White House Balks at Flood Insurance Delay, Agent Licensing Bill

By Andrew G. Simpson | January 28, 2014
White-House

  • January 28, 2014 at 9:22 am
    TAR says:
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    Since when is Obama and his Administration concerned about Americans being financially challenged? If he was so concerned about being “challenged financially” gasoline prices would be back down to $1.80 per gallon or less (as they were in 2008), grocery prices would not have risen due to increased energy costs and utility costs would lower.

    • January 28, 2014 at 2:59 pm
      Bill Price says:
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      Actually, A Congressional Research Report shows $5.5 billion surplus 12/31/11 and 6 months later, a $17.5 billion deficit. No way this can be correct.
      We did find that Insurance Companies ( with “no risk” were being paid from 33% to 66% commission and management fees by NFIP.) BUT we can’t find a comprehensive financial overview of the Flood Insurance program.
      Wonder why not?

      Bill Price

      • January 28, 2014 at 3:18 pm
        Agent says:
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        Maxine Waters doesn’t want it audited. Get it Bill?

        • January 29, 2014 at 11:43 am
          Bill Price says:
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          You should.
          BP

  • January 28, 2014 at 9:45 am
    Squandered Youth says:
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    There can be no greater proof Biggert-Waters needs to be put out of its (and our) misery than watching the contortions required to defend it: this President parroting the Tea Party on deficits while the Tea Party embraces a federal mandate requiring the purchase of grossly overpriced insurance through a system that makes healthcare.gov a model of transparency and efficiency. That’s not even taking into account that FEMA’s efforts to defend $30k annual premiums for $250k do not pass the straight face test, even if the agency is given a pass on ignoring the big picture that increases of this magnitude are so common and unpredictable they have frozen real estate markets and cost homeowners in lost value many times more than the amount of the deficit it is trying to reduce.

    The bottom line is Biggert-Waters is unworkable, inequitable, and imposes several dollars in costs for every dollar in revenues it retires. Trying to retire a portion of a pre-existing federal deficit by putting it on the backs of future homeowners mandated by law to buy insurance regardless of cost, while convenient, was a bad idea. Undermining decades of reasonable investment expectations by allocating that burden among homeowers on the basis of new maps that are essentially random at the level of individual properties was an even worse idea. There are ways for all stakeholders – homeonwers, insurance companies, mortgage lender and state and federal governments – to come together and make flood insurance affordable, sustainable, predictable and efficient. biggert-Waters doesn’t do this,and the sooner it is abandoned the sooner we can all move on to something that makes more sense.

    • January 28, 2014 at 11:00 am
      Flagent/insured says:
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      Last week I had two elevation certs come in. One for a home that was 7 foot under elevated in the keys, another that was 4 foot under elevated in Palm Beach, both right on the water. Guess what, as a consumer, I am not willing to share the cost of insuring those homes. Neither am I willing to share the cost of homes built in areas continously prone to flooding in the other parts of the country. While I agree that 30k for 250k of coverage is absolutely ridiculous, I think the flood rates should be increased.

      • January 28, 2014 at 12:04 pm
        Squandered Youth says:
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        There is room to work here on a sensible solution. If properties like the ones you describe have a history of flooding, something like the pre-Biggert-Waters termination of grandfathering for substantial/ repetitive loss would weed out these bad risks. The way FEMA has done its new mapping, however, being at -7 BFE is not necessarily proof of a bad risk. Experience in NJ has been it is not uncommon for a home built to BFE (on maps updated in the mid 2000′s) to be re-mapped at -7 BFE when Sandy’s record storm surge produced two feet of first floor flooding.(FEMA’s answer to how it can set a 100 year elevation five feet higher than the level reached in a 700-year storm is essentially “we don’t have to prove it’s right – you have to prove its wrong.”). No one can yet give an accurate prejection of the premium this kind of mapping would result in, but its likely in the range of $20k – $19k more than a pre-B-W non-subsidized premium. It would take $400/yr. per insured to pay off the NFIP debt in 10 years. That kind of an increase would have caused grumblings, but not a revolt. Even if homes near the water were asked to take take twice the hit -an $800 increase – that might be defensible. A $19,000 increase, however, is just nuts. There has to be a better way to do this, and that’s what all stakeholders need to take the time to figure out.

