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Shane Johnson

A majority of Texans don't have flood insurance. That could be a problem for the government.

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As Hurricane Harvey continues to wreak havoc on communities in Texas, many home and business owners are wondering how to re-instill a sense of normalcy in their lives.

Rebuilding that sense of normalcy, however, could cost the government millions of dollars.

"I can't believe this is happening," said Rockport, Texas resident Ruben Sazon. "I have no apartment. My apartment was decimated. I have no studio, so now I gotta find a place to go, to put my artwork."

Sazon's story is not unique. He's joined by the some 13 million disaster relief victims who also are unsure how to move forward.

Those with flood insurance are likely to begin filing claims either through private insurers or through a federally-backed program known as the National Flood Insurance Program (NFIP). Those who opted for insurance coverage through the government are likely to place additional financial strain on a system that has been burdened following two costly storms: Hurricane Katrina and Superstorm Sandy. Those disasters alone left the federal program roughly $25 billion in debt to the Treasury Department.

That $25 billion puts the NFIP, which is administered through FEMA, close to its debt ceiling of $30 billion.

"It's possible that an event as catastrophic as Hurricane Harvey could send the program to the point where it's hitting that limit in terms of debt. Congress is set to reauthorize the National Flood Insurance Program this September, and Hurricane Harvey may light the fire to make some reforms that will put the program on a financially solvent path."
Laura Lightbody, project director at The Pew Charitable Trusts

The government's troubles are unlikely to end with the NFIP, however. According to Insurance Council of Texas, a stunning 80 percent of Texans don't own flood insurance. That means the majority of disaster victims will look to federal agencies, like FEMA, for additional relief. Through FEMA's Individuals and Households Program (IHP), disaster victims who don't have insurance could file to receive up to $33,000 for home repair. They'll also be able to apply for low-interest loans from the Small Business Administration (SBA).

FEMA grants and SBA loans aren't exactly long-term solutions. An individual affected by a natural disaster generally only receives FEMA grants for about one or two months, though assistance can be provided for a maximum period of 18 months unless extended by the president.

Though the Hurricane Harvey's aftermath continues to affect communities in Texas, as well as some in neighboring Louisiana, FEMA officials said on Monday that they're anticipating more than 450,000 disaster relief claims. Similar to the NFIP, these claims could tax an agency that's seen continued budget cuts throughout the years.

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But the Trump administration disagrees. Following the White House's proposed for the 2018 fiscal year, then Department of Homeland Security Secretary John Kelly defended the administration's decision to cut billions of dollars to FEMA.

"We are ready to assist any state, any catastrophe, certainly in the case of Florida, hurricanes," he said. "So we're ready to go with it. FEMA is ready, leaning forward."

Though FEMA's ultimate financial fate will be determined by congressional leaders at the end of September, FEMA administrator Brock Long cautioned residents to expect a new sense of normal in Texas for years to come.

"FEMA is going to be there for years," Long said. "This disaster recovery is going to be a landmark event.

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