FEMA failing to deter flood-prone housing?

No one would race a Ferrari down a country lane, cause a horrible smash, and then expect their insurance company to pick up the tab. Insurers put rules in place to prevent reckless behavior that would put them out of business.

But FEMA isn’t a normal insurer.

(International readers: FEMA is the Federal Emergency Management Agency, a United States government agency running the national flood insurance program.)

It’s a simple rule, designed to protect both homeowners and taxpayers: If you want publicly subsidized flood insurance, you can’t build a home that’s likely to flood. But local governments around the country, which are responsible for enforcing the rule, have flouted the requirements, accounting for as many as a quarter-million insurance policies in violation, according to data provided to The New York Times by the Federal Emergency Management Agency, which runs the flood insurance program.

That’s from a recent article in the New York Times. The article paints a picture of a completely dysfunctional public flood insurance program that pays out even when basic rules are flouted. The reasons?

1. FEMA lacks the capability to properly audit homes to ensure rules are followed, and
2. FEMA cannot simply throw communities off the program. Because voters.

FEMA is hesitant to enforce its own rules because its only enforcement tools are so severe. In short, punishment can make the homes all but unsellable.

The reader comments are worth a gander. Here are a couple:

From a reader in Florida:

After living in FL for many years, i can say unequivocably that the Federal government should exit the flood insurance business like now. While well meaning, they have just made matters much worse and the states, especially in the South have been building in areas they should not for decades. Now the reality of climate change is going to bring a world of hurt. But it is up to the states to fix this mess as they have knowingly done this for the simple reason of greed. Of course, in the South, unless you are rich you are going to suffer, but that is the way it is down here. Might as well start the pain now and get it over with.

From a reader in Ohio:

It’s time to stop spending my federal taxes to bail out builders and local governments that flaunt the FEMA rules repeatedly. Some cities in Ohio have actively taken up programs to get homes and businesses out of regulatory floodplains. They are unfortunately in the minority. This program promises to continue to be a huge drain on taxpayer funds with the affects of Climate Change driving more frequent and more devastating flooding. It’s time to enforce the rules or stop paying claims.