Through Each Life, a Little ‘Debby’ Must Fall

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flooded neighborhood

Hear that gurgling noise? That’s Florida’s panhandle, practically drowning in Tropical Storm Debby’s drenching rains. Ole’ Deb is expected to make landfall Thursday, with weather forecasts calling for total downpours of anywhere from one to two feet, depending on where you are in the currently un-sunny Sunshine State. On Sunday, tornadoes spun off from the larger storm system, killing one woman and seriously injuring a child. And meteorologists caution more tornadic activity is possible.

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But despite those tragedies and the threat of more, the most likely and widespread risk to Floridians comes in the form of flooding. Emergency managers in Florida point out that inland flooding accounts for roughly half of all deaths from tropical storms in the U.S. over the past 30 years. Since 1900, nearly 10,000 people have died from floods in America alone.

And there are enormous financial repercussions attending any widespread flooding event.
Aside from the obvious destruction of property, floods can be so devastating and cut across so many categories, it’s difficult to accurately assess the damage. With their low-lying land and natural susceptibility to storm systems blowing in from the Gulf and the Atlantic, flooding is part of Florida’s economy in a way unlike other states.

If you live on a flood plain or waterfront area, flood insurance is a de facto necessity in obtaining a federally-backed mortgage. You can scarcely buy a home without it in many parts of the state. And there’s only one flood insurance provider in the game—the National Flood Insurance Program (NFIP), run by the federal government.

And, like many government programs, the NFIP is frequently a political football when it comes time for reauthorization. In fact, dealing with constant stops and false-starts from Uncle Sam, some Florida mortgage lenders have begun advising clients to buy flood insurance now, even if they’re not closing for another week or more—just to make sure they have it. As Charles Kiesel, a lender in Cooper City, notes wryly, “we’ve learned how dumb our government is, how it runs right up to the deadline.” Maybe they should look into getting flood insurance-insurance.

There are some legitimate reasons why the program may need reform. Its budget got busted when a particularly nasty streak of storms hit Florida and the Gulf States from 2004 to 2005, (including one you may recall named ‘Katrina’). As a result, the NFIP finds itself as inundated with red ink as Florida is with rain at the moment, to the tune of $18 billion.

Naturally, there was an understandable rush to pay out and cover people’s losses in the wake of such widespread ruin. However, as so frequently happens following a big government outlay, people started sifting through the numbers and asking some valid questions.

For instance, this is federal money—from all 50 states—but 2.1 million of the nation’s 5.6 million policies belong to Floridians, or at least property in Florida. Some folks paying taxes and living in areas with zero hurricanes have a hard time with that expenditure. And just a sentence ago, I mentioned “in Florida” because a not-insignificant number of homes filing damage claims were second homes, vacation homes and whatnot.

Nobody wants storm-ravaged victims left homeless, of course, but we’re talking about some pretty pricey real estate in a lot of cases. In times of extraordinary budget deficits, it’s tough to justify asking taxpayers to make multimillionaires whole on wrecked vacation homes when so many are built on land notoriously vulnerable to Mother Nature’s mood swings in the first place.

As such, new actuarial reforms are being considered in both houses of congress, including risk-based premium structures and restrictions on those who’ve lost a home to a wicked storm once…and then rebuilt in the same place. A Senate version of a bill with such safeguards would reduce the budget deficit by $5 billion over the next 10 years and ensure the longevity of the program for the next five. That bill, co-sponsored by Senators David Vitter (R-LA) and John Tester (D-MT), just received White House support.

So, let’s hope they get moving on that. After all, in addition to being a magnet for hurricanes, Florida is the eye of the storm in the nation’s battered housing market. If you can’t move forward on a land deal without flood insurance, that’s useful economic activity that’s not taking place. Let’s also hope the nice folks staring down Debby get through this mess safely—and that most of them have policies already.

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