The National Flood Insurance Program is 19 billion dollars in debt today.  The program continues to provide insurance for homes which have flooded and been repaired many times over the years. 

Spencer Gaffney of the Washington Bureau stated “ Between 1977 and 1995 the National Flood Insurance Program paid out $806,591 for repeated storm damage to a suburban Houston home that was value at $144,480.  If you think the math doesn’t add up you are not the only one.”

The City of Houston advises everyone to buy Flood Insurance not matter whether the area has flooded or not.  The propose of flood insurance is protection for people in low areas when they are faced with the threat of flooding caused by heavy rains.  The City continually updates their flood maps,  and passes rules designed to help with the flood problems.  The tremendous population growth and nature are causing the problem to escalate.

Losses from Hurricanes in the last few years have been catastrophic.  The government needs to run the insurance program in a business like manner.  The government can not afford to keep paying claims due to the fact the program has no cash reserve left.  If the government is going to be able to offer low cost flood insurance; so that people are not afraid to build in our cities.  Then they are going to have to build up cash reserves. 

It seems logical that there should be some limit on the amount of times a homeowner is paid for flood damage.  There needs to be a solution which is fair to all.  Perhaps when the third major claim is filed; the home owner could sell their home to the National Flood insurance program.  If the homeowner does not accept this solution, then they would be paid for their claim.  But the homeowner’s insurance coverage is canceled after this claim, and they are no longer eligible for the National Flood insurance Program.  The homeowner can still get insurance from a private insurance company.  But chances are if they can find an insurer, the premium will be pretty high. 

Congress has passed a temporary Flood Insurance Program while they are debating the solution.  Unfortunately there have been times when the program has been suspended.  This has caused buyers in flood prone areas to have to wait to close on their homes.  Because their lenders demand they have flood insurance coverage. 

Right now Congress is saying what is needed is a doubling of premiums.  Taking into account the real costs of flood insurance.  An increase in premiums is certainly part of the solution.  So is not allowing reoccurring losses.  People need to be protected, but the program also needs to be priced fairly for the homeowner.