Groups Urge Congress to Target Flood Insurance Fix to Help Needy, Not Wealthy

By Andrew G. Simpson | January 9, 2014
Superstorm-Flood Insurance

  • January 9, 2014 at 1:29 pm
    Captain Planet says:
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    Ohhhh, this is NOT going to set well with the Fox News crowd! Hannity to oppose in 3…2…

  • January 9, 2014 at 1:29 pm
    jtownagent says:
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    What a studid head line. Who is “this group”? Funny thing, last time I knew floods do not defirrentiate between the needy and the wealthy. Wealth is not a question on a flood application either. This issue has nothing to do with wealth.

  • January 9, 2014 at 1:32 pm
    JACK says:
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  • January 9, 2014 at 1:33 pm
    Barry Rabkin says:
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    And who gets to define what “wealthy” is?

    • January 9, 2014 at 1:37 pm
      JACK says:
      Hot debate. What do you think?
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      Barry- its on Wikipedia- defined as old white people that vote conservative

  • January 9, 2014 at 1:38 pm
    JohnG says:
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    If a “real” insurance company tried to justify the rates the NFIP is allowed to charge, every DOI would toss them out of their state as they could not justify there rates or their rate determination in any way shape or form. We don’t need a delay, we need an actuary with common sense. Good luck finding that in our government agencies! Charging up to $70,000 a YEAR for a building only coverage of $250,000 LIMITED SINGLE PERIL POLICY is immoral!

    • January 9, 2014 at 3:29 pm
      TomA says:
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      The rates probably seem non-sensical becuase there is another million or more people that do NOT have flood insurance but should. Insurance is about the spread of risk. When the pool is too shallow, everyone’s rates suffer. That said, again, the big rate increases are based on individual home risk characteristics. Throw in another million or more policies and rates for the recently “Unsubsidized” should balance out to something a little more manageable. In the meantime, it sucks. I get it. At some point we have to take responsibility for electing to live in an area where a super large body of water can rise up and wipe out a town. Oh, and viewing the NFIP as anything other than a federal backstop program rather than insurance is foolish. If you have a policy, and you have a flood…have low expectations and set aside some money in the meantime.

      • January 12, 2014 at 5:40 pm
        ajcmom says:
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        Gee, doesn’t this all sound strangely familiar, like the Affordable Care Act? Our government at its finest! Every time they claim they are going to make the rich pay, it’s the little guys who get killed. Please name one time where this tactic has ever worked!

  • January 9, 2014 at 1:39 pm
    Old Lawman says:
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    When one buys a home one should take into consideration ALL of the factors that may drive the cost of owning the home. In cases of devistation perhaps govt. can come in and offer low intrest loans to assist. However govt. should not subsidize the home owner.

    • January 9, 2014 at 1:41 pm
      JACK says:
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      Old Lawman- the law was retroactive to homes purchased July 2012. Sometimes all factors are not known….just saying.

      • January 9, 2014 at 1:45 pm
        JohnG says:
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        WRONG! Read the law before making misstatements. You are buying the gov’t BS. Peolple who purchased homes years ago who have been “re-mapped” have been HUGELY effected! Get you facts right!

        • January 9, 2014 at 1:49 pm
          JACK says:
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          ????

        • January 12, 2014 at 5:49 pm
          ajcmom says:
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          This is exactly what’s happening to us! We bought our home and business properties in 1997. And because our town was “remapped” a few years ago, we will all now see an exponential jump in premiums. How were we to know that in 1997??? And we live in a very poor town along Wills Creek in PA. That’s right, it’s a creek! The town was flooded in ’84, and since then a levee system was built by the state, and they refuse to “certify” it, which means a piece of paper that says our town has a levee to protect us. The house next door to us has been on the market for a year. Last week a young couple tried to buy it and backed out when the found out the flood insurance premium is $5400 a year. The house appraised at $90,000 — not exactly a mansion! So tell me again about me being so wealthy and that I should know better than to buy an ocean front mansion…..

    • January 9, 2014 at 1:41 pm
      JohnG says:
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      So when the NFIP just decides to change the map and toss you a $70,000 bill for insurance how do you “plan” for that. As the people in Sacramento and other communities where this has happened.

      • January 10, 2014 at 10:47 am
        Roscoe Garden says:
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        I’d like to see that $70,000 bill. Really. What is the coverage A amount on that property?

