Jeff Brandes: The paradox of safety — how cheap flood insurance drives us closer to danger

Imagine, for a moment, standing on the pristine shores of Florida’s Gulf Coast, where the sand meets the endless blue of the ocean. It’s a vision of paradise, the kind of place where you’d dream of building a home.

Yet that dream has a dark side.

The very thing that draws us to these picturesque coastal areas — proximity to the water — also makes them perilous. Hurricanes like Helene and Milton can upend life in an instant, leaving devastation in their wake.

But here’s the paradox: despite these well-known risks, people continue to build homes right along the coastline. Why?

The answer lies in a surprising culprit: cheap, federally subsidized flood insurance. While intended as a safety net, this program has inadvertently driven more people to build in harm’s way, amplifying both the human and financial costs of natural disasters.

To understand how we got here, we need to explore the unintended consequences of what seems, at first glance, like a reasonable policy.

The good intentions trap

Federal flood insurance, created through the National Flood Insurance Program (NFIP) in 1968, was designed to provide affordable coverage to homeowners in high-risk areas. Private insurers had long since abandoned the flood insurance market because the payouts were too unpredictable, and after particularly catastrophic floods in the 1960s, the federal government stepped in.

The idea was simple: make insurance available where the private market wouldn’t. Homeowners would be protected, and communities would be encouraged to adopt better floodplain management practices. Theoretically, it was a win-win — a safety net for individuals and a nudge toward smarter development policies.

But in reality, the availability of cheap, subsidized insurance had an entirely different effect.

It encouraged people to live closer to the very hazards the program was meant to protect them from. When insurance becomes a political issue and politicians focus more on affordability than on accurately reflecting risk, the true dangers are masked. As a result, people behave as if those risks don’t exist at all.

The end result? More homes are built in vulnerable flood zones, and disaster recovery costs spiral out of control.

The problem with the “American Dream”

There’s something quintessentially American about the dream of owning a home by the water. It’s a symbol of success, a testament to our ability to tame nature and carve out our little piece of paradise. But in pursuing that dream, we’ve overlooked a critical truth: nature is untamable, and the coastlines are shifting landscapes of risk.

The federal government’s well-meaning efforts to democratize the American Dream have unwittingly created a scenario where the dream comes with a hidden cost — a cost that grows with every hurricane season. As the climate changes and storms become more intense, the mismatch between the real risk of living on the coast and the perceived risk created by cheap flood insurance becomes more pronounced.

What’s worse, the costs of rebuilding — paid by federal disaster relief programs and federally paid insurance claims — are borne by all taxpayers, not just those who choose to live near the coast.

In essence, we’ve socialized the risk while privatizing the reward, encouraging a pattern of behavior that is both unsustainable and dangerous.

The cycle of rebuilding

Here’s where the paradox deepens.

After each major flood or hurricane, the same homes in high-risk areas are rebuilt, often with the help of federal disaster aid or insurance payouts. These are known as repetitive loss properties — homes that have been flooded and repaired multiple times, only to be repeatedly put back in the path of destruction.

Why does this happen? Because the availability of cheap insurance removes the financial incentive for homeowners to move, redevelop to higher standards, or rebuild elsewhere. They have no reason to believe that the next flood will be the one that forces them to relocate.

The system has made it easier to stay put and rebuild in place, perpetuating a cycle that grows more expensive with each passing year.

And so, the coastline becomes ever more crowded as new developments spring up and older homes are repaired, all while the risk of catastrophic flooding continues to rise.

Breaking the cycle

If we’re serious about reducing the human and financial toll of flooding, we need to rethink our approach to federal flood insurance. One solution could be to gradually phase out subsidies in the highest-risk areas, allowing insurance premiums to reflect the real cost of living in flood-prone zones.

This would force homeowners and developers to make more calculated decisions about where to build and live or how to mitigate the flood risk.

But this is only part of the solution.

We also need to change the incentives for building in coastal areas by ensuring that development meets new, higher standards for resilience. The key is using market-based solutions that promote smarter, denser development while reducing the risk of flood damage.

For instance, we can allow lot splits, upzoning, and Accessory Dwelling Units (ADUs) in less risky areas to increase density and affordability while also preventing further sprawl into the most dangerous flood zones.

By providing these options, we can encourage people to live in coastal areas, build elevated, fortified homes, and be more resilient to storm surges and flooding. These zoning changes create opportunities for smarter growth without increasing the development footprint in high-risk areas.

It’s not about stopping coastal living; it’s about making it safer and more sustainable.

Living by the coast may seem like a dream, but when the price of paradise is disaster on repeat, maybe it’s time to wake up.

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Former State Sen. Jeff Brandes serves as president of the Florida Policy Project.