FEMA Chief Disappoints Senators, Says He Can’t Delay Flood Insurance Rates

By Andrew G. Simpson | September 23, 2013
Craig Fugate
FEMA

Craig Fugate
FEMA


  • September 23, 2013 at 1:22 pm
    Dave says:
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    If people can’t afford to pay flood insurance premiums, then they simply cannot afford to live in a flood plain. Especially recurring flood plains. The Federal Governemnt needs to slowly remove themselves from this program and let the market determine fair rates for this insurance.

    • September 23, 2013 at 1:36 pm
      Bill says:
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      But that is why this program was set up in the first place, since the market didn’t want to insure many/most of these properties against flood losses.
      I find it very funny that promised rate increases were not an issue when this bill was being debated, but now that the senators have heard from their constituents, it is a VERY big deal!

      • September 23, 2013 at 2:36 pm
        SWFL Agent says:
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        This bill was passed without attention to details and the rate possibilities that exists. Now the public is hollering and the politicians want to make Fugate the scapegoat. If I were him I’d tell them to shove it and fix it themselves.

        Everyone should pay their fair share but not every home in a flood zone is a waterfront vacation home owned by the rich. Many homes are low value and some of the flood rates I have seen ($3k-$5k) are ridiculous compared to the home’s value. Let’s face it, this problem was started long ago when the Gov’t got into the flood business and it can’t be fixed without some pain and intelligent thinking.

        • September 27, 2013 at 10:30 am
          Jason says:
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          What irks me is that the fact that none of this is disclosed to buyers of homes. Everyone just assumes that their premiums truly reflect the risk of flooding. No one is told that their policy is heavily subsidized by the government or that the govt program subsidizing it is barely solvent.

          If this act isn’t delayed and amended then the majority of Florida will be gutted. My community, Pinellas County, will become a ghost town.
          All through an act of Congress.

          Amazing, you really can’t rely on Congress to do much except screw you over.

          • November 21, 2013 at 5:05 pm
            Dave says:
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            Funny how almost everything the government gets involved with gets screwed up. Obamacare will be interesting especially with all the administrative and business experience Obama brings to the table having been a “community organizer”.

    • September 25, 2013 at 8:52 am
      Mulligan says:
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      Then why not the following: if people can not afford to pay medical insurance then they simply can not afford to receive medical help.

      But yet we are moving to government subsidized insurance in that area, correct? I’m sure you find that to be fine.

      Also, the point you are missing is quite simply people bought and paid the associated insurance for many years. So let’s say your home owners insurance jumped by 10 fold, would that be acceptable?

      Additionally, how about the people who were not in a flood plane but now due to remapping they now are considered high risk? Is that acceptable?

      How about all of the businesses (hotels, restaurants and the like)who have significant increases. So they pass the cost onto the people who may vacation there resulting in reduced patronage and then shut downs. So you support all coastal towns or towns near other waterways just simply turning to ghost towns? But we should continue to have the federal government to subsidize the people who choose not to work and contribute by paying no taxes and receiving a fully refundable EIC and then getting free health care, correct?

  • September 23, 2013 at 1:30 pm
    Sargeant Major says:
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    How high is the water Momma? Three feet high and rising!

  • September 23, 2013 at 1:46 pm
    jw says:
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    If they call it “flood stamps” the La. republicans would not object.

  • September 23, 2013 at 3:00 pm
    Original Bob says:
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    So the Senate thought it was a good idea to pass this but had no clue as to the cost – sounds familiar, anyone surprized?

    “Most of the senators at the hearing said they agreed with the goal of Biggert-Waters of making the NFIP self-sufficient but said they did not expect the increases would be so dramatic or come so suddenly.”

  • September 23, 2013 at 3:06 pm
    It's about time says:
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    Guess the congress finally woke up from their deep sleeps at their desks!!

  • September 23, 2013 at 3:29 pm
    earlybird says:
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    After reading this article and the responses of our elected politicians, it seems that they have passed a law that nobody read! How could that happen? They passed ObamaCare and will not realize the consequences until too late. Hold onto your wallets folks!

