Lower Marsham · part 4 of 7
The American Letter
Lower Marsham, Episode Four. On Mrs Calloway’s cousin, the Congress of the United States, and a rehearsal that ran for fifty-eight years
Mrs Calloway of Church Lane has a cousin outside Baton Rouge, and the cousin sends things. Usually photographs of alarming food. Last month she sent a photograph of her flood insurance renewal notice, annotated in furious ballpoint, and Mrs Calloway brought it to the village book club, where it caused more discussion than the book.
The cousin’s premium had been redesigned by something called Risk Rating 2.0, the American programme’s latest attempt to charge people what their houses actually cost to insure. Her neighbours were petitioning their senator about it. Their senator, along with seven colleagues, was petitioning the government to abolish it. Mrs Calloway asked me, as the village’s resident bore on these matters, whether any of this had anything to do with us. The honest answer took an evening, and this essay is the transcript.
Britain’s flood scheme is often discussed as if it were a novel experiment whose ending nobody can know. It is nothing of the kind. The experiment has been run before, at continental scale, under laboratory conditions, by a country that documents its legislature more thoroughly than any in history. The United States built a National Flood Insurance Program in 1968, and its founding task force said precisely what Flood Re’s founding documents say: the subsidies were transitional. Existing homes would pay soft prices for a while; new construction would pay actuarial rates; the subsidised share would wither by attrition within roughly twenty-five years. Designed to be temporary, funded as if permanent, and it has outlived every promise made about it.
Fifty-eight years on, the audited results read as follows. The programme has borrowed $36.5 billion from the US Treasury since 2005 and still owes $22.5 billion. Its annual interest bill alone exceeds $280 million. Its own administrator, FEMA, records that it has never generated a profit in its existence. The subsidised share of policies did fall, from three-quarters to about 13 per cent, but it never reached zero, and it never will, for reasons the second half of this essay is about. Meanwhile the concentration at the top would make a Band H owner blush: 2.5 per cent of policies account for 48 per cent of claims by dollar value, and the country has accumulated more than a quarter of a million “repetitive loss” properties, rebuilt on the public dime and reflooded on schedule, of which over 44,000 hold the designation “severe.”
The programme did not merely fail to deter floodplain living. The peer-reviewed record shows it manufactured floodplain living. A 2024 study found that a community’s entry into the programme drove measurable migration toward higher-risk land. A county-level analysis of Allegheny County attributed 8.1 per cent of the housing in harm’s way to the insurance subsidy itself, and estimated that honest pricing would cut those property values by 8.8 per cent, a number every reader of Episode One will recognise as the American cousin of the vanished discount.
The part to read twice
All of that is merely expensive. What follows is the instructive part, because America did what Flood Re’s defenders assure us Britain will do in 2039. America decided to stop.
In 2012 Congress passed the Biggert-Waters Act, phasing out the subsidies at last, with near-unanimous bipartisan support. The votes were easy because the prices were still abstract. Then the phase-out produced concrete numbers on concrete renewal notices, including premiums travelling from $1,000 toward $31,500, and in 2014 Congress passed the Homeowners Flood Insurance Affordability Act, that reversed the reform with a speed and bipartisanship fully equal to the original. Grandfathering restored, triggers repealed, honesty postponed. A decade later the cycle ran again: Risk Rating 2.0 arrived in 2021, actuarial and property-specific, and by 2025 eight senators, Mrs Calloway’s cousin’s among them, stood queued to demand its destruction.
James Buchanan gave this machine its proper name half a century ago: the Samaritan’s dilemma. A state cannot credibly commit to withdrawing help from concentrated, visible, sympathetic losers, because the losers organise and vote while the diffuse payers never notice their £10.50. The commitment to end a subsidy is made in the era of abstraction and abandoned in the era of renewal notices, and this is not a defect of American character. It is a property of legislatures, the way rusting is a property of iron. Congress has now run the full course twice: solemn actuarial resolve, followed by the arrival of real prices at real doors in marginal districts, followed by compassion at emergency speed. There are less flattering words for the third stage, but compassion is what it is called on the floor.
Set Britain’s arrangements against this record and the family resemblance is unmistakable, allowing for the smaller scale and the better tailoring. A transitional scheme; a founding promise of eventual actuarial truth; a concentration of subsidy in repeatedly flooded, high-value properties; a growing rather than shrinking book; and a political deadline, 2039, at which several hundred thousand households are scheduled to receive, in a single season, the renewal notices that Congress twice could not survive. Flood Re does hold one card the Americans never held, a statutory sunset requiring primary legislation to move, and the final episode of this series will examine whether that card beats the dilemma. The American evidence on legislatures and renewal notices should temper the optimism: two rounds, two reversals, no exceptions yet recorded.
(The resemblance now extends, as of this month, to the mid-life reform. On its tenth anniversary Flood Re announced a package of rebalancings, caps and discounts, judged on their merits elsewhere in this series, and students of the American programme will recognise the genre at once. Congress has recalibrated its flood laws eleven times: each recalibration adjusted who carries the subsidy, and not one of them ended it. Reform, in this literature, is the thing a scheme does instead of expiring, and it is usually announced, as this one was, on a birthday rather than a deathbed.)
Mrs Calloway asked whether it has anything to do with us. It is us, madam, thirteen years early and in a larger font.
Her cousin’s parish sits on a bayou that has outlasted the Corps of Engineers’ entire published output, and Lower Marsham’s river keeps the same counsel here. Congress has amended its flood laws eleven times since she first undercut the church meadow. The river has not read the Biggert-Waters Act. To be fair to her, after 2014, neither did Congress.
Principal sources: GAO-23-105977 and GAO testimony (2026); FEMA, “NFIP Debt”; Cato Policy Analysis No. 923 (Van Doren, 2022); Christensen et al., JAERE (2024); Kousky and Kunreuther on Allegheny County; CRS on NFIP borrowing authority. Next in the series: The Door Nobody Fits, on what a premium used to pay for.