Maybe the govt should stop sending out $25 billion yearly to other anti-American countries and use the funds to solidify the FEMA/NFIP programs here so Americans can go on vacation in America on the beautiful coast lines for the next 100 years…
“Taxpayers should be outraged that their tax dollars are incentivizing high risk behavior that increases federal disaster costs,” said Ellis of the taxpayer group.
Ellis said Congress can create a means-tested relief option for homeowners but for lawmakers to delay Biggert-Waters on the assumption there are other solutions beyond charging risk-based premiums is “preposterous.”
Baxtor: What you should be outraged about is how many dollars have been spent on homeowners that have never paid one dime into FEMA. Do you think the people in NY had flood insurance when Sandy came knocking on their door…or the Folks in Colorado, do they have flood insurance, highly doubtful. What I am outraged about is that I have paid into the FEMA fund for 25 years, and never needed to use it. My $3100.00 premium will go to $55,000.00, IF I sell my home. Let me ask you, who in their right mind would by a home with a flood insurance cost of that magnitude? So now lets walk a few steps into the future, what is a home worth that has a flood premium of thousands of dollars, not much. In fact, the property appraiser is ready to take these home values down to land value only. Now lets think about what happens to the cities and counties when the tax roll is diminished by 50% or more? Who do you think will be expected to make up the tax deficit, the people who don’t live in the flood zones? Is that fair? We have communities here is Florida that are +55 communities, not waterfront property, homes, that are worth 80-90K. These retirees who have fixed incomes, are facing flood insurance bills of 12-15K? Fair? Hardly.
There are other solutions to this problem, one being that if you don’t pay into it you can’t collect from it. If that were the case then FEMA would not be 25B in debt, they would actually have a surplus. Why should a retiree living in a modest home of 90K subsidize the people in NY or Colorado? Do you really believe that this is equitable for them? For Florida, we have paid into FEMA $4.00 for every $1.00 that has been spent in Florida. WE ARE NOT THE PROBLEM!
We never know when or where the next tornado, flood, mud slide, or hurricane will hit. Since Katrina, the disasters that have occurred are in areas that are not considered “high risk” areas.
Another possible solution to this is that everyone who owns a home pays something into a National Disaster Fund, that way when any of these disasters occur in places that are not expected, and FEMA steps in, it would be somewhat more equitable then having the minority pay for the everyone.
The only thing that I can liken this to is if you and I have a car accident, you have collision on your vehicle but I don’t. Should my insurance company pay for my car to be fixed? Wouldn’t you think that it is ridiculous for me to expect anyone to pay for something that I didn’t have coverage for…flood is no different. Expecting people who happen to live in a flood zone to pay for other people who suffer losses that have never paid into FEMA, that is what is “preposterous”.
Flood should work like car insurance. Never had a flood? Lower premium. Had flood? Higher premium. These high rates are going to put homeowners into foreclosure and small businesses out of business. I’m a Realtor and seeing $2500 policies going to $20,000 – I mean c’mon – where’s the logic in that – why are we in Florida being punished for Katrina? At least we are at or above sea level!
I am outraged that the NFIP has collected $6 billion more in premiums than it has paid in claims. I am outraged that the NFIP runs at a 40% overhead (including fees and commissions paid to insurance companies that have no exposure).