  • September 24, 2013 at 1:47 pm
    Pat says:
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    Without the availability of low cost, government subsidized flood insurance, a lot of this housing would not have been built in high risk areas. That would be a good thing. Perhaps the law should be amended to phase in these increases over a period of five years. This would give people some time to sell their homes if they can’t afford the insurance. For certain low cost housing if very high risk areas, government can look into buying the housing stock and reverting the land back to nature and for public park use, like NY is doing after hurricane Sandy.

    • September 25, 2013 at 11:21 am
      Chase says:
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      That assumes that these flood zones make sense. In my town most of the down-town area is in a flood zone. This is a town that dates back over 250 years (we are right near Plymouth Rock in Massachusetts), and many houses that were built in the 1800′s and before are still here and have made it through many hurricanes. Holding them to modern standards does not make sense, and will cripple these people.

  • September 24, 2013 at 3:12 pm
    Darla says:
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    After reading these posts, I would have to say, if you think by increasing the flood insurance rate and allowing individuals to sell their homes to get out of it (which will cause the home to be unmarketable) or to allow that land to revert back to nature, I would have to state, there are many cities in this country that would cease to exist or have to moved entirely. Example: Sacramento, CA is almost entirely in a flood plain. Should that state’s capital be moved out of a flood plain and allowed to revert back to nature?

    Another good point that was mentioned before was many premium increases (3k-5K annually) greatly outweigh the value of the home. When is a home then valuable? If a person lives there, regardless of income range, do they have some sort of right to reside there? Yes. Are there risks of living there? Yes. Should we help those less fortunate to stay in their home valued at $50k, in a major flood plain with annual flood premium of $5k? Good question.

    There needs to be a review of the premiums and flood zones but by implementing a law too fast when the government bureaucracy hasn’t caught up with the requirements makes the people suffer for their inadequacies. There should be a delay and phasing in of changes in the law when it affects millions. People need to understand, living in a flood plain has risks and if you purchase a home there, you must accept the risk of flood.

  • September 25, 2013 at 10:38 am
    Mike says:
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    What most don’t understand is that this new legislation penalizes properties that were built before the flood program even existed and before FEMA created the height that properties needed to be built. This act applies primarily to homes built before 1974 which is when FEMA created the map that showed how high houses had to be built. Fundamentally, it is wrong to penalize properties not built up to a code that did not exist when the property was built.

    • September 25, 2013 at 11:17 am
      Chase says:
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      Further more many of these homes have made it through several storms. I know in Mass. most houses are built prior to the earlier 70′s and holding them to modern standards is fundamentally wrong.

  • September 25, 2013 at 11:16 am
    Chase says:
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    5K for flood prices? Clearly you gotten the correct info in. I am a Massachusetts agent, we are just getting renewals in that are exceeding 25k!!!! I just got one in for over 50k. We are having homes built prior to when flood laws were enacted that are being held to modern standards. Many of these people are not rich but working middle class. These are houses that have been around for a century and have made it through several hurricanes. This is going to be devastating to local real estate. You are going to have massive foreclosures in flood plains if things dont change.

  • September 25, 2013 at 2:36 pm
    Robin Gonzalez says:
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    and what happens to those of us that were listed as low risk and suddenly our homes are now high risk due to new maps? This is simply put a govt. sponsored extortion to force more homeowners to purchase flood insurance to make the plan solvent. That’s why FEMA doesn’t have all the back-up on rate increases. They knew what they were doing and Congress should never have been allowed to pass the bill without all the information in front of them. As far as I’m concerned the mortgage docs I signed state that I am to carry ONLY Property Insurance and under Federal law there is NO requirement for existing mortgages to carry flood insurance. ONLY new mortgages wanting to purchase in a flood zone area are required to have flood insurance. Congress needs to fix the issue they created and stop playing with my money and my home!