    • January 9, 2014 at 3:19 pm
      KY jw says:
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      I agree that proximity to water and possibility of flooding should be taken into consideration before purchasing a home. I would also research if the property has ever flooded. However, the person whose home has not flooded since it was built (over 40 years ago) and was “remapped” into a zone that requires insurance has a valid argument. They could not have foreseen this.

      I think there are many homes that should not be built where they are, but it appears, that the changes to the NFIP don’t all work. Whether it’s due to mapping or lack of actuarial skills, something the program is broken. The problem is how can the legislature fix this since they’re the one’s who screwed it up in the first place?

      • January 9, 2014 at 3:20 pm
        KY jw says:
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        ignore the “something” after ‘actuarial skills, ‘

  • January 9, 2014 at 1:45 pm
    Psaiwisuhkernekah Ptweowa says:
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    • January 9, 2014 at 2:55 pm
      InsGuy says:
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      Yea! Let’s give MORE coverages to the gov’t to handle. That’ll solve it! :P

      They call that hooey in Texas.

    • January 9, 2014 at 3:22 pm
      KY jw says:
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      The rates for wind/hail and earthquake are not out of order. These coverages are working just fine in the majority of the country.

    • January 10, 2014 at 10:50 am
      Roscoe Garden says:
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      Yes, because the US Federal Govt has done so well with The Affordable Care Act implementation and administration. Oh, wait a minute!

    • January 10, 2014 at 11:06 am
      Roscoe Garden says:
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      P P has it backward. Allowing flood insurance to be written by the private sector will ‘fix it’ over the long term because the owners of property exposures which are un-insurable will eventually have to self-insure or sell the property to someone who can afford to self-insure it. The desire by someone to live in high flood risk zones should not be subsidized by taxpayers. The private market can decide to use investors capital, including higher risk taking via ILS’s to insure all types of catastrophes. Taxpayers who do not want to take flood insurance risks can chose to not invest in insurance companies or ILS’s.

      • January 13, 2014 at 10:11 am
        LiveFree says:
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        I agree with Roscoe. This opinion will not be a popular one and I understand why because it’s a harsh reality but it is the truth none the less. The gov’t made this a mess by interfering with the market in the first place and the market has to be allowed to correct. The correction will come with a lot of turmoil but it has to be done now or it will only be delayed and worsened in the future. I feel absolutely terrible for anyone effected and hope that people will realize the cause of this was gov’t policy and apply what they realized to all other sectors of gov’t policy (see monetary policy/Federal Debt).

        To those effect all I can say is be mad, but be mad at the right people, the gov’t that made this unsustainable policy structure.

  • January 9, 2014 at 1:46 pm
    earlybird says:
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    “Means testing” in the case of hi value coastal property, is in effect already. “Needy” people do not buy million dollar plus ocean front homes. As a insurance broker, I have seen sales of some properties fall thru due to the cost of flood coverage required by the mortgage company. But, if “you” plan to buy a property and think the rental revenue during the 12 week summer season will pay the mortgage and expense of insurance, then “you” shouldn’t be buying that property anyway. “Don’t buy what you cannot afford.”

  • January 9, 2014 at 1:53 pm
    Dave says:
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    “Opponents of delaying Biggert-Waters flood insurance reforms and stopping the resulting premium hikes say the negative effects are being exaggerated and instead of gutting all of the reforms, Congress should target its fix, including using means-testing, to those who most need premium relief.”

    So we’re going to provide “premium relief” (read subsidies) to people in flood prone areas to continue to incentivize them to stay in or build in areas where the shouldn’t be living or building? Sounds like a great idea.

  • January 9, 2014 at 1:54 pm
    David Avellar Neblett says:
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    I am a homeowner with a recently purchased home in a VE area. My Flood insurance is close to $6,000 although my entire home is raised 8′ feet off the ground. I am also an attorney that is working on and has worked on a number of flood loss claims.

    Flood insurance is often required and because it is run via quasi governmental agencies etc., there is really no way to have someone look at your home or get different insurance. If you are in a certain zone – your insurance costs ____. This is ridiculous.

    Someone down my block is trying to sell their home and the potential purchaser is now trying to back out of the deal as the insurance on that home is close to $10K a year and everyone is worried it will go up considerably.