        • January 28, 2014 at 1:34 pm
          FLagent/insured says:
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          Ok sense I insure the whole country. Here’s what I heard continuously from people in Sandy’s path, ‘oh this home has been here 100 years and has never flooded’. Guess what happened, it flooded and was a total loss. Which is the same thing that can happen in other parts of the country, 100 years no flood, then all of the sudden an unexpected event.

          • January 28, 2014 at 3:47 pm
            Squandered Youth says:
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            I’m not saying there should never be any increase, only that the increases produced by Biggert-Waters make no sense. Relatively few homes that were the subject of Sandy claims were total losses. Most merely had first floor flood damage resulting in an average claim, last time I checked, of $45k. The total loss properties were usually pre-FIRM homes that the pre-B-W loss of grandfathering for substantial/ repetitive claims would have weeded out anyway. I don’t have a problem with imposing new standards at the time of that level of damage. What I object to are excessive premiums that compel phrophylactic elevation of entire neighborhoods when the expense isn’t justified by the risk avoided. Nothing I’ve said relies on the “no flood in the past guarantees no flood in the future” argument – which I wouldn’t have made before Sandy and definitely wouldn’t make after. The point is – as you concede – $20k to $30k premiums for $250k coverage is nuts. This is particularly true since most insured properties came through something worse than the worst storm they can expect to experience in a lifetime with only moderate damage and are now facing premiums that assume they will be a complete loss every few years. No one is arguing this is the correct result, so the focus should be on stopping B-W before it causes more harm, then fixing the problem.

      • February 1, 2014 at 3:12 pm
        gerard says:
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        I think that since flood insurance was mandated and that since 1968 the Federal Government promoted real estate development in coastal areas, that there remains a responsibility for the government to continue its present funding. You cannot change the rules in the middle of the game. Any present or future substantially remodeled structure has to be grandfathered.

        As a comparison, should the government suddenly say that the elderly are really burdening us financially and substantially cut their monthly stipend? Many people will not make to retirement age, like my father, so why did his SS contributions go to pay for others fortunate to make it? Stupid but similar.

        Why does the government pay 62% of the $9 BILLION annually for farmers crop insurance or the 5 BILLION annually to farmers for NOT planting crops. Why not let the free market determine the price of crops?

        And going back to Food Insurance- why do insurance companies, as stated by a poster above, and verified, collect up to 60% commissions on every policy? 5% seems very reasonable!

        I have shared my thoughts with numerous federal elected officials and national newspapers to spread the word about this farce called Biggert-Waters and the even bigger farce of the insurance companies looking to gouge the premium payer. A congressional panel should look to the big insurers as to their link to think destructive policy.

    • January 28, 2014 at 1:14 pm
      james says:
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      Squandered, you have no idea of the Tea Party. I wish it had as much power as the ultraliberal Democrats, since they’re the reason we’re in this deficit mess.

  • January 28, 2014 at 9:46 am
    Bill Price says:
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    Has anyone seen a Comprehensive Financial Analysis of the NFIP?
    Bill Price

  • January 28, 2014 at 12:13 pm
    Rusty says:
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    Once again, it demonstrates why government has no business being in the insurance business. Neither this program nor Obamacare are
    actuarially sound and simply represent another example of unfunded future liabilities that taxpayers will ultimately shave to shoulder, in addition to all the others created by our various overspending governmental entities. One thing the country’s current economic situation has demonstrated is that we cannot “do it all” as politicians would have us believe while they commit future generations to a massive debt burden.