I take serious issue with the arguments/rationale presented by Mr. Ellis and Miss Lubber for delaying the implementation of the Briggertt-Waters Act presented in this article. First, the affordability study was mandated in the Act was never undertaken. The Act was implemented blind, with no guidance issued to the insurance industry regarding rate increases until nearly 8 months after the legislation was in effect. There was no requirement for lenders, sellers or insurance companies to disclose to buyers of high-risk homes between the time the act was passed and subsequently implemented. I live in Florida and purchased a home within what I consider the black hole period just mentioned. If there had been any disclosure regarding the fact that my flood insurance would increase from $4,600 to $55,775 per year (over a 1,000 percent increase and nearly three times what I am paying for my mortgage) I would have never purchased my home. My current insurance company (UPC) billed my escrow account September 28, 2013 and then said I was insufficiently insured. They then informed me it was required that I provide a flood elevation certificate to determine the actual cost of my policy. They received that information six days prior to my policy renewal date and then informed me of the 55,775 cost. They then billed my escrow account which is not in deficit at an amount of over 44,000 dollars. I attempted to cancel this policy and was informed by the insurance company it could not be cancelled mid-term because I did not meet any of the FEMA requirements for cancellation. From my perspective, what is occurring is legalized extortion. Additionally, the argument that the act would remove “subsidies” to bring premiums up to fair market value is bogus. Florida has been a primary exporter of FEMA dollars for many years. A simple cursory review of policies in effect in the country (per the FEMA website) shows that Florida has 2,054,803 policies in effect (there is not even one other state that has over a million policies in effect). We in Florida are thus being asked to pay the bill for the rest of the country when we have not had any significant “flood events” in nearly 40 years. If one is going to pass legislation to “fix” the Flood Insurance Program’s deficit (primarily Katrina and Sandy) then one would think that serious research would have been conducted prior to enacting such a law.
Good comments C Bopp. You know it wasn’t too many years ago when some people on this blog were advocating a federal solution to wind coverage. Can you imagine the disaster that would have been.
My home of 20 years is on a CREEK (not a lake, river, or ocean)on a 100-yr flood plain in MICHIGAN. I am now being mandated by my mortgage-holder (based on new FEMA flood maps) to purchase flood insurance, at the cost of $2,500/yr. With respect to those who feel that Florida is subsidizing the rest of the country, I appreciate your outrage at premiums, but I suspect more of my money is going to flooding in Florida than vice-versa, and believe there needs to be consideration to level of risk as well as affordability. God forbid it happens to anyone, but the odds of my home being swept away by the creek or a hurricane seem rather remote.
Sandy, you could not be more wrong; your money is not going to Florida. It is not a ‘feeling’ as you say, but it is a fact – Florida subsidizes the rest of the NFIP. Despite being the largest state by far premiumwise (40.9% of ALL Flood policies are in Florida and roughly one-third of all NFIP premium is paid by Floridians), it has much lower losses than states with people like you who live on creeks and rivers. However, I will say that Michigan is not one of the problem states.
Living up north I would assume that you are familiar with the concept of meltwater, no? Rivers and streams overflow their banks on a relatively regular basis; the magnitude dependent upon the amount of snowfall over the winter and the rate of increase in temperature. Do you recall what you were taught in school about the Fertile Crescent of the Tigris and Euphrates rivers? Or about the bounty – in a desert – attributed to the Nile? What did these have in common? Rivers that flood their banks and deposit nutrient-rich silt.
What happens when certain areas in the US get a few inches of rain? Flash floods. Why? Because the soils are not porous enough or are underlain by granite and the like – desert or mountain, same result. On top of that, water runs downhill – you don’t even need to be near a body of water, just being lower than your neighbors will suffice. Do you know what happens when Florida gets a few inches of rain – IN AN HOUR? Minor street flooding in certain spots with poor drainage and greener grass followed by turning off sprinkler systems. Summer afternoons are almost certain to pour an inch or two of water (or more) in a very short time and we don’t file claims.
Floridians pay in four dollars for every one dollar paid out (Florida’s 40.9% of all policies are only responsible for just over 10% of all claims paid) – that’s a loss ratio of 25%. Do you know how many insurers would kill to have such a portfolio? A good year for a Homeowners’ carrier is 90% by comparison.
If you absolutely must blame someone other than yourself (who also chose to live in a flood-prone area), look to Texas or Mississippi. Texas accounts for roughly 10% of all policies but were responsible for 8.8% of all claims paid – they’re still breaking even, so maybe that is not the best example.
Now, Mississippi, on the other hand is 1.1% of all policies and they paid $23.4M in premium in 2006. Losses from 1978 to 2006 totaled $2.7B – with a ‘B’. Do some goesintas and you get roughly 116 – in other words, it would take 116 years of paying the same premiums with NO losses in order to break even. See the problem there? Florida, by comparison, would need four years to fund all of its losses incurred during those same 28 years.