    I might feel differently about Flood insurance and this legislation, but I work on flood claims. Generally, you don’t get anything from this insurance and the laws are set up so that most homeowners/insureds get screwed. If you disagree with the insurer, you have to file in Federal Court, there are many time limitations and there is no recourse against the insurer for any wrongdoing.

    Increased costs of flood insurance will definitely impact the sale of homes in my area and I truly believe that we would all be better off without this insurance or if the private market got involved.

    David Neblett PerryNeblett.com #Floodinsurance #perryneblett

    • January 9, 2014 at 2:01 pm
      Dave says:
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      In the shorter term it would appear there will be a lot of pain. In the longer term there will be fewer people living in or building on flood plains which I consider a good thing.

      • January 9, 2014 at 2:34 pm
        jack says:
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        Dave- everyone lives in a flood zone…EVERYONE! You live in a low to moderate flood zone yourself. Go to FEMA and map it yourself. 25% of all flood occur in low-mod zones….got it? Educate yourself a little.

        • January 9, 2014 at 3:30 pm
          KY jw says:
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          jack, it’s still a good idea to discourage building in areas that flood frequently. As far as I’m concerned, if a property floods twice, then nothing should be built there. I think this is similar to what Dave meant when he said “fewer people living in or building on flood plains…”

          • January 9, 2014 at 4:05 pm
            jack says:
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            KY jw- The only problem with that is the gov has to step in and buy the property like in NJ. So you take tax dollars and pay pre-flood inflated values for homes that have flood damage. That’s a bailout.

            Problem is, just because a home floods twice it doesn’t mean FEMA paid a lot. See what I’m saying. FEMA says if a home has 50% damage it has to be elevated to new BFE and to code. It doesn’t happen most of the time.

            I moved to the Charleston SC area 2 days after Hugo. I could go on and on.

            Here’s a kicker for you. Did you know BFE is not determined by storm surge ? It’s based on rain fall.

          • January 10, 2014 at 7:42 pm
            KY jw says:
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            Well, then, how do you fix this? Buildings/homes that flood are either insured or not. Either way, repairs are apparently subsidized by the govt. If you don’t buy out the property, then what happens to it? If the owner can’t afford the insurance, do they walk away from their home & it’s loan? Then what? The bank is stuck with property it can’t sell. What then? It’s a never ending circle argument. How do we get off this Mary-go-round?

    • January 9, 2014 at 2:47 pm
      jack says:
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      David Avellar- It sounds like you are paying “obstructed rates”! Have your agent tell you what unobstructed rates would be and have a contractor make the changes under the home. Make sure you have $5k max deductible and if you can live with it, remove the contents. Your bank could care less if you have contents coverage. NFIP only pays you ACV on contents anyway. You may already know this but thought I would throw it out anyway.

      • January 9, 2014 at 2:52 pm
        jack says:
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        David Avellar- also check to see what figure your agent used as the replacement cost on the app. There are 3 tiers used in calculating your premium. Under $333,000 pays one rate, $333,000 to $500,000 pays another, over $500,000 pays the highest. FEMA justifies it based on “large loss ratio”.

        • January 9, 2014 at 2:53 pm
          jack says:
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          the above is only used in VE flood zones.

  • January 9, 2014 at 2:11 pm
    jtownagent says:
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    david says “I am a homeowner with a recently purchased home in a VE area. My Flood insurance is close to $6,000 although my entire home is raised 8′ feet off the ground. I am also an attorney that is working on and has worked on a number of flood loss claims.”

    Your home may be 8″ off the ground; that does not mean you are 8′ above the base flood elevation.

  • January 9, 2014 at 2:19 pm
    jtownagent says:
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    John G-perhaps the governments wants out of the flood program. As they continue to “messed it up with improper rates”, both too high and too low, perhaps the For Profit insurance industry will come in with “proper rates”, . Until then the NFIP program will probably continue to loose money.

    • January 9, 2014 at 2:42 pm
      jack says:
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      jtown- the gov will never get out of the flood program….never. It’s how they rob peter to pay paul.

  • January 9, 2014 at 3:13 pm
    Richard Lowe says:
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    • January 9, 2014 at 3:33 pm
      KY jw says:
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      That’s it. You, Richard Lowe, are a troll. Quit baiting.

