Hensarling op-ed in U.S. News and World Report: Harvey Is Our Wake-Up Call
The destruction caused by Hurricane Harvey is unlike anything my home state has ever experienced. As long as I live, I'll never forget those images of elderly women waiting in waist-deep water to be rescued. I'll never forget the images of children clinging to their mothers as they waded through flooded streets. No one with a heart could look upon this tragedy and not be moved. First responders, federal, state and local officials, and compassionate armies of volunteers are working around the clock to meet emergency needs. Once those needs are met and the recovery phase begins, our nation must then turn its eyes toward making sure government policy never again puts people in harm's way like our National Flood Insurance Program does.
In theory, the program helps homeowners prepare for and protect against flooding. In reality, it does the opposite. Over its 50-year existence, the program has devolved from a prudent tool to manage local flood risk, to policyholders paying actuarial rates into a government monopoly that subsidizes homeowners to live dangerously.
With pricing discounts that do not reflect the reality of risk, the program creates perverse incentives to build and re-build homes and businesses in flood-prone areas. One home in Houston flooded 16 times over 18 years. Another in Canton, Mississippi flooded an average of every eight months over 18 years! Obviously these homes are not located in safe places, yet combined flood insurance payments of more than $1 million encouraged their owners to stay right where they were.
This is no urban legend. Nearly 1 in 10 homes has had claims for repetitive flood losses that are greater than the value of the home. And the problem is only getting worse. Houston has suffered three "500-year" floods in the last three years. The U.S. Department of Homeland Security reports the number of homes that repeatedly flood is growing by at least 5,000 a year.
No one wants government to dictate where they can and cannot live, but neither should we subsidize a program that increases the likelihood more people will die in a flood. We cannot watch another family lose everything – risking their lives and the lives of the first responders sent to rescue them – because the flood insurance program's seal of government approval fooled them into thinking they were safe. That's more than wrong; it's immoral.
Americans deserve better, and we can start with building a better flood insurance program now – not tomorrow, not next year and not after the next flood. That's why the House Financial Services Committee has produced legislation that will make the National Flood Insurance Program stable, affordable and safer. It protects homeowners by requiring the program to clearly communicate their full flood risks and provides more than $1 billion to help them make home repairs and modifications to lower their flood risk. It also protects hardworking taxpayers with common-sense changes to begin phasing out taxpayer-provided subsidies for properties that flood over and over again. Our legislation also gives everyone access to lower-cost flood insurance by opening the program up to private market competition.
Having just one insurance provider for all flood risk in the entire country makes no sense. Competition is good for consumers. It provides more choices at better prices. In states like Pennsylvania where there is private market competition, policyholders are finding more affordable flood insurance. Pennsylvania's insurance commissioner gave several examples in testimony to Congress, including one property owner who was quoted a $6,000 annual premium by the flood insurance program but found private coverage for just $900. Separately, an independent study found that 69 percent of Louisiana homeowners and 92 percent of Texas homeowners could see cheaper premiums with private insurance than with the program.
It's therefore ironic that those who oppose common-sense flood insurance program reform claim changes will make flood insurance unaffordable. When has a government monopoly ever provided consumers with a cheaper, better product than private market competition?
The devastation caused by Hurricane Harvey should be a wake-up call to Washington when it comes to flood insurance. All will benefit from a stable, affordable and safer National Flood Insurance Program. That's exactly what our legislation offers.