And, probably the mack daddy of them all, Louisiana, paid $194M in premium for 2006, which is 8.1 percent of all policies issued by NFIP. Hold onto your hats with the losses paid from 1978-2006: $14.926B – that is 47.2% of all NFIP claims paid. In one respect, that is actually better than Mississippi – it would only take 77 lossless years to recoup what has been paid. Who would ever have thought that building a city in an area the Indians warned floods often (and below sea level, no less) would end up with so many claims?
So, Floridians have a very legitimate beef with Biggert-Waters. Please get off your high horse and take the time to learn what you are talking about. If you don’t believe what I am saying, go to this cool site called Google.com and look it up and show me I am wrong.
Mona, if the “unfair law” you refer to is a law that attempts to bring in sufficient revenue to make NFIP break even, then there is a lot more to say. This is what happens when central economic planners interfere with markets to achieve political ends. First they con people into believing that they can wave their magic law-making wands and suspend economic reality so that risky behavior can be engaged in penalty-free. They dig the hole deeper and deeper, and when it gets so bad that they are compelled to stop the fiscal bleeding, innocent people get hurt very badly. If you don’t want this to happen, then you should oppose any and all government interference in the insurance market, including crony-capitalist scams like NFIP.
==“Taxpayer costs from climate change are getting bigger and bigger. Last year’s extreme weather events alone cost every American more than $300 apiece, or $100 billion altogether – most of it to pay for federal crop, flood, wildfire and disaster relief,” said Ceres president Mindy Lubber.==
Because as everyone knows, there were no extreme whether events prior to the Soviet Union’s collapse, when the Red movement had to turn Green to advance its statist, despotic agenda.
THIS bill has placed my wife here in west virginia in a precarious position, both are retired wv school teachers. our home lost its value due to the Biggert-Waters flood insurance reform act.if inacted, we can no longer afford to carry the insurance. we would be financially devastated.. HOPEFULLY our estemed senators will vote YES on the 4 year moratorim..,this will give enough time for further study…
Maybe the govt should stop sending out $25 billion yearly to other anti-American countries and use the funds to solidify the FEMA/NFIP programs here so Americans can go on vacation in America on the beautiful coast lines for the next 100 years…
“Taxpayers should be outraged that their tax dollars are incentivizing high risk behavior that increases federal disaster costs,” said Ellis of the taxpayer group.
Ellis said Congress can create a means-tested relief option for homeowners but for lawmakers to delay Biggert-Waters on the assumption there are other solutions beyond charging risk-based premiums is “preposterous.”
I’m outraged.
Baxtor: What you should be outraged about is how many dollars have been spent on homeowners that have never paid one dime into FEMA. Do you think the people in NY had flood insurance when Sandy came knocking on their door…or the Folks in Colorado, do they have flood insurance, highly doubtful. What I am outraged about is that I have paid into the FEMA fund for 25 years, and never needed to use it. My $3100.00 premium will go to $55,000.00, IF I sell my home. Let me ask you, who in their right mind would by a home with a flood insurance cost of that magnitude? So now lets walk a few steps into the future, what is a home worth that has a flood premium of thousands of dollars, not much. In fact, the property appraiser is ready to take these home values down to land value only. Now lets think about what happens to the cities and counties when the tax roll is diminished by 50% or more? Who do you think will be expected to make up the tax deficit, the people who don’t live in the flood zones? Is that fair? We have communities here is Florida that are +55 communities, not waterfront property, homes, that are worth 80-90K. These retirees who have fixed incomes, are facing flood insurance bills of 12-15K? Fair? Hardly.
There are other solutions to this problem, one being that if you don’t pay into it you can’t collect from it. If that were the case then FEMA would not be 25B in debt, they would actually have a surplus. Why should a retiree living in a modest home of 90K subsidize the people in NY or Colorado? Do you really believe that this is equitable for them? For Florida, we have paid into FEMA $4.00 for every $1.00 that has been spent in Florida. WE ARE NOT THE PROBLEM!
We never know when or where the next tornado, flood, mud slide, or hurricane will hit. Since Katrina, the disasters that have occurred are in areas that are not considered “high risk” areas.
Another possible solution to this is that everyone who owns a home pays something into a National Disaster Fund, that way when any of these disasters occur in places that are not expected, and FEMA steps in, it would be somewhat more equitable then having the minority pay for the everyone.
