Posted by R. Neal

The debate raises several difficult questions:

WASHINGTON - Property owners would face higher flood insurance premiums and more of them would have to have the coverage under proposals a congressional committee discussed Wednesday to reform the bankrupt National Flood Insurance Program.

The chairman of the Senate banking committee also said the debt - more than $23 billion - the flood insurance program is expected to rack up because of Hurricane Katrina may never be paid back to the U.S. Treasury, making it a taxpayer bailout.

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The debate is likely to involve arguments over whether higher insurance premiums would sting wealthy owners of beach homes who have not been paying their fair share for flood coverage, and whether higher premiums would be a further burden on working families who live full time in flood-prone areas and can't afford to pay more.

"Should we as public policymakers look at the people who are least likely and able to buy something because of their economic situation, as opposed to some of the very wealthy that have second or third homes and they're getting a ride, so to speak?" Shelby said. "A lot of people are probably getting a free ride.

"Should we continue to subsidize building in hurricane-, flood-prone areas? Should the taxpayers pay for that? That's one of the policy questions we'll have to answer here."

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Historically, the flood insurance program has paid back its loans with interest. Since Katrina, however, Congress has increased its borrowing authority to $18.5 billion and a top Federal Emergency Management Agency official said he expects that money to run out by Feb. 10.

The article looks at other issues regarding flood insurance, and some of the proposals for reform. This is a good example of yet another policy that Katrina has forced government to evaluate.