For nearly half a century, the federal government has backstopped the National Flood Insurance Program. The program helped real estate owners and assisted development in flood hazard areas by insuring homes and businesses. Protection comes at a cost, however, and a series of large storms beginning with Hurricane Katrina in 2005 and culminating in Hurricane Sandy left the flood insurance program $24 billion in debt and the federal government on the hook for the shortfall.
As a result, Congress made a series of changes to the Flood Insurance Program that will greatly increase flood hazard insurance premiums. The premium increases should have a longer phase-in to recognize the fixed and durable nature of real estate. The legislature should also act to secure discounts the program already offers.
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