The damage done by Hurricane Milton is tragic. But federal flood insurance programs make the tragedy and the losses much worse.

The National Flood Insurance Program (NFIP), which currently has underwritten more than 5 million policies, was created as a temporary fix in 1968. It has never been seriously reformed. It now issues 95% of all flood policies, and is $20 billion in debt (and those losses are likely to double). The subsidies encourage people to live and build in flood-prone areas where their lives and property are at greater risk because the insurance isn’t properly risk-adjusted.

The main beneficiaries are well-off homeowners in flood-prone coastal areas, many of whom have second vacation homes.

Kentucky Senator Rand Paul tried last year to exclude second homes from the federal flood insurance coverage. He pointed out that “one house in Virginia, they’ve rebuilt the house 41 times,” but he was shot down. Paul says the number of homes that keep getting rebuilt is skyrocketing. “Severe repetitive loss properties”, which describe buildings that have received at least four flood insurance payouts of $20,000 or more numbered 40,000 in 2022, up from just 10,000 in 2000.

Homeowners and lenders in some areas are caught in a cycle of getting flooded out, rebuilding, and moving back in only to get flooded out again.

Get rid of the program or require premiums that cover the cost of the insurance, which will discourage building in flood-prone areas.