Flood insurance fiasco indicative of downward spiral
To the Editor:
After voting for the Biggert-Waters Flood Insurance Reform Act of 2012 that resulted in huge premium increases for flood-vulnerable properties in Rhode Island, Senator Jack Reed has suddenly experienced an epiphany. He now regrets the effects of the bill he voted for. Did he not understand the bill, or did he just not read it? Who knows. But now he wants to change it.
The 2012 act changed how flood insurance premiums were calculated to make them based on actual risks and it dropped subsidies for flood-prone property owners – subsidies that had been paid by taxpayers in parts of the country that are not vulnerable to flooding. It was meant to fix an unfair system where taxpayers throughout the country helped pay flood insurance premiums for property owners who chose to purchase property in flood-vulnerable areas. It changed the previous collectivist approach to flood insurance to a capitalist/market-driven approach. And Senator Reed apparently approved of the changed approach at the time the law was passed.
Fast forward to 2014. Flood-vulnerable property owners in seaside states and in some river basin states have raised a tremendous ruckus about the 2012 act’s huge premium increases and the loss of flood insurance subsidies. Senators from these states banded together to produce legislation that might ameliorate the 2012 law’s effects. Knowing they could not get support for reversing the law completely since most senators represent inland states whose taxpayers had been unfairly paying for coastal property owners’ flood insurance, Reed and other senators managed to pass a law that would delay premium increases for four years and would force an “affordability study.”
But the collectivist mind of Jack Reed didn’t stop at that. He pushed for an amendment to the 2014 bill that would create “community-based flood insurance plans.” Instead of spreading the cost of flood-vulnerable property insurance premiums across the entire country as the laws did before the 2012 act, Reed’s amendment would spread the cost across a community instead of across the country.
So, what would the result be? A taxpayer living high atop a hill two miles from the coast would pay higher taxes to subsidize the flood insurance premiums of those in the same community who own property in flood-vulnerable areas on the coast. Or, if the community-based insurance program was limited to flood-vulnerable property owners, coastal property owners in low flood vulnerability areas whose premiums are relatively low would subsidize coastal property owners in very high flood vulnerability areas in the same community whose premiums are extremely high. The cost would be spread so that those paying low premiums would see their premiums increase to moderately high, while those previously paying extremely high premiums would see theirs decrease to moderately high. An example might be a low-vulnerability property owner who previously paid $1,000 per year might see his premium increase to $8,000 per year, while down the road a highly-vulnerable property owner might see his premium drop from $20,000 per year to $8,000.
This whole flood insurance fiasco, from all four of our congressmen and senators voting for a bill in 2012 that they didn’t understand or didn’t read, to our senior senator now pushing for a collectivist approach to fixing the problem, just shows how inept and philosophically bankrupt our political leaders are. And it’s getting worse. As our politicians eagerly push for more and more Americans to join the parade of takers who have no shame about being recipients of government redistribution of hard-earned wealth, our country continues its downward spiral toward moral and economic chaos.