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National Flood Insurance Program deeply in debtPosted On Fri, June 18, 2010
One possible reason for the Senate's continuing refusal to renew funding for the National Flood Insurance Program, which lapsed earlier this month, is that the program is operating under a deep debt.
The program was able to support itself through premiums and fees ever since it was established in 1968, but the payouts required by Hurricanes Katrina and Rita in 2005 has sunk the program beneath billions in deficits, according to a FOX News report. Thanks to the deluge of claims resulting from the two massive storms, the program is $19 billion in debt.
The problem, the report said, is that the program can no longer bring in enough premiums to cover its costs, particularly due to the fact that the program charges below-market rates for its flood insurance.
Another problem is that 40 percent of the claims the program processes are from areas that repeatedly flood, and homes that are repeatedly lost and rebuilt, despite only 1 percent being considered "repetitive loss properties," the FOX report said.
A report from the Insurance Journal revealed that the most recent proposal to renew the NFIP, among other programs, was voted down because Democrats lacked the necessary votes to get a supermajority.
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