http://www.al.com/news/press-register/metro.ssf?/base/news/124272451749570.xml&coll=3

WASHINGTON — Across the country, federal flood insurance policyholders ponied up more than $3 billion in premiums to protect their homes and businesses in the last fiscal year. Less than half of that money was set aside to pay claims for actual flood losses, according to government figures.

Instead, the Federal Emergency Management Agency spent almost $1.5 billion to cover overhead in two areas: interest on the program’s debt to the federal treasury, and compensation to the insurance companies that largely run the program day to day. Other costs included taxes and grants.

About $1.4 billion went for claims, reserves and adjustment expenses, according to figures supplied by FEMA at the Press-Register’s request.

Three and a half years after Hurricane Katrina swamped the program with claims, the numbers offer a snapshot of its continuing struggle to recover.

Created in 1968 because private insurers were reluctant to cover water damage, the initiative, formally known as the National Flood Insurance Program (NFIP) was generally self-supporting for much of its history. Now, it is considered effectively bankrupt.

As Hurricane Ike and other recent storms have spawned more losses, the program’s borrowing from the treasury has crossed the $19 billion mark. Last month, President Barack Obama’s administration urged Congress to forgive that debt or face the possibility that interest payments will eventually consume every dime in premium revenue.

So far, lawmakers have deadlocked on the specifics of a remedy. The flood program formally expired last fall, and Congress has since approved only a stopgap measure to keep it going through this September.

http://www.al.com/news/press-register/metro.ssf?/base/news/124272451749570.xml&coll=3

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