New Farm Subsidies Would Set Back Flood Insurance Reform

February 16, 2012

WASHINGTON, DC, FEBRUARY 16 -- New legislation introduced by Rep. John Garamendi (D-CA) proposes subsidized premium rates from the National Flood Insurance Program for farmers whose properties are at-risk due to aging and substandard levee structures.

Under the bill, the Flood Insurance for Farmers Act, coverage of agricultural structures in floodplains where levee systems recently have been downgraded by the Federal Emergency Management Agency would be charged rates that reflect only “a low or moderate risk of flooding.” The bill also would prohibit FEMA from requiring flood-proofing or flood damage mitigation for new or existing agricultural structures in such zones.

The following statement from R.J. Lehmann, deputy director of the Center on Finance, Insurance, and Real Estate at The Heartland Institute – a free-market think tank – may be used for attribution. For more comments, refer to the contact information below. To book Lehmann on your program, please contact Tammy Nash at tnash@heartland.org and 312/377-4000. After regular business hours, contact Jim Lakely at jlakely@heartland.org and 312/731-9364.


“Rep. Garamendi’s bill does no favor for farmers by encouraging them to continue to live, work, and build on properties at risk of catastrophic flooding. It does no favor for local communities by reducing their incentives to repair and upgrade levee systems found to be substandard. And it certainly does no favor for taxpayers, who already must shoulder the NFIP’s more than $18 billion in debt, by forcing them to subsidize risks that are both foreseeable and avoidable.

“The U.S. House of Representatives already has recognized the problems that subsidized federal flood insurance pose by passing overwhelmingly legislation that would phase out existing subsidies for second homes, commercial properties, and properties subject to repetitive losses. A bipartisan group of 41 senators, backed by a coalition of business, taxpayer, and environmental groups, also has come together to urge Senate leadership immediately schedule a floor vote on similar legislation.

“It is particularly disappointing that Rep. Garamendi, a former insurance commissioner of the nation’s largest state, would abandon the principles of sound risk management with a proposal to introduce new destructive subsidies to the NFIP, which has been targeted by the Government Accountability Office as a high-risk federal program.”

R.J. Lehmann
Deputy Director, Center on Finance, Insurance, and Real Estate
The Heartland Institute
rlehmann@heartland.org
202/525-5726


The Heartland Institute is a 28-year-old national nonprofit organization with offices in Chicago, Illinois and Washington, DC. Its mission is to discover, develop, and promote free-market solutions to social and economic problems. For more information, visit our Web site or call 312/377-4000.