    • January 28, 2014 at 2:31 pm
      Bill says:
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      What about Medicare Part D? That one has already added plenty to the deficit and will continue to add many billions into the future. Why is that lovely piece of legislation never mentioned anymore?

  • January 28, 2014 at 12:58 pm
    Lou says:
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    I am concerned about the Federal Government getting in the business of licensing agents, especially this administration. It will become politicized to the point that an agent may be delayed or denied licensing based on the political views, activism etc. Frankly I don’t trust anything coming out of this presidents mouth or his administration.

    • January 28, 2014 at 1:27 pm
      FLagent/insured says:
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      Totally agree. I have no idea why that even needs to be done. If you want a non residence license you can get one by applying through the proper channels. It makes no sense.

    • January 28, 2014 at 2:36 pm
      Agent says:
      Hot debate. What do you think?
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      I agree with you 100% Lou. Their app may have questions about your party affiliation and if it doesn’t match what they want it to, the app will get substantially delayed and you might even get audited by the IRS.

      • January 31, 2014 at 10:44 am
        Speculation says:
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        Wow wild speculation is fun isn’t it! Their app *may* have questions about party affiliation. Yeah and it *may* tell you the sky isn’t blue.

        • January 31, 2014 at 1:00 pm
          Libby says:
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          That’s typical Agent drivel, Spec. Pay no attention.

          • January 31, 2014 at 3:28 pm
            Agent says:
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            Libby, you are very trusting of government even though you have been lied to over and over about anything and everything. You would be better off being skeptical. The Federal Government has no business regulating something that should be reserved to the states. All it is going to do is increase expenses and the size of government.

          • January 31, 2014 at 4:15 pm
            Libby says:
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            Agent – I quit trusting the government after all the busllshit shoveled on us by Bush about WMD’s.

            And haven’t you and your kind been screaming to the rafters about navigators not having background checks and fingerprints? A national registry would make sure all agents have this, since not all states have that requirement.

            Background checks and fingerprints were good for navigators, but not for you? Less regulation? More regulation? Make up your mind.

  • January 28, 2014 at 1:52 pm
    WK2 says:
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    Seems to me that while most don’t want to pay a portion to cover others living in flood zones they all seem to agree these rates are way out of control. There is no way it should cost tens of thousands to insure a home for $250,000 in coverage. FEMA can’t justify those rates. We are broke here at home yet we have money to send all over the world to bail out other countries and their problems. Maybe we should take care of our own here in the USA before we provide for others. Once we clean up our mess we can help others if there is anything left. I sure don’t believe these subsized rates are the cause of the NFIP being broke. It couldn’t possibly have anything to do with out of control spending by FEMA since Katrina hit….

  • January 28, 2014 at 2:04 pm
    Wayne2 says:
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    If the NFIP is running at a loss shouldn’t everything be reviewed before just raising rates for policyholders? Shouldn’t claim payments, loans, gift cards, operating expenses, rates, everything be looked in to before this happens. I am sure the entire thing can’t be just subsidized pricing.

  • January 28, 2014 at 2:19 pm
    MidFlAgent says:
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    For many years the NFIP has a surplus at years end and the government took that money and put it somewhere else. Now that the NFIP needs it, why isn’t it being paid back.
    No one seems to remember those years, where the money went, or even how much it was….hmmmmmmm. If the government would have the surplus alone odds are the program would not be in financial situation it is now.
    Funny how no one wants to address this.

  • January 28, 2014 at 2:44 pm
    Tommy Hansen says:
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    Does anyone realize that if this bill was to pass a majority of the population that live anywhere near the coast will not be able to afford to live there. You will have vacant home that will not sell.

    For all those legislator who are in support of the Biggert-Waters act I hope the next time they go the beach, they will be prepared to wait on themselves and clean their own room because no one who does that will be able to afford to live there.

    I hope the next time they get gas and the price explodes I hope they realize that the millions that work in the refining facilities along our coastal cities will not longer be able to afford to live there…

    I hope that when they go to take a cruise, there are prepared to load their own luggage because there will be no one working because they cannot afford to live there.

