Water bills

September 04, 2007

Just because flooding is the nation's worst natural hazard doesn't mean that financing flood insurance should be treated as a major political hazard. But that's exactly what's going on because Congress still hasn't lived up to its responsibility to make the federally subsidized program anywhere close to self-sustaining.

Maryland needs government-backed flood insurance. More than $12 billion in Maryland property is covered by flood insurance policies. That's the 12th-highest amount in the nation (and more than many similarly at-risk states, including Alabama, Massachusetts and Hawaii).

Maryland counties that aren't located directly on the Atlantic Ocean or the Chesapeake Bay can still be threatened by hurricanes, nor'easters or localized severe thunderstorms. Standard homeowners policies won't cover such disasters, and so the government's involvement is required.

But the danger of federally backed insurance is that it will be treated too much like an entitlement rather than as a genuine insurance policy. Admittedly, if government sets premiums too high, there's a danger too few property owners will buy the coverage. But set them too low and it only encourages development in the floodplains - and puts all taxpayers unfairly at risk.

If Hurricane Katrina taught us anything, it's just how big a risk that can be. The flood insurance program is deeply in debt thanks to $20 billion in claims from 2005. In Congress, there have been efforts toward modest reforms - raising the cap on premium increases from 10 percent to 15 percent, for instance, but that's not nearly enough.

Insurance premiums need to reflect the real risk, particularly for residences built in areas prone to flooding. Right now it costs about $400 for $100,000 in coverage. And Washington also needs more accurate maps to detail what properties are most in danger of flooding, particularly as global warming causes sea levels to rise.

Raising flood insurance premiums won't make politicians popular with waterfront landowners, but then neither should the billions of dollars in unfunded liability that another Katrina-like hurricane could impose on taxpayers. People who live in flood plains are taking a chance. That's their right - but they should also take responsibility for that choice.

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