The pictures were almost unimaginable. Over 48 hours, parts of Houston were pummeled by more than 30 inches of rain as Hurricane Harvey swept across the Texas coast. The storm dropped the equivalent of a year’s normal rainfall in less than a week and left large sections of the city underwater.

While the floodwaters have receded across Houston, a financial storm is brewing around how to pay for the massive amounts of damage. The federal National Flood Insurance Program (NFIP) is currently $24.9 billion in debt. It has a $1 billion reinsurance policy and can borrow up to around $6 billion more from the U.S. Treasury. The program was set to expire, but President Donald Trump signed legislation extending the National Flood Insurance Program until Dec. 8, 2017, allowing more time for Congress to attempt to reform the program. Given the cost of major storms in the past, Congress will almost certainly need to raise NFIP’s debt limit as part of a renewal.

Yet Congress must not simply continue the status quo. As the NFIP’s current indebtedness indicates, the program is dysfunctional, with out-of-whack rates that chronically take in less in premiums than is needed to meet its obligations. Once justified on grounds that homeowners and businesses were unable to find private flood insurance, the existing program has undercut the development of a private flood insurance market.

It doesn’t have to be that way. A recent study by the Milliman actuarial and consulting firm found that 88 percent of Texas homes could see lower premiums from the private market than under the NFIP. Even in the highest-risk zones, the private market is able to provide a better, cheaper option for consumers if only the government will get out of the way.

Critics like Sen. Bob Menendez, D-N.J., have argued that private insurance companies aren’t to be trusted to pay flood claims. But states have more recourse to deal with bad actors in the private market then consumers do with the federal government. If a private insurer fails to pay valid claims, they risk fines by the Texas Department of Insurance, or even suspension of their license. By contrast, states lack the ability to discipline a federally run program.

Going forward, the NFIP should also make more use of reinsurance to deal with high-impact events. In January, NFIP entered into an arrangement with a group of 25 international reinsurance companies whereby they agreed to pay out slightly more than a billion for any 2017 flood event exceeding $4 billion in losses. The agreement will help to reduce the financial burden on NFIP and ultimately by the taxpayers. The January reinsurance issue was oversubscribed, indicating an appetite in the private reinsurance market to take on this risk. Legislation passed by the House Financial Services Committee in June would make it mandatory for NFIP to consider expanded use of reinsurance in the future.

Finally, any NFIP renewal package should reverse the recent Trump administration executive order repealing the Federal Flood Risk Management Standard. The FFRMS helps protect taxpayers and the environment by making sure flood risks are taken into account when building federal infrastructure and other federally funded projects in recognized floodzones. It’s only common sense that we should be cautious about building in areas that are particularly vulnerable to flooding.

The scale of the flooding from Hurricane Harvey may be unprecedented, but it was not unforeseen. Such floods are and will continue to be a periodic occurrence in an area that has known its share of natural disasters. But the fact that storms cannot be prevented does not mean that we cannot prepare for them. We must.

Image by IrinaK

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