    I hope that when everything in the country goes up in price everyone realize that the millions that have jobs connected to the ports from Maine to Texas will no longer be able to afford to live near there they live.

    I personally live in a modest home near the coast around Galveston, Texas. My flood insurance will eventually reach around $10,000 per year. As a retired 40yrs of service Deputy Sheriff I will not be able to afford that. I will also not be able to move because I will not be able to sell my house because of this. I then can go on welfare. Hows that sound to the Congressmen.

    The Flood program and FEMA are nothing but a long lasting hangover from Hurricane Katrina and the absolute waste on what they spent on that. I can tell you that when Hurricane Ike hit my house, I received almost nothing. But, I worked and did what I had to do and did not sit around waiting for handouts.

    Are you aware that the contract workers who were writing a majority of the damage estimates for these programs were getting paid on the amounts that they wrote. How insane is that. Did I say how insane is that. A receipe for abuse and disaster…

    Respectfully,
    Tommy Hansen
    Bayou Vista, Galveston County, Texas

  • January 28, 2014 at 7:03 pm
    Judy Hansen says:
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    If you think raising these rates to this extent will make the NFIP sound from an actuarial standpoint, think again. You are not taking into consideration all of the millions of dollars paid to flood victims that did not have a flood insurance policy, did not pay one cent into the program. After these major flood events, the government handed out millions to people that did not have flood insurance. We saw it time and time again after Ike. Don’t penalize the folks that do carry flood insurance polices. There are a lot of problems with the program, but raising the rate to a level that no one can afford is not the answer. You will have little money in the proverbial pot because very few will be able to afford their premiums and the rest will have to walk away from their homes.

  • January 28, 2014 at 8:02 pm
    Tim Grady says:
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    I think if the government is going to mandate a program like the NFIP then they have a responsibility to make it affordable. You can’t take a structure that was build legally and to code then hold it hostage to newer standards when FEMA decides to write new maps that aren’t even accurate. I have two customers who have already lost their homes to these rate increases.

    • January 31, 2014 at 3:34 pm
      Agent says:
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      They may have the responsibility, but that doesn’t mean they will ever do it. When has anything the government done reduced cost to the American taxpayer? Oh, I forgot the ACA. It made Healthcare more affordable, right? $2,500 savings for the typical family, right? Would you like to buy some swampland in Kansas?

    • January 31, 2014 at 4:17 pm
      Libby says:
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      NFIP is not mandated by the government. Your mortgage company may mandate that you buy flood insurance and up until now NFIP was the only place to get it. But the government doesn’t make you get it.

      • February 11, 2014 at 3:48 pm
        Tommy K says:
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        Libby, flood insurance is mandated by the government if you’re house is located in a FEMA designated floodzone and you are carrying a federally insured (FDIC) mortgage. See: Flood Protection Act of 1973 and National Flood Insurance Reform Act of 1994.

  • January 29, 2014 at 11:17 am
    Marie Beninati says:
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    The fundamental flaw is in the element of “surprise” to new waterfront homeowners- I have someone who received a bill for $250,000 of flood insurance of over $30,000. This cannot under any circumstances be acceptable in these United States! Some one didn’t do their homework! It cannot be dealt with on a case by case basis – how can we expect an average person to pay such an outrageous fee while we wait for someone in a government position with no sense of urgency to respond! Sandy has done a lot of damage to waterfront homes that were not covered by flood insurance – owners had to pay for bulk-head damage and the like, now we dump “Market Rates” on these same people – who’s market rates? It’s a real mess in the real world here!

    • January 29, 2014 at 1:06 pm
      Agent says:
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      So Marie, what was all the hundreds of millions given to NJ from FEMA all about to help restore the properties damaged by Sandy? Perhaps they didn’t need Flood Insurance if FEMA was going to step in anyway.

