25, 2012, 9:43 p.m. ET
Senate Bill Would Drive Up Flood-Insurance Premiums
By ALAN ZIBEL And LESLIE SCISM
Vacation homes and commercial properties in flood-prone areas could see their
flood-insurance premiums more than double over a four-year period under a bill
poised to clear the Senate this week.
The measure, which was endorsed by the Obama administration Monday, is meant to
shore up the finances of a federal program that provides mandatory flood
insurance. The Congressional Budget Office estimates the bill would save $4.7
billion by 2021.
The government-run National Flood Insurance Program has borrowed nearly $18
billion from the Treasury Department to pay claims resulting from the hurricane
season in 2005—a particularly bad year for flood losses. The Senate is expected
to take up the legislation Tuesday or Wednesday.
The government pays flood-insurance claims, while private insurers sell
policies and manage claims under the program, created in 1968. Flood insurance
is required for federally regulated lenders and government-backed mortgages in
flood-prone areas. Insurance industry groups say the program's rates are far
too low, making it hard for private competition to emerge.
More than 20% of the 5.6 million homeowners in the program receive subsidized
rates. The subsidies are directed at homes built before 1975, and homes that
were built before the nation's flood-mapping system was established to
designate high-risk areas.
The bill would gradually remove those subsidies for second homes as well as for
commercial properties and properties with a history of repeated flood damage.
But some property owners, including many living in residences built decades
ago, would continue to receive support.
The increases would more than double premiums for about 440,000 policyholders
who pay $1,174 a year on average, the CBO estimates. J. Fletcher Willey, who
runs an insurance agency in North Carolina's Outer Banks, said local property
owners with repeated flood losses would be hit with higher costs. But he said
he agreed with the move by Congress.
"This is something that should have been done earlier," Mr. Willey
said. "It stands to reason when a property has been damaged over and over
again the property owner should pay more."
Senators still need to work out differences with a version passed by the House.
The measure is backed by a broad coalition, including the insurance industry,
real-estate agents, fiscal conservatives and environmentalists. There are still
some concerns that the overhaul doesn't do enough to decrease the program's
burden for taxpayers. Sen. Tom Coburn (R., Okla.) said consumers who have
repeated flood-insurance claims should be kicked out of the federal insurance
While lawmakers of both parties support the bill, there has been disagreement
in Congress over whether to establish a flood-insurance requirement for
homeowners who live by levees, dams or other kinds of flood protection.
Sen. Mark Pryor (D., Ark.,) argues that requiring homeowners in so-called
residual risk areas to pay for insurance is unfair, given that they are
protected from floods. But other lawmakers last week reached a compromise that
sets out a method for charging those customers based on the flood risk they
Gerrie Schipske, a member of the Long Beach, Calif., city council who opposes
that plan, sent an email to her constituents over the weekend aimed at rallying
opposition. Ms. Schipske says the Long Beach and San Gabriel rivers, which flow
through concrete channels in her city, stand little risk of flooding. If the
Senate bill isn't changed, she said, "a great portion of the homeowners
will have to pay this flood insurance.…It's an unnecessary burden."
Since 2008, Congress has passed a number of short-term bills but hasn't been
able to complete a five-year extension of the flood-insurance program. The
program has been allowed to lapse numerous times, delaying real estate deals.
The impact of the bill is likely to be most felt in Florida, where
vacation-home owners will be hit with higher premiums. Florida has more than 2
million flood-insurance policies.
But Maureen Harrell, owner of Harrell Real Estate in Melbourne, Fla., said having the program extended five more years outweighs concerns about higher
rates for some property. Real estate agents, she said, have "all been
affected at one point in time or another," by lapses in the program.
Write to Alan Zibel at firstname.lastname@example.org and Leslie
Scism at email@example.com
York Times Editorial Page
Ticks to the Slaughter
The mild winter is promising to bring a bad summer for disease-causing
parasites like the deer tick, which causes Lyme disease, a danger throughout
the Northeast. A three-year experiment in tick control in two areas of Long
Island — Shelter Island and western portions of Fire Island — has shown
Researchers from Cornell University installed and monitored dozens of
“four-poster” feeding stations, which lure deer to a bin baited with corn and
rigged with rollers soaked with a tick-killing pesticide, permethrin. When a
deer rubs against the rollers, ticks die by the thousands. One station can
treat all the deer in about 100 acres.
New York had banned four-poster devices because feeding wild deer makes them
congregate, which increases the risk of spreading chronic wasting disease. The
Department of Environmental Conservation approved the experiment for these
confined areas, where Lyme infections were severe and chronic wasting disease
The experiment was a departure for the cautious conservation department, and it
faced resistance from hunters who didn’t like the idea of permethrin in their
venison. But, under pressure from Shelter Island residents, the project was
approved. Hunters were assured that the pesticide, commonly used in shampoos
for head lice, showed up only on the skin and hair of affected deer, not in
The results were excellent: Tick populations were reduced by more than 90
percent, according to the study’s report issued last year. Scientists are
cautious about predicting a comparable drop in Lyme disease because so many
factors are involved in its spread. But the experiment, which ended last year,
seems well worth continuing and expanding to other parts of Long Island.