Hurricane Andrew's Wake-up Call

August 25, 1992

Last spring, experts at the National Hurricane Conference predicted the United States would soon enter a new 25-year cycle of more frequent and more destructive hurricanes. They proved prescient yesterday as the 1992 hurricane season began with one of the most powerful storms to hit a densely-populated metropolitan community in this century.

There were relatively few deaths but much destruction in Miami and South Florida. However, Hurricane Andrew is still very much alive -- and exceedingly dangerous. It could still hit another big city -- Mobile, New Orleans, Galveston -- tomorrow or Thursday and cause more human suffering and property damage.

The federal government is partly responsible for the fact that there is so much residential development in hurricane-prone areas. Its National Flood Insurance Program (NFIP) subsidizes insurance for residences in such areas, making mortgages possible as well as making insurance affordable. NFIP has to pay off claims with taxpayers' money when premiums don't cover them. This cost the Treasury over a half billion dollars from 1978 to 1987, according to the Coast Alliance, an umbrella group of environmental organizations. It labels NFIP "the next S&L bailout." That may be hyperbole, but NFIP has over $200 billion in unfunded liabilities. This year's hurricane season started with only $325 million in the NFIP fund for paying claims. The last hurricane in Andrew's category cost NFIP more, and Andrew is just the first big storm of 1992. This season could cost taxpayers $4 billion, according to some estimates.

NFIP will insure some homes for less than one-tenth what a private insurer would charge. Nor do policy costs go up as claims recur or risks increase, as when, for example, shoreline erosion puts a structure much closer to the ocean and thus more in peril from storm surge. About a third of NFIP claims are repeat claims from about 2 percent of policyholders. Even leaving aside the arguments by environmentalists that NFIP has helped encourage destructive over-development, it clearly is a program taxpayers should not have to subsidize.

Delaware's Rep. Tom Carper, among others, got the House to pass legislation that would lead eventually to eliminating this expensive and harmful subsidy. Sen. John Kerry of Massachusetts has pledged to get a version of that bill through the Senate next month. They are both from states with large coastal populations (so is Maryland Sen. Paul Sarbanes, a co-sponsor). This legislation is not a result of coast-bashing by spoil-sport members of Congress from inland states. It deserves to become law this year. We urge Senator Kerry and Representative Carper to insist that it does. Hurricane Andrew is a wake-up call.

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