It is often objectively argued that 80% of all declared disasters in the US involve floods. One of the primary purposes of creating the National Flood Insurance Program codified at 42 USC Sections 4001 and following was to reduce federal disaster outlays, and hopefully the outlays of STATES and their local governments and the private sector. The basic quid pro quo in this land use program masquerading as insurance was that existing mistakes would be covered by federal flood insurance in return for minimization of future losses to floods. Another concept in the statute was that those who were occupying the nation's flood plains would bear the costs of that occupancy with burdening the general taxpayer especially with free disaster relief.
The NFIP primarily insures residential construction, single family and mulitfamily and small business. Smart Condo associations can often use the NFIP as first layer and get excess insurance sometimes even offshore. The NFIP does not in any way regulate how its offered insurance is meshed with offerings of the private insurance sector. It does however indirectly support STATE insurance regulation and sometimes STATES general revenues by having decided to let the STATES levy premium taxes on this federal program. I have long advocated that the STATE premium taxes levied go only to STATE floodplain management programs. And let's be honest few if any STATE floodplain management programs existed in June 1969 when the NFIP issued its first policy.
Now there is discussion of the need to reform the NFIP because of its costs to the taxpayer. Never is the issue raised as to whether NFIP reforms will increase FEDERAL disaster outlays. And by the way just for the record total crop insurance outlays, finance sector outlays, and other forms of federal "disaster" assistance far outweigh the meagre outlays of the NFIP over its premium income. The outrageously good deal given private insureres by participation in the program or by its existence generally allowing them to foist wind damage off as flood damage has been written up elsewhere.
What should be pointed out is that there were restrictions on outlays of disaster relief when flood insurance was available before Tropical Storm Agnes in 1972 and its huge losses. The result of the fact that no disaster relief could be made available where the NFIP was available was considered too harsh on the public ans so the Disaster Relief Act of 1974 (May 1974) relieved that restriction in part. Thus STATE's were mandated to buy their own flood insurance coverage on their structures but this through very contorted thinking has been largely an avoided consequence since May 1974. That issue alone would cause savings in both the NFIP and federal disaster outlays. What should be of interest is that the Flood Disaster Protection Act of 1973, with its largely delayed effective date of December 31, 1974 was in fact joined at the hip in passage of the Disaster Relief Act of 1974. Now largely forgotten the promise was made by Congress in those pieces of legislation that neither program, the NFIP or federal disaster relief, would be changed without consideration given to the impacts on the other.
Unfortunately, Since the Banking Committees have jurisidiction over the NFIP and the Transportation and Infrastructure Committee in the HOUSE has jurisdiction over the disaster programs, functions, and activities of the Robert T. Stafford Act, never have the twain met again since the 1973-74 legislative enactments.
A further gutting of the NFIP sanctions and restrictions on disaster outlays occurred in 1977 led by Senator Eagleton in an amendment allowing disaster relief to non-designated flood areas of mapped floodprone communities under the NFIP. While at first this may seem sensible, the inaccuracy of the NFIP maps and the discentive to participation led to a major undermining of the NFIP. The restrictions should at least be returned to where they were pre-1977 if not returned to where they were pre-1974.
In an amazing report the Pittsburgh District of the USACOE did a study that recommended that the NFIP cover STATE and LOCAL water and sewage treatment plants. The basis of this recommendations was to force the STATE and Local owners of these plants to recognize more accurately flood risks in their construction and management. EPA also recognizes this need. I have long stated that EPA builds water and sewar treatment plants and FEMA rebuilds them after the flood. And don't think that water and sewerage treatment plants are not part of significant outlays under the Public Assistance Program authorized by the STAFFORD ACT. Some estimate that these outlays could represent up to 40% of all public assistance outlays. The problem of course is that water and sewage treatment plants are considered by some to be funcitonally dependent on the flood plain. This is not quite accurate but is certainly widely believed and because of NIMBY and other restrictive zoning, usually water and sewage treatment plants are not very close to residential areas or at least prime residential areas.
So in reforming the NFIP, and assuming some of my simplistic remedies are ignored (e.g. providing no NFIP insurance on unmapped geographic areas or for undisclosed hazards-mudslides for example)and outlays would have been substantially reduced in Katrina and even now, the impacts of changes in the disaster legislation and flood legislation must always be examined jointly.
Even individual and family grants to the extent that they hold in place in hazardous areas individuals and families can act as a disincentive to flood plain management 9land use)!
Perhaps this is all beyond the ken of Congress but is should not be beyond the ken of FEMA and the disaster and flood program managers. And perhaps time to separate disasters into components with floods and others such as earthquakes administered separately and more rationally than the so-called all-hazards disaster approach including intentional and accidental man-made incidents and events.