Are we drowning in flood insurance?

In 1996, hundreds of Rita and Dave Hogan's Holstein cows floated and bellowed in the chocolate-brown flood waters of Tillamook, Ore.

"It was so devastating ... because the water came and didn't go away," says Mrs. Hogan, still with a twinge of loss in her voice. "It was in our house and in our barn for five days."

With the cattle needing to be milked, volunteer firemen swam out in wet suits to rescue the not-so-buoyant bovines. In the end, 200 cows died, and the rest were scattered to 11 local farms.

Flood waters routinely saturate this dairy town, known for its cheddar cheese. And its happening across America with startling regularly, as people crowd flood plains and pave over wetlands.

Only about one-quarter of the 11 million households in flood plains around the country are covered by flood insurance. And, usually, less than 30 percent of the properties in flood plains are covered by federally sponsored flood-insurance policies.

But those properties soak up billions. In fiscal 1999, more than $750 million in loss and loss adjustment (a large percentage of this came from hurricane Floyd) was paid out nationally, compared with $533.8 million in claims paid in 1989.

The findings are nothing new to officials. James Witt, director of the Federal Emergency Management Agency (FEMA), acknowledges the crisis.

"We have so much repetitive flood loss out there," Mr. Witt says. "We need to spend more in prevention than recovery."

The Hogans' situation mirrors that of thousands of families: As waters drench towns, the government continues to gush funds for flood insurance. Reoccurring flood damage is draining the government of millions of dollars.

The stubborn irony about the damage caused to people living in flood plains, say both federal disaster officials and environmentalists, is that it is caused by people continuing to build in these naturally at risk areas.

The Federal Flood Insurance Program, intended to provide a safety net to flood-prone areas, is now relied upon to routinely rebuild and repair thousands of structures across the US each year.

While no one agency tracks total flood damages, the Hydrologic Information Center in Silver Spring, Md., estimates that floods caused $8.73 billion worth of damage in 1997.

"I don't really believe there is an increased frequency in flooding," says Frank Richards, head of the Hydrologic Information Center.

Mr. Richards says the news media are making the events more immediate and giving them more exhaustive coverage - something that burns the disasters into public consciousness.

According to a report by the National Wildlife Federation, between August 1995 and January 1998, the National Flood Insurance Program (NFIP) had a net borrowing from the US Treasury of $810 million. The report focused on flood loss and voluntary property buyouts. The report also showed that the NFIP was not enforcing its requirements. For example, when properties are substantially damaged (when damage in a single event exceeds 50 percent of the property's value), it must be elevated or removed from the flood plain. Many such homes and businesses remained as they were.

The numbers are staggering and point to how difficult it is to monitor properties when disaster strikes. According to the report:

*A property in Canton, Miss., valued at $49,300, has experienced 25 losses over 18 years (on average, one loss every eight months) for a total of $161,279 paid in claims.

*The most costly single-family property is located in Houston. Valued at $114,480, the house experienced 16 losses between 1989 and 1995 and received insurance payouts totaling $806,590. The building's value has been paid for seven times over with flood insurance claims.

Under the National Flood Insurance Program, about 3.8 million insurance policies are in effect, insuring $431 billion in property.

But FEMA estimates that the number of new "repetitive loss" properties has been increasing by an average of more than 1,500 a year. FEMA estimates between 9 million and 11 million homes are at risk from a 100-year flood, and 2 million homes are at risk from coastal storm surges.

"The physical relationship between rainfall and flooding is not cause and effect," Richards says. "If you look over a century, [the intense flooding of recent decades] is not really that strange."

"When we build a levee or build a dam, people move in behind the structure. People want an iron-clad guarantee [and say,] 'Why didn't it protect me?' "

Indeed, structural improvements work. They have prevented $200 billion in flood damage. Yet these have also cost the government billions in insurance claims as water is diverted to other areas.

The patch-as-we-go attitude, however, is losing favor with residents and, more importantly, fund administrators.

For example, Hull, Mass., is a crooked arm that juts out into Boston Harbor on one side and Massachusetts Bay on the other. Despite extensive seawalls, it gets battered yearly by nor'easters. There are about 1,892 flood insurance policies in effect. Fire Chief James Russo, a lifelong resident, has seen his share of nor'easters batter and mangle houses. He's also seen people milk the system.

"In the early '80s, the fraud was unbelievable," Mr. Russo says. Years ago, people would take old appliances into the basement and let them drown in flood waters, he says. Pictures were taken, claims filed, then, "They lined up, submitted paperwork, and the government wrote them a check." The next year, they did the same thing with the same appliances, Russo says, soaking television sets year after year, and getting paid for it.

Flooding not only can prompt fraud, it also splits communities.

Just ask Steve Wehrle, mayor of Rhineland, Mo. After Mother Nature turned on the faucet in July 1993, his town on the banks of the Missouri was moved to 52 acres of cow pasture. The federal and state government financed the project with $5 million in assistance. But some refused to go, splitting the once homey town into two.

"We were a lot closer [to one another]," Mr. Wehrle says. "[It was] a place where everyone gathered."

Many of the businesses are still in the original part of the town and the residences are on the hill. Thirty-two homes were moved and seven new ones built.

$25 billion

Rhineland's move, one of three communities relocated in 1993, prompted FEMA to start Project Impact, a program that invests in disaster damage reduction. In the past 10 years, FEMA has spent $25 billion to help people repair and rebuild their communities after natural disasters. Other programs, such as the federal Hazard Mitigation Grant Program, provides grants to states and local governments to help prevent loss of life and property.

And FEMA says buying back flood-prone property works well.

Prompted by the deluge in the Midwest, FEMA has made about 17,000 voluntary property buyouts in 36 states and one territory.

But many Americans bought property in a flood zone before the area was mapped and can't move.

"A lot of these folks have no choice," says Mark Stevens a public affairs officer for the FEMA flood insurance program. "People don't have the wherewithal to pick up and relocate to a different spot."

More telling, perhaps, is the inherent desire - buried deep in the American psyche - to live by water.

"There is something about us as a [nation]," Richards says. "We have this affinity with water."

(c) Copyright 2000. The Christian Science Publishing Society

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