National Flood Insurance Program $25 Billion In Debt From Sandy, Katrina, Ike - Reauthorization?
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Today, the NFIP is effectively bankrupt. It owes the U.S. Treasury nearly $25 billion – money it borrowed from federal taxpayers to cover its obligations in Sandy, Katrina (2005), and Hurricane Ike (2008). No one expects that money to be repaid. Some coastal state lawmakers are even calling for Congress to write off the massive debt, contending it is the only way the troubled insurance program, which is up for reauthorization this year, can regain its financial footing.
Wiping away the debt will help. But it is only a matter of time until the next big storm drains the coffers again. Even relatively weak hurricanes cause hundreds of millions in damage, while monster storms like Katrina and Sandy cause billions. Complicating matters, the NFIP has improbably subsidized thousands of risky properties along the coast – low-lying houses that flood over and over – by charging them below-market premiums to entice them to join the program.
Now the federal flood program faces no less than an existential threat. As seas rise, coastal floodplains are expected to expand, exposing more property to routine flooding, surge, and waves. By some estimates, hundreds of thousands of U.S. houses could be underwater by century’s end and a trillion dollars worth of property at risk. Much of Long Beach Island’s heavily insured housing could be covered by several feet of water twice a day at high tide, rendering it inaccessible except by boat. Meanwhile, the average losses for each flood policy could increase by half, according to a 2013 government study, leading to sharp increases in premiums that price out all but the wealthiest property owners. Elevating homes above predicted flood levels and adopting other mitigation strategies will help in the short run, says Robert E. Kopp, an expert on climate change and sea level rise at Rutgers University. But not enough coastal communities are taking the long-term threat seriously. “So what we have is a lot of changes on the margins,” Kopp said.
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Another study by researchers at the real estate firm Zillow found that nearly two million U.S.homes worth almost $900 billion could be underwater by 2100. The researchers weren’t referring to a situation where the market value of a home dips below the value of the mortgage; they literally meant underwater, swamped by rising sea levels. Zillow researchers looked at coastal states where sea levels would rise by six feet by 2100. In Florida, the most vulnerable and heavily developed, they found nearly 1 million homes – one of every eight in the state – would be underwater. The next most vulnerable state was New Jersey, where 190,429 houses would be inundated.
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http://www.climatecentral.org/news/how-rising-seas-drowned-the-flood-insurance-program-21484
http://www.climatecentral.org/news/how-rising-seas-drowned-the-flood-insurance-program-21484
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