A man walks away from a flooded section of Highway 23 in Wayne, New Jersey August 30, 2011. New Jersey and Vermont continue to struggle with their worst flooding in decades on Tuesday, two days after Hurricane Irene slammed an already soaked U.S. Northeast with torrential rain, dragging away homes and submerging neighborhoods underwater. [Photo/Agencies]

Small and staying that way

The flood program would seem to have ample room to grow, given that fewer than one in 20 American households have a policy.

It is also cheap for most people. The former FEMA director Allbaugh calls it one of the best buys for taxpayers, and with average annual premiums of less than $500, it's hard to argue.

And yet take-up is and has been anemic. Many people who buy flood insurance do so only because their mortgage lender requires them to do so as a condition of their loan. Many of them, insurance agents say, take the first opportunity they can to let the policy lapse.

"We are seeing a definite uptick in policies that are being non-renewed because people just can't afford it," said Patty Templeton-Jones, vice president of operations and Templeton-Jones said there is no question that FidelityNational and other flood insurance writers will see businesspick up in the near term, but there is also little doubt thatmany of those new customers will let their policies go in two tothree years, absent another disaster in their area.

Therein lies the problem, for the government and forcommunities that are already financially strapped: people justdo not see the point of a flood policy.

Among them are Kevin Putnam's parents. Their Brattleboro,Vermont house is now full of water, thanks to Hurricane Irene,and the potentially crushing burden of rebuilding could be stuckon their shoulders. "They have been here 50 years and this isthe first time this has happened," Putnam said. "The premiumjust isn't worth it."

Take that sentiment, multiply it across an entire town, andthe result is nothing less than financial disaster.

"It's a small state and we're overwhelmed," Brattleboro,Vermont town manager Barbara Sondag said. The state suffered itsworst flooding in 80 years, with some 260 roads damaged orwashed away entirely in the storm.

According to NFIP data as of June 30, Vermont ranks 47th ofthe 50 states in the number of flood policies in force, withjust 1.5 percent of households covered.

In Brattleboro there are all of 99 policies on the books fora town of more than 12,000 people. Insurers like FidelityNational say there are some limited FEMA loans those people maybe able to apply for, and even more limited (in size andavailability) grants. But by and large, they are on their own.