Hurricane Harvey and the Failure of the National Flood Insurance Program

Houston's most recent natural disaster is only the latest example of how a program created to help homeowners has been a greater benefit to the industries that profit from them.

2 minute read

December 15, 2017, 9:00 AM PST

By Katharine Jose


Flood Damaged Suburb

Hurricane Harvey's destruction is evident in the suburb of Riverstone, located in Fort Bend County, Texas. | michelmond / Shutterstock

An exhaustive piece by the Houston Chronicle that is both study of, and investigation into, the National Flood Insurance Program, begins with the statement that it is a failure.

 “The impact of Congress' failure is undisputed. The National Flood Insurance Program was supposed to discourage development in flood-prone areas, but new development has spread across flood plains, including thousands of homes in the Houston area that flooded during Hurricane Harvey.”

It’s hard to disagree, when an earlier installment of the Chronicle’s enterprise series noted that a development for 900 new houses in an area that flooded during Harvey nearly slipped through the City Council unopposed only two months after the hurricane.

The National Flood Insurance Program has existed since 1968, but even as it was being designed lawmakers recognized the risk.

“In 1966, a task force commissioned by President Lyndon B. Johnson recommended that the government offer below-market rates to entice property owners to enroll in the program. But it warned that such an approach presented dangers if low insurance costs were allowed to become incentives for building in flood-prone area.”

Those below-market premiums have meant that the program cannot pay for itself. It has required taxpayer bailouts 16 times in 25 years, according to the Chronicle, and is $20 billion in debt—and that’s before it pays out another $10 billion in claims from Hurricane Harvey.

Legislation that would raise insurance premiums has generally been thwarted, often by lawmakers whose constituents benefit from booming real estate markets, or often who have received significant donations from industries related to building and real estate; last year the National Association of Realtors spent, just on lobbying Congress, four times more money then Exxon-Mobile.

Meanwhile, by financing rebuilding, repeated claims on the same homes under the flood insurance program have at times added up to many times the value of the property.

And ultimately, low premiums on flood insurance are a detriment to homeowners.

“Those subsidies have helped lure generations of homeowners into properties that trap them in a cycle of building, flooding and rebuilding. Henry Thompson and his wife, for example, bought their home not far from Cypress Creek three years ago. They knew the neighborhood northwest of Houston flooded, but the cost of flood insurance was so low — about $400 a year — they bought anyway.

Then Harvey swept 2 feet of water under their threshold, forcing them to live on the second floor for the past three months with a microwave, an electric skillet and two young children. They want to sell, but can't imagine they'll find a buyer, leaving them with little choice but to cash the insurance check, rebuild and wait for the waters to rise again.”

Saturday, December 9, 2017 in Houston Chroncle

portrait of professional woman

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching. Mary G., Urban Planner

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching.

Mary G., Urban Planner

Cover CM Credits, Earn Certificates, Push Your Career Forward

Aerial view of town of Wailuku in Maui, Hawaii with mountains in background against cloudy sunset sky.

Maui's Vacation Rental Debate Turns Ugly

Verbal attacks, misinformation campaigns and fistfights plague a high-stakes debate to convert thousands of vacation rentals into long-term housing.

July 1, 2025 - Honolulu Civil Beat

Logo for Planetizen Federal Action Tracker with black and white image of U.S. Capitol with water ripple overlay.

Planetizen Federal Action Tracker

A weekly monitor of how Trump’s orders and actions are impacting planners and planning in America.

July 2, 2025 - Diana Ionescu

White and purple sign for Slow Street in San Francisco, California with people crossing crosswalk.

San Francisco Suspends Traffic Calming Amidst Record Deaths

Citing “a challenging fiscal landscape,” the city will cease the program on the heels of 42 traffic deaths, including 24 pedestrians.

July 1, 2025 - KQED

"Altadena - Not For Sale" yard sign in front of burned down house after Eaton Fire in Altadena, California in January 2025.

Half of Post-Fire Altadena Home Sales Were to Corporations

Large investors are quietly buying up dozens of properties in Altadena, California, where a devastating wildfire destroyed more than 6,000 homes in January.

July 7 - Dwell

Dense multistory residential buildings in hilly San Francisco, California.

Opinion: What San Francisco’s Proposed ‘Family Zoning’ Could Really Mean

Mayor Lurie is using ‘family zoning’ to encourage denser development and upzoning — but could the concept actually foster community and more human-scale public spaces?

July 7 - The San Francisco Standard

Blue self-driving Ford Transit van shuttle in Jacksonville, Florida.

Jacksonville Launches First Autonomous Transit Shuttle in US

A fleet of 14 fully autonomous vehicles will serve a 3.5-mile downtown Jacksonville route with 12 stops.

July 7 - Smart Cities Dive

Urban Design for Planners 1: Software Tools

This six-course series explores essential urban design concepts using open source software and equips planners with the tools they need to participate fully in the urban design process.

Planning for Universal Design

Learn the tools for implementing Universal Design in planning regulations.

Associate/Senior Planner

Gallatin County Department of Planning & Community Development

Senior Planner

Heyer Gruel & Associates PA