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Joe Henderson Columns

Henderson: Fair play needed in flood insurance debate

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Published:   |   Updated: October 1, 2013 at 06:48 AM

Let’s say you have lived in the same house for the last 15 years. You have made your mortgage payments on time, including the flood insurance you had to buy. It was a little pricey, but there was a government subsidy that kept it manageable.

Besides, you figured it was worth it for that spectacular water view.

That’s before you got the letter.

The agency that provides flood insurance is running a $24 billion deficit, so effective today your insurance rates will skyrocket. They’ll keep going up until the subsidy – estimated by the Government Accountability Office at nearly half the actual insurance cost – is eliminated.

Homeowners are freaking out.

Gov. Rick Scott wrote Florida senators Bill Nelson and Marco Rubio urging them to help fix this before it really gets to be a problem. The governor made a righteous call on that one.

There are also legal challenges from affected states, but even if there is a last-minute injunction, it’s probably only temporary.

This is one of those modern problems that illustrates where we are as a nation. Agencies are under increasing pressure to balance their budgets, but how is it fair to break a promise to homeowners that was keeping insurance premiums manageable?

It is perfectly understandable, though, to argue the rest of us shouldn’t subsidize someone who bought property in a flood zone.

If I get 12 speeding tickets (which I haven’t), my car insurance will go through the roof. If I’m a smoker (which I’m not), I have to pay more than someone who doesn’t.

So why should someone who owns a home on the beach or along the river expect taxpayers to help them out with their flood insurance?

Going forward, maybe someone buying in a flood zone should have to absorb the full cost. But a lot of people bought these homes years ago with the belief that flood insurance costs would be reasonably steady. If people start losing their houses, it could torpedo an economic recovery that is fragile at best.

Do we really want to go through that again?

This is all a cautionary tale for political game-players, though.

When the Biggert-Waters Flood Insurance Reform and Modernization Act of 2012 passed (that’s the bill that triggered all this), a headline on insurancejournal.com read like this: Agents, Insurers Cheer Congress OK of Flood Insurance Reform Bill.

It was bipartisan legislation, signed into law by President Barack Obama. The story quotes a top insurance executive praising the “common-sense reform” that would restore financial stability to the flood insurance fund. Maybe so, but it brings chaos to everything else.

There has to be a better way, one that reins in a runaway deficit with some commonsense fair play. Maybe we can find that solution if our leaders will stop reading “Green Eggs and Ham” on the floor of the U.S. Senate and actually focus on the problem.

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