The only thing that I can liken this to is if you and I have a car accident, you have collision on your vehicle but I don’t. Should my insurance company pay for my car to be fixed? Wouldn’t you think that it is ridiculous for me to expect anyone to pay for something that I didn’t have coverage for…flood is no different. Expecting people who happen to live in a flood zone to pay for other people who suffer losses that have never paid into FEMA, that is what is “preposterous”.
Flood should work like car insurance. Never had a flood? Lower premium. Had flood? Higher premium. These high rates are going to put homeowners into foreclosure and small businesses out of business. I’m a Realtor and seeing $2500 policies going to $20,000 – I mean c’mon – where’s the logic in that – why are we in Florida being punished for Katrina? At least we are at or above sea level!
I am outraged that the NFIP has collected $6 billion more in premiums than it has paid in claims. I am outraged that the NFIP runs at a 40% overhead (including fees and commissions paid to insurance companies that have no exposure).
I take serious issue with the arguments/rationale presented by Mr. Ellis and Miss Lubber for delaying the implementation of the Briggertt-Waters Act presented in this article. First, the affordability study was mandated in the Act was never undertaken. The Act was implemented blind, with no guidance issued to the insurance industry regarding rate increases until nearly 8 months after the legislation was in effect. There was no requirement for lenders, sellers or insurance companies to disclose to buyers of high-risk homes between the time the act was passed and subsequently implemented. I live in Florida and purchased a home within what I consider the black hole period just mentioned. If there had been any disclosure regarding the fact that my flood insurance would increase from $4,600 to $55,775 per year (over a 1,000 percent increase and nearly three times what I am paying for my mortgage) I would have never purchased my home. My current insurance company (UPC) billed my escrow account September 28, 2013 and then said I was insufficiently insured. They then informed me it was required that I provide a flood elevation certificate to determine the actual cost of my policy. They received that information six days prior to my policy renewal date and then informed me of the 55,775 cost. They then billed my escrow account which is not in deficit at an amount of over 44,000 dollars. I attempted to cancel this policy and was informed by the insurance company it could not be cancelled mid-term because I did not meet any of the FEMA requirements for cancellation. From my perspective, what is occurring is legalized extortion. Additionally, the argument that the act would remove “subsidies” to bring premiums up to fair market value is bogus. Florida has been a primary exporter of FEMA dollars for many years. A simple cursory review of policies in effect in the country (per the FEMA website) shows that Florida has 2,054,803 policies in effect (there is not even one other state that has over a million policies in effect). We in Florida are thus being asked to pay the bill for the rest of the country when we have not had any significant “flood events” in nearly 40 years. If one is going to pass legislation to “fix” the Flood Insurance Program’s deficit (primarily Katrina and Sandy) then one would think that serious research would have been conducted prior to enacting such a law.
Good comments C Bopp. You know it wasn’t too many years ago when some people on this blog were advocating a federal solution to wind coverage. Can you imagine the disaster that would have been.
Behold the fruits of politics and central economic planning.
My home of 20 years is on a CREEK (not a lake, river, or ocean)on a 100-yr flood plain in MICHIGAN. I am now being mandated by my mortgage-holder (based on new FEMA flood maps) to purchase flood insurance, at the cost of $2,500/yr. With respect to those who feel that Florida is subsidizing the rest of the country, I appreciate your outrage at premiums, but I suspect more of my money is going to flooding in Florida than vice-versa, and believe there needs to be consideration to level of risk as well as affordability. God forbid it happens to anyone, but the odds of my home being swept away by the creek or a hurricane seem rather remote.
Sandy, you could not be more wrong; your money is not going to Florida. It is not a ‘feeling’ as you say, but it is a fact – Florida subsidizes the rest of the NFIP. Despite being the largest state by far premiumwise (40.9% of ALL Flood policies are in Florida and roughly one-third of all NFIP premium is paid by Floridians), it has much lower losses than states with people like you who live on creeks and rivers. However, I will say that Michigan is not one of the problem states.