      • January 29, 2014 at 1:36 pm
        Libby says:
        Hot debate. What do you think?
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        Even if you bought the maximum amount of coverage from NFIP you wouldn’t necessarily have enough to repair/rebuild. Don’t just assume all people that got FEMA money did not have NFIP coverage. Not to mention all the money needed to clean-up and rebuild infrastructure. Everything is not as simple as you try to make it Agent.

        • January 29, 2014 at 2:23 pm
          Agent says:
          Hot debate. What do you think?
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          So you just troll from article to article hoping to find a post to argue with me about, huh Libby. Homeowners & Business Packages covers wind, Flood covers rising waters. If a property is flood damaged and they don’t have flood, is there a possibility that FEMA is paying a lot for property losses? With their record on Katrina, this government entity just shells it out.

          • January 31, 2014 at 1:02 pm
            Libby says:
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            Don’t flatter yourself, Agent! LOL!!!

          • January 31, 2014 at 3:29 pm
            Agent says:
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            ( * )

          • January 31, 2014 at 4:18 pm
            Libby says:
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            Just what does that mean, Agent?

      • January 29, 2014 at 2:44 pm
        Squandered Youth says:
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        I think Marie may have meant “waterfront structures” not “waterfront homes,” as flood insurance only pays for the house, not things like retaining walls, which have to be fixed out of the owner’s pocket. As to Agent’s main point, the amount of money given to Sandy victims who did NOT have flood insurance is an issue in NJ. No one wants to see people suffer, but there is a process point (the goal of the NFIP to have insureds self-fund disaster recovery doesn’t work if people opt out on the assumption they’ll get bailed out) and an emotional response (people who “played by the rules” by buying insurance and building to BFE are at risk of losing their homes while people who didn’t are getting money for theirs. The amount of Sandy grant money is misleading. Much of it is earmarked in ways that mismatch where the damage was done. One much-criticized program offers money to people to move INTO the counties hit hard by Sandy while the people already living there get nothing. A lot of the money is earmarked for low income housing and non-seasonal rental units, despite Sandy having hit a lot of towns were more than half of affected properties are second homes used as seasonal rentals. Despite constituting the lion’s share of affected properties, none of the grant programs permit a cent to be spent on second homes – even to elevate them to comply with the new elevation standards FEMA is imposing. Encouraging reconstruction of beachfront primary residences while disadvantaging, in the same neighborhood, second homes which a) drive the resort economy with rentals and b) don’t create a homeless problem if they do flood seems like an unusual planning strategy, but those are the incentives of the grant program. Not surprisingly, over more than a year later, most of the grant money has not been spent, primarily due to the difficulty in finding recipients who meet all of the criteria to receive it.

      • January 29, 2014 at 3:31 pm
        Bill Price says:
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        As I understand it the NFIP paid for uninsured Sandy repairs, if the Property owner signed up for Flood Ins later.
        In other words, Collect first, pay later.
        Bill Price

  • January 30, 2014 at 1:14 pm
    uct says:
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    I find it comical people want to live on the beach, yet not pay the price for their flood insurance. There are parts of the country that flood yearly, yet those homeowners are screaming “unfair” because they are being asked to pay their share. Guess what? If your home is only $250k, and your premium is $20k for flood, and it floods yearly, you are still not paying enough. If you choose to live in a flood prone area, or along the beach, STOP complaining about your flood insurance. Don’t like it? Simple solution. Don’t buy the house.

    • January 30, 2014 at 3:31 pm
      max says:
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      Not so simple genius. I bought my home (in MA) over 30 years ago. Not in a flood zone and 3 miles from the beach. During blizzards and hurricanes that brought coastal damage to some homes here my neighborhood was never effected. Now FEMA has redrawn the maps…guess what hundreds of homes in this town are now in ‘flood zones’ including my neighborhood. We never even had a drop of water in our basement! Now we are in a flood zone? FEMA didn’t bother to take ground elevations they contracted companies to fly over and use laser ‘solar mapping’ already proven to be flawed science. If it walks like a tax and smells like a tax, it’s a tax.

