The National Flood Insurance Program doesn’t have enough money to continue functioning, according to a Government Accountability Office report, and the program is flawed by design and would have gone broke even if not for Hurricanes Katrina and Rita.

Private insurers in the U.S. do not provide insurance against floods, and this coverage is only available through NFIP, a government program run by the Federal Emergency Management Agency, now a part of the Department of Homeland Security.

The NFIP has historically charged flood insurance premiums which are far below the actual risk premium for the area, causing it to pay out much more in claims than it takes in in premiums, the GAO report said.

The NFIP, by design, is not actuarially sound. The program does not collect sufficient premium income to build reserves to meet long-term future expected flood losses. In November 2005, FEMA’s authority to borrow from the Treasury was increased from $1.5 billion to $18.5 billion through fiscal year 2008 to help pay claims from the 2005 hurricane season. It is highly unlikely that the NFIP as presently funded could generate sufficient revenues to repay a debt of this size.

One reason the NFIP is not actuarially sound is because a number of its policies on dwellings that were built before flood plain management regulations were established in their communities are subsidized and pay premiums of 35-40 percent of the true risk premium. In January 2006, FEMA estimated an annual shortfall in premium income of $750 million because of such policy subsidies. Some subsidized properties, called repetitive loss properties, also suffer repetitive flood losses, which accounted for about $4.6 billion in claims payments from 1978 to March 2004. — Challenges for the National Flood Insurance Program (PDF)

So, in response to this, David I. Maurstad, the NFIP program administrator, asked Congress Wednesday for more money, according to the New York Times.

The program expects to borrow $23 billion from the Treasury to pay claims from Hurricanes Katrina, Rita and Wilma. In written testimony to a Senate committee, David I. Maurstad, the administrator, said the program would reach its debt limit by mid-February and require another infusion of up to $5.6 billion. — New York Times

The solution, of course, according to these fools, is to prop up the program with more taxpayer money, and the proposed “reforms” aren’t nearly enough to fix the program.