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Eli Lehrer and others, Chicago, column: Flood insurance program needs U.S. Senate vote

By Eli Lehrer, Joshua Saks and Shana Udvardy CHICAGO -- The floods that struck North Dakota earlier this year certainly cost a lot. Infrastructure repairs and human services will add more than $350 million to federal and state taxpayers' tab. And...

By Eli Lehrer, Joshua Saks and Shana Udvardy

CHICAGO -- The floods that struck North Dakota earlier this year certainly cost a lot.

Infrastructure repairs and human services will add more than $350 million to federal and state taxpayers' tab. And that is only the beginning.

Private insurers will reimburse some businesses, and the National Flood Insurance Program -- a federal effort that's the only seller of flood insurance in most places -- will write checks totaling hundreds of millions more.

That's why everyone in North Dakota should be concerned that Congress can't get its act together to put the flood insurance program on stronger footing.

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Some background first. Important as it is to flood-prone areas such as North Dakota, the NFIP never has worked very well. While its creators promised that the program would break even and discourage development in flood-prone areas, it currently owes the Treasury more than $17 billion and often encourages developers to build new homes in areas that flood.

The program also is unfair in many ways.

While most North Dakota residents pay premiums that are close to those that would be charged if private insurers wrote flood coverage, the program offers huge subsidies to those who live along hurricane-prone coasts.

Even amidst foot dragging, however, there's a clear path forward for NFIP now -- if only Congress would follow it.

After years of arguing over the program's future, both the House and a key Senate committee have passed bills that assure the program's continued existence beyond its scheduled lapse Nov. 18. But even though it easily could, there's little sign that the Senate actually will take a vote on the program anytime soon.

And that's a problem. While it's likely that Congress will extend the NFIP for a few months sometime in mid-November -- it has kicked the can in this way this since 2008 -- the simple fact that the program could expire causes tremendous peril.

That's because whenever the program lapses (as it has on at least three occasions in the past four years), it becomes nearly impossible to close any real estate deals in flood-prone areas, including the most densely populated parts North Dakota. This simply is bad for business.

Furthermore, without a long-term renewal of the program, key efforts to stabilize the program's finances and improve the maps it uses to set rates will remain in abeyance.

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And given the likelihood that the program will have to add to its already-overwhelming pile of debt as bills for this year's floods come due, there's at least the chance that, even if Congress lets the program continue without reform, the NFIP simply will run out of money.

It doesn't have to be this way. In fact, flood insurance reform appears to be one of the few major pieces of legislation that an increasingly riven Congress could send to President Barack Obama's desk before the end of the year.

The bills before Congress offer something for just about everyone to like.

Free marketers should rejoice that the bills reduce costs for taxpayers and stabilize public finances. Environmentalists should appreciate the ways that they promote conservation and restoring rivers.

Most important, people living in flood-prone areas should recognize that the bills assure the program's survival, thus enabling the NFIP to keep helping communities survive nature's worst.

Whatever happens, the National Flood Insurance Program faces deep problems; but right now, Congress has a good chance to move things in the right direction.

North Dakota Sens. Kent Conrad and John Hoeven should make their choices heard.

For the good of North Dakota -- and the good of the nation -- the Senate needs to schedule a vote on flood insurance sooner rather than later.

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Lehrer is national director of the Center on Finance, Insurance and Real Estate at the Heartland Institute.

Saks is senior legislative representative of the National Wildlife Federation's water resources campaigns.

Udvardy is director of flood management policy for American Rivers.

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