“Flood insurance rhetoric ignores reality,” Dec. 15

This column on the National Flood Insurance Program’s subsidized properties takes my organization, the R Street Institute, to task for asserting that NFIP’s premium subsidies flow disproportionately to wealthier property owners. While we concede that this is a generalization to which there are exceptions, the nationwide data pretty firmly backs up our contention.

The column faults us for relying on FEMA’s county-level data, positing that there may be “wide disparities” in home values within a given county. That’s true as far as it goes, but one cannot just wave away FEMA’s data as irrelevant. Counties in the top 30 percent of home values account for roughly 80 percent of the NFIP’s subsidized properties, and counties in the top 30 percent of income account for 65 percent of them. By contrast, just 9 percent of subsidized properties are in counties in the bottom 30 percent of income.

Clearly, a disparity that stark is not just mere coincidence. The program cannot solely consist of lower-income homeowners who happen to live in wealthy counties. While it’s true that not all owners of subsidized properties are “rich,” vanishingly few could be considered “poor.”

Moreover, the Institute for Policy Integrity has found that, between 1998 and 2008, the wealthiest counties filed 3.5 times more flood insurance claims and received more than $1 billion more in claim payments than the poorest counties. A separate analysis from the nonpartisan Congressional Budget Office of 10,000 NFIP-insured properties found that 40 percent of subsidized coastal properties were worth more than $500,000, compared to the U.S. median of $160,000. Furthermore, 23 percent of the subsidized coastal properties were second homes or vacation homes.

In fact, second homes account for 345,000 of the 441,000 properties that are seeing their subsidies phased out. Another 87,000 are commercial properties. The bulk of the program’s subsidized properties, some 715,000 of them, see no change in their rates unless they are resold, significantly rebuilt or the policy is allowed to lapse.

We at R Street have said repeatedly that, to the extent the changes enacted by the Biggert-Waters Act cause legitimate affordability concerns, those should be addressed through a limited means-tested program. A blanket four-year delay would gut these crucial reforms with no distinction between those who genuinely need help, and the many who do not.

R.J. Lehmann
Washington, D.C.

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