  • January 30, 2014 at 2:12 pm
    FLuw says:
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    Comical is people assuming everyone living in a flood zone lives on the beach. Many people bought homes that were not in mapped flood zones and are now being told the maps are changing and now you have to buy flood insurance. Many people bought older homes and have lived in them for decades only to be told their flood insurance will now cost 10X as much because the rules have changed 20 years after they bought their home. No way to forsee that or avoid buying the house. Many of these people haven’t ever had a flood claim so there are no yearly floods. Your one size fits all comments don’t apply.

  • January 30, 2014 at 4:20 pm
    james says:
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    Well, it passed. The agency licensing scheme is the part that makes NO sense.

    • January 30, 2014 at 4:50 pm
      Agent says:
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      I am in the process of renewing my state license. Am I now going to have to get a Federal License at another exhorbitant charge?

  • January 30, 2014 at 6:15 pm
    Robert Ferrari says:
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    It’s amazing how this congress quickly forgets what it’s like to have to struggle to make ends meet. They sit in their ivory tower, completely isolated from the masses with no idea about the impact this short sighted law is going to make on home owners.

    The FEMA deficit could easily be made up by reducing the amount of money we send to countries over seas who hate us, Egypt for example. It’s time to take care of our people and quit trying to convince the world to like us by buying them.

    • January 31, 2014 at 10:11 am
      Agent says:
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      I agree Robert. This country is running trillion dollar deficits, borrowing $.40 of every dollar they spend and is totally out of control. Flood has been broken for a long time. How many times has it been looked at, extended at the last minute? However, I don’t think the population as a whole should have to pay for people that live in obvious flood zones. Why should my Homeowners be surcharged to pay for it? Why should my taxes have to go up to pay for it?

  • January 31, 2014 at 10:40 am
    james says:
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    More often than not, Agent hits it right on!

  • January 31, 2014 at 2:24 pm
    JMH says:
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    I lost the downstairs of my home in Ike. My home is not grandfathered; so, I have flood insurance only on the upstairs portion of my home. My neighbor with the same floorplan downstairs was grandfathered. FEMA paid her $150,000 after Ike. It cost us around 20,000 to repair our home. My neighbor repaired her home, then bought a new truck and a boat with her windfall.
    This is a major part of the problem. FEMA hires a lot of subcontractors as adjusters. They were paid on a percentage of what they write. How is that good business?
    I also know a lot of people that didn’t carry flood insurance and they were given FEMA money. Many of us were scratching our heads and wondering why we have carried flood insurance all these years.
    We have another friend that received $50,000 and wasn’t grandfathered and wasn’t even covered downstairs. Then a few months later opened their bank account and magically another $50,000 had appeared.
    These are true stories and I’m sure there’s tens of thousands of them out there. I believe the program is mismanaged and now they’re trying to legislate us out of our because of it.
    The program needs to be looked at with a microscope. And when conducting an actuarial study of money taken in and money going out, they should only consider the money paid to actual policyholders.

    • January 31, 2014 at 4:28 pm
      Libby says:
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      Totally agree with your points, JMH, but many people get the NFIP confused with FEMA. NFIP is only a small part of FEMA and not all communities participate in NFIP, but are still eligible for FEMA funds. FEMA also provides funds for non-flood related natural disasters like what happened in West, TX. Oh, wait.

      I am sure there is gross mismanagement, as there is with most governmental agencies, and we need a microscopic examination of the whole department.

      • February 11, 2014 at 5:27 pm
        Agent says:
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        After Katrina, FEMA was handing out checks of $2,000 like candy on the streets of New Orleans. Later, when the people relocated to places like Houston, they put them up in hotels, apartments and paid slumlords like Bill White millions. There are always crooks who will take advantage of a disaster. In Okla City last year, enterprising crooks were selling bottled water for $5 a bottle, motels charging 3 X the going rate. Oklahoma cracked down on these people big time.



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