  • January 9, 2014 at 3:15 pm
    Richard Lowe says:
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    • January 9, 2014 at 3:21 pm
      jack says:
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      like pregnancy coverage

  • January 9, 2014 at 3:18 pm
    Tim Grady says:
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    I am an insurance agent on the Oregon Coast. I have clients who are losing their homes due to increases in flood rates so I know that is not a myth. I have seen reates in excess of $50,000 on $250,000 policies for houses that were built long before there were flood zones or maps. I think if the government is going to mandate coverage then they must also make it affordable. My customers aren’t wealthy. They should also not be allowed to make retroactive changes to rating on houses can’t possibly be affordably updated to meet the new standards. There was a good reason for pre-firm rating and the reasons still exist.
    Also, lets discuss what accuarally sound rating means to the NFIP. The Northwest part of the country has not had the dollar value of claims from flooding in the entire history of the program as are generated by one hurricane in the gulf coast or the eastern seaboard, yet we pay the same rates. If any national insurance carrier tried to raise their rates in Oregon based on their loss ratio in Florida the Insurance Commissioner would slap them so hard their families would feel the smack!

    • January 9, 2014 at 3:26 pm
      jack says:
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      Tim- that’s because of population density. A home at -2 has the same risk being flood regarded of what state it’s in.

  • January 10, 2014 at 9:24 am
    Roland says:
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    “Grande also said that while private insurers have shown some interest in providing flood insurance, they can’t do that if they have to compete against NFIP premiums that are subsidized and below cost.”
    Duh. So why doesn’t NAMIC – an organization that is supposed to represent private insurance companies in a free market – tell the politicians to scrap NFIP once and for all? (Hint: it has to do with NAMIC member companies getting to write the profitable coverage on structures that never should have been built while taxpayers get stuck with the bill for the risky flood coverage.)
    Even lacking any understanding of how markets work, anybody should be able to see by now that the government has screwed this up beyond repair. If it wants “actuarially sound rates,” then all it has to do is get out of the way and let the market provide them.

    • January 10, 2014 at 10:26 am
      JACK says:
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      Roland- but they just into the health insurance. Can’t wait for that one to blow up….tick…tick..tick.

  • January 10, 2014 at 12:09 pm
    Squandered Youth says:
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    B-W is just a bad statute. The main cause of the NFIP deficit is only 44% of premiums go to pay claims; 30% goes to WYO insurers for administrative fees. B-W does nothing about this: it more than double premiums without touching the insurers’ 30% cut. It is also unfair to make current policyholders pick up the full $24 billion pre-existing NFIP debt, much of which stems from political damage control decisions and poor fraud control following Katrina that have NOTHING to do with the future actuarial risk of a current insured’s property. Moreover, B-W dumps a disproportionate amount of this old debt on a relatively small subset of owners compelled by law to maintain coverage who are unlucky enough to draw higher elevation on new maps. “means testing” relief from this absurdity would only make the disparity worse. Finally, B-W is a tremendously inefficient means of raising revenue because the premium increases have a disproportionate negative impact on property values. In some areas there has already been a 20% hit. NFIP insured properties are worth over $3 trillion. Even if B-W only has a 1% negative impact on property values overall, it will end up costing insured $54 billion for the government to pay off a $24 billion debt.

    The key to NFIP reform is to spread the pain to all stakeholders, not just pile it on a small subset of captive insureds unfortunate enough to have their flood maps chagned.

    • January 13, 2014 at 8:45 am
      jack says:
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      Squandered- so lets make the healthy pay for the sick. Hey why not its working for obamacare…lol.

  • January 13, 2014 at 3:59 pm
    earlybird says:
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    No offense meant “Squandered” but you must have been napping in 1st grade math class. 44%goes to pay claims, 30% goes to the old meanies at the WYO insurance company. That is 74%. Who gets the remaining 26%? The WYO insurers handle all of the paperwork, which includes getting all of the forms signed, getting the rating correct after the retail agent screws it up at the beginning. The WYO, handles all complaints and has to provide claims service. Like many of today’s problems, the “geniuses” in Congress dreamed up a bill, put it in place, and don’t know how to fix it after its been exposed as a catastrophic mess. As it is now, it will kill the barely recovering real estate markets nation-wide.



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