Sales of flood insurance up sharply

Sales of federal flood insurance rose sharply last year. From November 2005 to November of last year, the number of federal policies jumped more than 13 percent, far more than normal.

Sales in coastal and other vulnerable areas spiked dramatically. In Mississippi, sales jumped 61 percent, for example.

The Federal Emergency Management Agency said the strong increases were in northeastern and western states as well. Idaho had a 24 percent increase, and Rhode Island 21 percent.

“I would have to believe that very few people think their regular insurance program covers flood. You’d have to be living under a rock to still think that,” said Ted Kinney, of the Alabama Independent Agents Association. “People in the past … thought that the government would come in and bail them out, and now they’re realizing that the government won’t do that.”

The numbers are a welcome trend for the federal government, which has struggled to gain more participation in the National Flood Insurance Program. The increase of 700,000 new policies will help spread the program’s costs around the country and leave more people protected instead of scrambling for taxpayer relief in the aftermath, officials said.

It also will provide a badly needed injection of cash. The program was self-financed for decades until the storms of 2005 wrecked its finances. It expects to be about $20 billion in debt to the Treasury once all claims are paid. It takes in $2 billion a year in premiums, but more than a third of that goes to pay debt.

The recent surge in policy purchases put the program over $1 trillion in liability, with some 5.4 million policies. Along with Katrina, regional flooding in the northeast and elsewhere last year probably contributed to the spike, said a FEMA spokesman.

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