Does 'Harvey's' Flooding Of Houston Pose An End To Flood Insurance?

Scene of flooded homes just outside Houston after Harvey Struck.

Few people may know, but the last bastion of insurance for protection against floods ends on September 30th. On that date, according to a WSJ article yesterday ('New Dangers For Flood Insurance', p A5), the National Flood Insurance Program (NFIP) - created 50 years ago - is scheduled to expire.  Indeed, it "has just $5.8 billion left it can borrow from the Treasury to meet new claims, according to January figures reported to congress".  Many citizens in flood prone areas buy these government policies - from the NFIP- through private insurers which are then compensated for that service.

The program itself was created  because no private insurer was willing to risk having to pay out for catastrophic flood losses.  As for the NFIP, it could be inundated with billions of dollars in new claims in the wake of Harvey's colossal rainfall - which is still adding up.

The question for lawmakers now is whether to designate a more comprehensive fix to return the NFIP to solvency, or merely attempt a temporary renewal.  According to Sen. Bill Cassidy (R, La.) quoted in the article:

"From a public policy perspective, Hurricane Harvey reinforces the narrative of why the national flood insurance program is so important and needs to be addressed."

Financially speaking the program is in trouble and insolvent. It already has a debt of nearly $25 billion from earlier climate disaster, much of it from Hurricane Katrina in 2005, then Superstorm Sandy in 2012.

The WSJ piece notes that it will "take days if not months, for claims to emerge from Hurricane Harvey".   Also, more than 200,000 homes could be at risk along the TX coast, this from information and analytics firm Core-Logic .  Noteworthy also is that in 30 Texas counties there are nearly 450,000 policies covering $125 billion in insured value. More than half that value is in heavily populated Harris County.

Another aspect hitherto unmentioned  is that a new Texas law goes into effect Friday which may toss all hopes of decent insurance payouts into the crapper. This law- House Bill 1774 - will make it harder for Texans to receive insurance payments.

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