WASHINGTON — Capitol Hill lawmakers are weighing a financial rescue for people along the Missouri River whose flood insurance policies, though valid, were essentially voided by FEMA.
What's unclear is how much such a rescue could end up costing federal taxpayers.
The problem arose after the Federal Emergency Management Agency determined last month that the ongoing Missouri River flooding started June 1 and has been a "flood in progress" from that date forward.
Generally, that means a flood insurance policy had to be in effect before that date for the policyholder to collect on any damage. Because flood insurance policies require a 30-day waiting period, they had to be purchased by the beginning of May for policyholders to collect.
The proposal before Congress would remove the "flood-in-progress" rule but keep the 30-day waiting period. That means that a person who bought a policy after May 1 would be able to collect on it, as long as the damage occurred after the 30-day wait.
Rep. Lee Terry, R-Neb., sponsored the proposal in the House of Representatives, where it was adopted along with a slew of amendments to a bill reauthorizing the federal flood insurance program. That legislation was then approved overwhelmingly.
On the Senate side, Sen. Mike Johanns, R-Neb., has introduced legislation that mirrors Terry's proposal. Sen. Chuck Grassley, R-Iowa, is a co-sponsor, and Sen. Ben Nelson, D-Neb., said he was studying it.
It is unclear how many people the proposal would affect, but if the plan is approved and those people's property is damaged, additional money will flow out of the already bleeding National Flood Insurance Program. That program is $18 billion in the red and in need of a government bailout.
The program's debt comes largely from massive losses associated with 2005's Hurricane Katrina, but also because Congress has pushed the agency to keep flood insurance premiums low.
Still, Terry said, the program should be able to handle his proposed change and pointed to $1 billion for Missouri River flood relief set aside in a spending bill already approved by the House.
Terry said it's a matter of fairness to people who bought policies in good faith and who thought they would be covered.
"Obviously, if you deny everybody that's buying flood insurance any right to receive compensation for damages, you're going to save money," he said.
But Steve Ellis, spokesman for Taxpayers for Common Sense, objected to what he described as bailing out people who bought flood insurance too late.
"I'm not unsympathetic to people being flooded," Ellis said. "It's a tragedy and it's incredibly difficult on people, but, to some extent, the way this policy is written encourages people to play the game of chicken with the flood."
Ellis said that the issue is personal responsibility and that those at risk of flooding should purchase and keep flood insurance over the long haul, year after year. Instead, many try to game the system by going without until a disaster seems imminent, he said.
"That certainly makes a lot of other people who are in the program and are paying their premiums year-to-year feel like suckers," Ellis said.
Council Bluffs resident Christy Wilcoxen said she was just playing by the rules when she obtained flood insurance for her Bluffs home on June 6. She said her house has never had water in the basement. There has never even been standing water in the yard or in the neighborhood.
But with the scale of the predicted flooding, she wanted to be safe and figured that she would be covered 30 days after she bought the policy. She described FEMA's flood-in-progress ruling as "unethical" and said she hopes the proposal passes the Senate and is signed into law.
Several senators from states along the Missouri River said after a meeting last week to discuss the flooding that they support the proposal.
Sen. Pat Roberts, R-Kan., told The World-Herald that all 14 members of the Missouri River Working Group would probably sign off on the plan.
Roberts said he had gotten an earful about the flood-in-progress rule while touring affected areas with Kansas Gov. Sam Brownback. "Gov. Brownback and I heard about that more than once, I can assure you," Roberts said.
Johanns downplayed the change's potential price tag, saying that people still have to pay premiums to get the insurance and then wait the 30 days before a policy goes into effect.
"That's going to prevent people from gaming the system," Johanns said. "You're not going to be able to wait until the floodwaters are lapping at the front doorstep. You would not get covered."
He also invoked the idea of fairness.
"What this bill basically says is, 'Look, let's treat people fairly here,'" he said. "If they've bought the flood insurance and they've waited the 30 days and they didn't have any damage during that time and they get hit by flooding at 40 days, they should be reimbursed."
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