Heritage Foundation Details Problem with Federal Flood Insurance

The Heritage Foundation has published a new web memorandum. The memo, published September 27 and titled "Fixing Flood Insurance Before the Next Disaster: House Bill Takes Several Steps in the Wrong Direction," was authored by David C. John.

According to the memorandum, the House of Representatives will soon consider the Flood Insurance Reform and Modernization Act, which expands flood insurance coverage and adds new wind damage insurance. The new insurance program, if approved, would begin at the end of June, next year. The author asserts that the move by the Congress "...is both irresponsible and bad policy." He maintains that the structure of the program is insufficient to cover damages resulting from severe storms and that the entire program should be completely revamped to prevent recurring federal bailouts.

The memo says the proposed legislation being considered by the House of Representatives has several faults, including the addition of expensive new wind damage coverage, increases in flood insurance coverage, coverage for basements and crawl spaces, and delays in the introduction of risk based premiums until 2011. Instead of adding to a federal program, the author says, such coverages should be left to private insurance companies.