McHugh David: NFIP exposes problems with bureaucratic “one-law-fits-all” mantra
While tax reform is dominating the majority of conversation in and around Washington D.C. before Christmas, another subject is also being debated (hotly) on the floor - the National Flood Insurance Program (NFIP).
The heated debate has created yet another temporary extension of the program, while the houses on Capitol Hill find a plan that suits all.
The problem? Well, it’s those who think that fair and equitable premiums for all floodplain homeowners are important, versus those that think the deficit the program currently runs is entirely too out-of-bounds, requiring radical change to get back into the financial green.
What’s actually occuring here is a debate between those that care - because their constituents are affected - and those who may not necessarily be disinterested, but are removed enough from the problem to where they view it as dollars and cents.
Interestingly enough, flooding is one of the disasters that most parts of the United States share at least some common ground.
Earthquakes are mostly local to the west coast; blizzards in the northeast; below 0 temperatures in the upper mid-west; hurricanes on the Gulf of Mexico coast; even tornados are somewhat oddly placed outside of the lower mid-west.
But flooding? That can happen anywhere, as much of America’s 3.8 million (rounded) square miles is covered with giant drains (see: rivers).
Unfortunately, the case can be made that flooding is still more rampant in certain parts of the country as opposed to others - and Louisiana just happens to be one of those places.
Even if you remove the Great Flood of 2016, there was wide-spread flooding in Louisiana two springs in a row after downpours left much of the northern and western part of the state inundated, as well as southern Livingston Parish.
What also makes Louisiana different is that, for the most part, a huge chunk of the real estate market are located on the flood plains. If they aren’t, those pieces of property either survived the first two flood plain remodels, were elevated out of the flood plain, or were lucky enough to be built on some natural knoll.
It may not be the case for long, however, as Congressman Garret Graves is proposing a compromise that would keep premiums low but spread the risk by requiring more homes to carry flood insurance.
So the battle is uphill for Louisiana’s D.C. delegation, who are fighting the good fight against budgetary sticklers who want to, quite simply, jack up premiums and walk away.
The understanding is that an increase in premiums could be disastrous for any real estate markets which have a glut of homes for sale inside flood plains - East Baton Rouge and Livingston, for example.
The program has existed for too long, and the rules enforced haphazardly, that the calamitous increase of premiums isn’t feasible, and we will, instead, see a small percentage increase in premiums and a widening of the “risk net” to include more areas that, at present, aren’t required to have flood insurance.
The initial “just raise the premiums” reaction is a major problem that exists at present - centralized government, made up of a vast array of differences, trying to apply “one-law-fits” mentality to a large country that, for all intents and purposes, could not possibly be (relatively speaking) more diverse.
Louisiana’s delegation should be applauded for standing up and saying, “no, this is not good enough,” but too often this doesn’t happen. Too often the United States ends up with economic, educational, social, and public policy which may be beneficial for one area with the appropriate demographics, but completely unrealistic for another.
Perhaps the increase in premiums and spread of the risk pool will shy builders and developers away from high-risk areas but the fact remains that Louisiana stood to suffer the most from the initial reformation proposals.
Until folks understand that America is, in itself, widely diverse an policy must consider all, not the best fit, local angles - the country will continue to fracture