  • September 25, 2013 at 3:10 pm
    Bob says:
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    I am a Cape Cod Massachusetts insurance agent and we just got a quote back on an older (pre-firm) house that with the map change from X to V that was written in the preferred risk program for $356 annual premium; the new rate in the V zone quoted by the company for the same limits is $45,724 annual

    • January 10, 2014 at 4:18 pm
      marko says:
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      I would just like to know how long has it been since some of these areas have had a major flood with extensive damage. I live in pinellas county fl and can not find the last time there was a major flood in the area. Yet for who knows how long FEMA has collected flood insurance premiums. If someone is about to tell me that 50 years of flood insurance premiums can not cover all the floods and area has is BS. MIAMI-DADE, FL 25 billion loss due to hurricane Andrew 1992, how long has it been since last flood to the area? How long has FEMA been feeding off of the premium policies in the Area without major losses? Low Income families can not afford to pay $4000 – $16000 per year in flood premiums. For the past 13 years 90% of people I know have had an annual income of $13k-$20k, and these was before half of them lost their jobs. Unemployment will deny most of these people benefits because their incapability to speak English yet all these people held their jobs well over 10 years most at a single company(I just wonder how is that possible without english) What the government is allowing is just great lets just kick these people to the curb and let them die there, After all this is a capitalist country so who cares about them.

  • September 25, 2013 at 3:22 pm
    Jan says:
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    How do you tell someone that was paying $350.00 a year for flood insurance that the premium went up to $45,000 and then some? Sorry, you are now in a velocity zone. Who has to explain this to these people???? It’s the agents that have to break this news to them, and oh by the way,this premium has to be paid in full every single year prior to the policy going into effect. Where is the value in this policy????? You could own the home quite a few times within a few years. Let’s get reasonable and have some of these politicians stop worrying about how they are going to spend their summer vacation and actually get to work and make this fair for all.

  • September 25, 2013 at 4:36 pm
    JC says:
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    I’m an agent. I built my house in 1997 in an A12 zone above base flood elevation according to the rules at that time. If FEMA redraws the map and my rates skyrocket my house will be basically unsaleable. Since FEMA is the government, does this not violate the “Takings Clause” of the 5th Amendment? Should the government not be required to compensate me for the diminished value they caused to my property?

  • September 26, 2013 at 8:26 am
    Jean adams says:
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    Is it fair to buy a property and then be told that the rules have changed and you are now in a flood zone??
    is it fair that a few counties in the country are bearing most of the cost?? That 24cents of each dollar stays in the state and the rest goes to other states such as Colorado etc who don’t pay any flood insurance??

    Many people who are miles from the beach etc are getting a rude awakening that their flood insurance will cost them more than their mortgage.

    Here come a lot more foreclosures etc.

    I hope all those that like to visit the beach are ready to pay Thousands a night rather than hundreds??
    There are not enough days in the year to raise rates a little to even break even. While you are at the beach your food etc will go to ?????

    The roads etc near those hotels will become impassable as the value of the properties will diminish so they won’t pay any taxes for infrastructure. The houses that are there that may not have a mortgage will depreciate and start to become hazards as people won’t fix up as can’t sell and get money back later.

    Plus this bill was buried in a Transportation bill that no one read in congress as usual. Part of the bill said that FEMA was to do a study on the ramifications of the bill That still has not been done yet they are going ahead and raising the rates. They say there is no money for the study!!!!!!!!!!!!

    TIME to give READING tests to CONGRESS and time to clean house of the hole bunch of them.

    And you want these people running your health care!!!!!!!!! They don’t think anything through as to the trickle down affect in the real world. Then they exempt themselves from the crop they subject us to!!!!!

  • September 26, 2013 at 11:50 am
    InsGuy says:
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    I tend to agree with most, Jean, but this is much bigger than a “few counties” with beach-front properties. How many miles of beach are there in CO? IA? TN? and on….

    With continued FED control over these issues, I don’t see a solution in sight, which is why I believe there is so much back-room support for the FIO – wait for it – they’ll be ceded control of the national catastrophe programs under the guise of having “Insurance” experts solve the problems.

    Perhaps setting up a back-stop like TRIA for flood might help a private market restore itself over time? (Get the Feds in the Cat Reins business instead of the primary coverage business)

    That little known branch called the Corps of Engineers is huge beast of it’s own that’s having a great impact on flood patterns all by themselves.

    I don’t know what the solution is but if the weather patterns of the last few years continue we’re going to be another Greece or Spain. I hate to say it, but like it or not, get ready for FIO to flex their muscles, and step in with a countrywide federal catastrophe assessment for every property policy sold.

