Reforming national flood insurance.

• Author: Lavigne, Peter
• Position: Special Section: America Under Water - Cover Story

Barely a month goes by lately without a major new natural disaster hitting some area of the U.S. and leaving in its wake ever-increasing claims on taxpayer dollars. As Mississippi Valley floodwaters slowly drained away with the last vestiges of summer, 1993, so were taxpayer dollars flushed away with claims on the National Flood Insurance Fund and dozens of other disaster relief programs of the Federal government.

In August, 1992, Hurricane Andrew struck, followed by Hurricane Iniki in September, the December nor'easter, and the March, 1993, Atlantic Coast blizzard. The on-again, off-again leftovers of the great Mississippi flood still were hitting the news even as Hurricane Emily lashed the Carolinas before heading out to sea. These disasters were followed by the ever-so-predictable cycle of fire, flooding, and mudslides in Southern California, along with the not-so-predictable, but ever-so-probable, Los Angeles earthquake.

The floods of 1993 in the Mississippi Valley caused scores of deaths and cost billions in damage. They are reminders of the perils of building in floodplains and the economic devastation occurring when floods and storms wreak sudden and - despite the best efforts of the Army Corps of Engineers - often uncontrollable havoc.

Flooding along rivers, estuaries, and coastlines accounts for more than 70% of natural disasters in the U.S. Private insurers historically have refused to underwrite flood insurance because of the certain losses and generally high risk represented by covering houses and other structures in high-hazard floodplains and coastal erosion zones.

In the absence of private flood insurance, Congress established the National Flood Insurance Program (NFIP) in 1968 to prevent taxpayer dollars from repeatedly pouring out of the Treasury and onto the flood-plains and coastal erosion zones in the form of Federal disaster assistance funds and infrastructure subsidies. According to the law, "Annual losses throughout the Nation from floods and mudslides are increasing at an alarming rate, largely as a result of the accelerating development of, and concentration of population in, areas of flood and mudslide hazards." It further states that "The Nation can not afford the tragic losses of life caused annually by flood occurrences, nor the increasing losses of property suffered by flood victims, most of whom are still inadequately compensated despite the provision of costly disaster relief benefits ..."

Among the NFIP's purposes is to "encourage State and local governments to make...