INSURANCE COMPANIES AREN'T FLOODING IDIOTS; IT'S UNCLE SAM

Rivers like the Missouri and Mississippi tend to flood sometimes massively. They've been doing it since the Big Bang. Although the Great Flood of `93 has been described as "historic," it is an even money bet that within the next 20 years some other huge flood will take place approximating the `93 model in acres submerged, houses and businesses destroyed and infrastructure damaged. Despite the risk of inundation, population centers developed along the Missouri and Mississippi because of the economic vitality generated by river access. The risk of disaster was outweighed by the commercial benefits of geography.

In the 20th century, the federal government felt it could tame the rampaging waters. The Army Corps of Engineers would build a brand-spanking new levee just about anywhere, and on tantalizingly attractive terms: Uncle Sam pays 75 percent; local folks put up 25 percent. The price was right. Places up and down the river, including St. Louis, put up new flood barriers. This meant, of course, that other lowland areas unprotected by levees would be submerged even deeper than before. You can try to repel water, but you can't repeal it.

As expanded development took place in flood plains, thought was given to insuring homeowners and businesses against the inevitable disasters. A tornado or a hurricane can unpredictably hit in lots of places. A flood predictably occurs only one place in a flood plain. You know that when you build or buy there.

Insurance companies aren't fools. Since flooding constitutes 70 to 90 percent of all disaster losses in the United States, nearly every property-and-casualty policy contains an exclusion for flood damage. As one casualty insurance expert puts it, "Only an idiot would insure against floods along much of the Missouri and Mississippi Rivers."

Up steps the idiot. The federal government decided that it would get into the business of subsidizing flood insurance for those addicted to building and living in flood plains. But even with government subsidies, the premium is high. Thus, 85 percent of the people and businesses decided not to insure, confident that generous old Uncle Sam would bail 'em out again as he had done in the past.

Some of our staunch fiscal conservatives in Congress are now advocating that the government should simply pretend that homeowners and businesses had filed for and obtained federal flood insurance in a timely way a brand new way of depleting the federal treasury.

A lovely old lady in her 80s was on television a few days ago. She said, "This is the third time I've been flooded out. The federal people helped me rebuild right here the first two times. This time I'm going to let them build me a new place on high ground." That's nice. Three floods per homeowner ought to be a limit with which we all can live even Uncle Sap.