The catastrophic losses that the National Flood Insurance Program (NFIP) faces in the wake of this year’s hurricane season prove that it is time for Congress to fix the program once and for all. The solution is to take steps to make NFIP actuarially sound. Such changes may not be popular among those who live in flood plains or along the coast, but they are the only responsible way to shore up the program and protect taxpayers.

According to David Maurstad, Acting Insurance Administrator for the Federal Emergency Management Agency (FEMA), claims due to Katrina and Rita could exceed $22 billion, or about one-and-a-half times the $15 billion NFIP paid out in claims between its creation in 1968 through 2004. Maurstad’s estimate amounts to more than 11 times the almost $2 billion NFIP paid for flood insurance claims stemming from the hurricanes that hit Florida and other areas in 2004.

So far, Congress’ reaction to these losses has rightly focused on ensuring that the program has the money to pay claims against it. In September, NFIP’s authority to borrow from the Treasury was raised from $1.5 billion to $3.5 billion. November saw a further increase to $18.5 billion, and additional increases are likely. In theory, NFIP will repay this money from its premium income, but these loans are so large that the program probably will not even be able to afford interest charges unless its premium income is greatly increased. Realistically, the only way to get these loans off of NFIP’s books will be for Congress eventually to forgive them.

Unfortunately, the demands on NFIP are not likely to decline. While losses from a single storm like Hurricane Katrina may be exceptional, scientists expect hurricane activity to build in coming years. As millions of Americans continue to relocate to flood-prone areas and property values in those areas continue to rise, NFIP will face much higher annual claims then it has in the past. While Congress has not yet passed any increase in flood insurance coverage, it is likely to do so. Such an increase would reflect rising property values, but premium income on the increased insurance will probably not cover the higher losses.