  • September 27, 2013 at 1:50 pm
    Splint says:
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    Completely agree with you Jason. Here is my solution to the problem. Supposedly the government was already subsidizing our flood insurance by 10K to 15K per year. Why not give 75% grants at a max of 50K per household to assist in the elevation of a persons home? Make the home owner responsible for the remaining 25% at a reasonable interest rate of 2% over a 20 or 30 year period. This would mean the government is only subsidizing the home for an additional 4 or 5 years with an immediate infusion of Grant money and the home owner has a 25% or greater steak in the improvement of their home. These homes would now be elevated to the appropriate flood level and future flood worries greatly diminished.

  • September 28, 2013 at 12:24 am
    VeteranForcedOutOfMyHome says:
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    If these rake hikes go into effect, I will be forced to default on my loan & leave the state. I will be forced to ruin my credit, and leave my job. Unfortunately,everyone in the surrounding area will probably be forced to do the same. Fugate has decide to hold us hostage based on Obamacare games.
    It’s interesting to note that the people who created this hike are from Illinois and places unaffected by their actions. The elected officials who are now enacting it are also unaffected. It should also be mentioned that Senators and Congressmen whose states ARE affected are only trying to DELAY this action. Which means, if I am not forced out of my home this year, I WILL be next year… I don’t see that as much help, even if that helps THEM get re-elected.
    It’s a shame that after 30 years of serving my country, this is what my elected officials are doing to me and my family as a reward.
    I think that if the people in Illinois feel that there should be a rate hike, maybe THEY can pay it instead, as Florida pays in MOST of FEMA’s income already, I think Illinois can pick up the rest of the Tab, since it was their idea. Although Florida is frequently hit by hurricanes, other places along the east coast actually flood more. I’ve been here for 13 years and my home has never come close to being flooded, as I live 38 miles from the coastline.
    Thank you Judy Biggers, Mr Fugate & the rest of your crew, I hope you can live with what you are about to do the state of Florida and many parts of the country. The housing market and the economy will probably not recover from this.

  • September 28, 2013 at 10:46 am
    robert says:
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    the solution is to abandon your house and move out of new orleans or become very rich or go to hell Congress don’t read the laws they pass so just your hard luck.

  • September 29, 2013 at 8:08 pm
    MrDuffin says:
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    Three thoughts….one is that the Flood Insurance Budget would not be broke if the fund that once had a surplus had not been robbed of the money to be used for other things. And the second thing is that if the billions to fix New Orleans (that is 18′ below sea level) had been used to relocate the folks to higher ground the flood budget would not be broke. And finally….if it was Muslims that were subject to these rate increases Obama would act and stop the madness.

  • September 30, 2013 at 10:48 am
    Gordon says:
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    All insurance rates should be actuarially sound, period. Flood “insurance” has always been a joke. By the way, that includes medical which is why ACA cannot work. Otherwise, the system collapses.
    If you had repetitive fire losses, you can be sure you would lose your coverage.
    Property owners in flood prone areas need to mitigate, move or pay for their own risk, not ask for another entitlement payment.
    I say be responsible and self-sufficient.

  • September 30, 2013 at 11:18 am
    Tracy says:
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    I’m really tired of the government subsidizing, which is paid by taxpayers. I’m one of those taxpayer, but I get no subsidy for my Texas coastline flood insurance or windstorm coverage; and my area has not had a flood or hurricane in 30+ years. I see no reason that I should be paying taxes for repetitive flooded homes or someone who can afford a second home. Those families need to pay for what they can afford or move to another area….like the rest of us.

    • October 2, 2013 at 2:44 pm
      Greg says:
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      First off only ~45% of the premiums collected are paid out in claims. 30% are paid to the insurance industry (which seems excessive). They do need to look at the money management of the system. It is ALOT of money in the mix.
      As far as your taxes (and my taxes too)..what will be the impact when people are all forced out of their homes and the economy takes hit so hard it affects not just me but YOU and everyone else.
      My house has survived every bad storm that has come this way in Houston area..but I just got rezoned by Fema. My county side of the ounty line is 17 feet BFE..right across in Glveton is 14 feet. If they impose this..many goo professional and tax contributing citizens will have to walk away from their homes.
      Estimates are 170 million jobs lost..while I am not sure of the exact accuracy because I never trust integrity of the numbers by the government and media. Either way it will be big..and you will be affected possibly more if they push this through.

