Despite representing a coastal area, Campaign for Liberty Chairman Ron Paul opposed federal flood insurance programs throughout his congressional career. Congressman Paul’s opposition was based on the fact that the programs where unconstitutional, and encouraged individuals to make unwise decisions by building homes in areas where they were likely to suffer flood damage. Since the insurance rates are well-below what would be charged in a free-market, and since some of the houses covered are second or vacations homes, the flood program also functions as a form of welfare for the well-to-do.
While supposed to be self-sustaining, the high number of claims that the programs have had to pay out in the last decade has led Congress to appropriate 24 billion dollars to pay for flood damages. Concerns about the programs exploding costs viability thus lead Congress to pass some reforms limiting taxpayer-liability for properties that experienced repeated damages, as well as properties that served as vacations or second homes.
The bill also required the Federal Emergency Management Agency (FEMA) to draw new flood maps to make sure rates in certain counties actually reflected the risk of a disaster. Since the bill passed, many local officials, property owners, and real estate professional have complained that FEMA has been conducting the remapping in an ineffective, incompetent, and heavy-handed manner (in other words the way FEMA does everything).
This has been used to justify efforts to overturn most of the pro-taxpayer reforms passed in 2011. So this week Congress will vote on legislation (HR 3370). overturning many of these reforms For example, the bill repeals the reforms requiring that one a house it should, the new owners pay "actuarial" rates instead of the artificially low rates traditionally charged by the program. This is still a long way from a market but at least it was a step toward ending protecting taxpayers. The new bill also repeals the 20011 law's provision that aimed to ensure that taxpayers are into forced to subsidize on vacation homes built in flood plans. You can call your representative here and ask they stand for the taxpayer by opposing HR 3370.