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Reality Check: Flood, Rebuild, Repeat

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The National Flood Insurance Program is drowning in debt. It's $25 billion in the hole. We have found a small number of homeowners who flood repeatedly, many here in Alabama, continue to get paid after each storm. NBC 15's Andrea Ramey investigates in this Reality Check.

Storm after storm on the Gulf Coast, the same story is told. The same homes flood are then re-built, only to be damaged again. A 2010 study found one Alabama home valued at $153,000 cost the flood insurance program $2.3 million in claims.

"The older homes, the fish camps, that have been here from the 60s and 70s that continuously flood," said Gulf Shores flood plain manager Brandon Franklin.

In Gulf Shores, $171,000,000 has been paid in claims to 5,095 policyholders, about half of the town's population.

"We rank very high in the nation for repetitive loss," said Franklin.

Homes that repeatedly flood only make up one percent of the policyholders of the National Flood Insurance Program, but account for 30 percent of the program's cost according to FEMA.

On Dauphin Island, where homes are literally being consumed by the Gulf, 2,100 policyholders have been paid $72 million to re-build.

"There's a little bit of a perverse incentive for homeowners living in flood risk areas to continue to live there," said Pew Charitable Trust Prepared Communities Initiative Director Laura Lightbody.

"We have a mandate to provide this product to any homeowner who seeks it," said NFIP Director Roy Wright.

Wright says Congress has directed FEMA to accept everyone who applies and to provide discounts to about 20 percent of those policyholders. A policy, he says, Congress has been unwilling to change.

"There have to be changes. There must be changes to this program. We need to make room for the water. We likely need to do some kind of buyout for them so they can restart their life somewhere else in the community," said Wright.

But how likely are reforms that would make the flood insurance program sound? According to Senator Richard Shelby, not very.

"They want the taxpayer to bail them out. And it won't be the first time. I spent a lot of time and effort on reforming it and then Congress changed it all so I'm very dubious on any reforms coming out the flood insurance program," said Shelby.

Congress is looking to re-authorize the program. Lawmakers are working out some of the sticking points like how to handle repetitive loss properties and keeping rates affordable.

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