Living up north I would assume that you are familiar with the concept of meltwater, no? Rivers and streams overflow their banks on a relatively regular basis; the magnitude dependent upon the amount of snowfall over the winter and the rate of increase in temperature. Do you recall what you were taught in school about the Fertile Crescent of the Tigris and Euphrates rivers? Or about the bounty – in a desert – attributed to the Nile? What did these have in common? Rivers that flood their banks and deposit nutrient-rich silt.
What happens when certain areas in the US get a few inches of rain? Flash floods. Why? Because the soils are not porous enough or are underlain by granite and the like – desert or mountain, same result. On top of that, water runs downhill – you don’t even need to be near a body of water, just being lower than your neighbors will suffice. Do you know what happens when Florida gets a few inches of rain – IN AN HOUR? Minor street flooding in certain spots with poor drainage and greener grass followed by turning off sprinkler systems. Summer afternoons are almost certain to pour an inch or two of water (or more) in a very short time and we don’t file claims.
Floridians pay in four dollars for every one dollar paid out (Florida’s 40.9% of all policies are only responsible for just over 10% of all claims paid) – that’s a loss ratio of 25%. Do you know how many insurers would kill to have such a portfolio? A good year for a Homeowners’ carrier is 90% by comparison.
If you absolutely must blame someone other than yourself (who also chose to live in a flood-prone area), look to Texas or Mississippi. Texas accounts for roughly 10% of all policies but were responsible for 8.8% of all claims paid – they’re still breaking even, so maybe that is not the best example.
Now, Mississippi, on the other hand is 1.1% of all policies and they paid $23.4M in premium in 2006. Losses from 1978 to 2006 totaled $2.7B – with a ‘B’. Do some goesintas and you get roughly 116 – in other words, it would take 116 years of paying the same premiums with NO losses in order to break even. See the problem there? Florida, by comparison, would need four years to fund all of its losses incurred during those same 28 years.
And, probably the mack daddy of them all, Louisiana, paid $194M in premium for 2006, which is 8.1 percent of all policies issued by NFIP. Hold onto your hats with the losses paid from 1978-2006: $14.926B – that is 47.2% of all NFIP claims paid. In one respect, that is actually better than Mississippi – it would only take 77 lossless years to recoup what has been paid. Who would ever have thought that building a city in an area the Indians warned floods often (and below sea level, no less) would end up with so many claims?
So, Floridians have a very legitimate beef with Biggert-Waters. Please get off your high horse and take the time to learn what you are talking about. If you don’t believe what I am saying, go to this cool site called Google.com and look it up and show me I am wrong.
Actually, let me do you and everyone else a favor; here is a link to NFIP actuarial data which shows percentages, insured values, written premiums and similar data for claims – all broken down by state: http://www.fema.gov/media-library-data/20130726-1602-20490-3771/nfip_eval_actuarial_soundness.txt
Shame shame on all of you who support such an unfair law !!!
nothing else to say
Mona, if the “unfair law” you refer to is a law that attempts to bring in sufficient revenue to make NFIP break even, then there is a lot more to say. This is what happens when central economic planners interfere with markets to achieve political ends. First they con people into believing that they can wave their magic law-making wands and suspend economic reality so that risky behavior can be engaged in penalty-free. They dig the hole deeper and deeper, and when it gets so bad that they are compelled to stop the fiscal bleeding, innocent people get hurt very badly. If you don’t want this to happen, then you should oppose any and all government interference in the insurance market, including crony-capitalist scams like NFIP.
==“Taxpayer costs from climate change are getting bigger and bigger. Last year’s extreme weather events alone cost every American more than $300 apiece, or $100 billion altogether – most of it to pay for federal crop, flood, wildfire and disaster relief,” said Ceres president Mindy Lubber.==
Because as everyone knows, there were no extreme whether events prior to the Soviet Union’s collapse, when the Red movement had to turn Green to advance its statist, despotic agenda.
THIS bill has placed my wife here in west virginia in a precarious position, both are retired wv school teachers. our home lost its value due to the Biggert-Waters flood insurance reform act.if inacted, we can no longer afford to carry the insurance. we would be financially devastated.. HOPEFULLY our estemed senators will vote YES on the 4 year moratorim..,this will give enough time for further study…