  • September 30, 2013 at 3:00 pm
    James says:
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    Someone kindly brought up New Orleans and the billions spent since 2005 to upgrade levees, drainage and pump stations. As an agent here, the new maps are giving a betterment to 85% of the property owners so those people will not be moving “north”. However, buying a house on top of a mountain isn’t safe either. While BW and new maps will certainly force some to move/sell/default it’s not the majority of property owners. Just because it hasn’t flooded in 300yrs, hear it all the time, doesn’t mean it won’t. I also agree some of the BW could be adapted to not penalize the ones who stand to lose their livelyhood as a result of new rates. $50k a year in premium is obviously not actuarially sound.

  • September 30, 2013 at 10:58 pm
    MarkT says:
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    The fact is, FEMA did not attempt to educate the public on their plans. I own a 165K home in Pasco County Florida. It is water front, has never flooded, and was built in 1984. We have moved and were set to close on the home on October 4th. The new owner was given a price quote of $42,000 annually. That is not a typo. $42,000 annual premium which would pay for the home entirely every four years. Now I ask: How is that a fair premium? We are certainly fine with paying the actual risk cost of insurance. But $42K???? Come on….I’ll take that line of business! I would ensure homes with my own means if I could get that kind of risk/return ratio. The government shouldn’t subsidize flood insurance, but it shouldn’t have poor actuarial tables that lead to honest people like us simply walking away from our home. Good credit, good jobs, and an asset made worthless through a failed attempt at reform.

  • October 2, 2013 at 2:53 pm
    Greg says:
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    ~44% of the collected premiums are paid out in claims. ~30% is paid to the insurance industry (which could be another topic). First they need to scrutinize allocation of money.
    I agree with above..my house is ~$150K house built in 60′s and never has come close to flooding and eathering multiple storms. Not all houses by coastal areas are big money homes.
    The tax impact will be much bigger for the hit on the economy with people losing jobs an walking away from their homes.
    I have really become so jaded against our government and lost all faith in it all.

  • October 2, 2013 at 3:00 pm
    earlybird says:
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    As I advised one of my wealthy clients,”don’t buy flood insurance.” He said the bank made him. I reminded him of a saying often heard from his own father. “If you cant pay cash for it, don’t buy it.”
    If you don’t want insurance subsidized by the US Govt, let us get a quote for you from our London market. Then you won’t mind paying the NFIP premium.

  • October 31, 2013 at 10:05 am
    Mona says:
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    Sir..
    It never fails to amaze me and all my fellow Americans to see how fast can FEMA implement any insurance premium increase ..and how helpless and powerless you become when it comes to prevent a disastrous and unjust law such as this Biggert-Waters reform !!!
    May God have mercy on all of us

  • November 21, 2013 at 3:19 pm
    IowaG says:
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    I live in Iowa. I bought my $135K house last December. I already pay $140 / month in flood insurance – even though I live near a small creek that barely trickles. It will now go to minimum $280 / month to possible $433 / month. I won’t know which amount until I have a Flood elevation certificate done….for $750 which I don’t have. No one told me of this coming – not the bank, not my insurance company, not my real estate agents…..And now high likelihood that I will lose my house. This isn’t a coastal issue. This is an American issue. I am devastated.

  • November 21, 2013 at 5:00 pm
    earlybird says:
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    The result of this remapping and increased flood insurance premiums may surpass the idiocy of the Affordable Care Act. The folks that will suffer are those that have homes, pay real estate taxes that run the communities in which they live. We know them collectively as “the middle class.” When the home construction industry suffers another decline in sales, the construction workers, an integral segment of the industry, will not have work, no income, and the expenses continue. Unemployment, mortgage defaults, foreclosures, and empty homes will be the result. It is conceivable that more communities will suffer the plight of Detroit!

  • January 21, 2014 at 4:36 pm
    D.J SMITH says:
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    JUST WHAT A DIABLED COMBAT VETRAN ON SOCIAL SECURITY AND A SMALL PENSION NEEDS A 120 % INCREASE IN MY FLOOD POLICY. THANKS TO ALL WHO VOTED FOR THE BIGGERS-WATERS BILL.

  • February 1, 2014 at 4:35 pm
    gerard says:
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    You can only get so much blood from a stone. If these rates take affect, I will stop paying all my unsecured debt so that I can pay for my flood insurance. It’s the credit card companies that will take it on the chin.



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