Consumer Group Blasts ‘Misleading’ Senate Bill to Delay Flood Insurance Hikes

February 19, 2014
Flood

  • February 19, 2014 at 2:38 pm
    Squandered Youth says:
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    CFA’s proposal does nothing to protect CURRENT consumers of flood insurance. To the extent this is “consumer protection” it relies on “destroy the village in order to save it” logic.

    CFA’s opposition to S. 1926′s B-W “time out” would make sense if CFA believed that B-W rates are sound. Even CFA acknowledges, however, FEMA’s machinations are far from transparent and frequently unfair, the resulting rates are frequently exhorbitant, and the commissions on WYO – a major problem NOT addressed by B-W – are out of control. The broad support S. 1926 received reflects a consensus there is something very wrong with implementation of B-W that needs to be stopped and fixed before it causes real, immediate and substantial harm that would be irrevocable once inflicted.

    CFA expressly acknowledges the flood insurance program needs a major overhaul and implicitly concedes that B-W doesn’t fit the bill. B-W was not comprehensive reform – it was the mutant offspring of an odd marriage of left and right sound bites that really does nothing more than expedite ways to put the entire NFIP debt on current and future homeowners, while giving a pass to the federal mismanagement which created the debt and the private insurers who profit the most from it – and will profit even more from higher rates. CFA raises some points worthy of discussion – which congressional inertia guarantees will NEVER be discussed if B-W is permitted to remain in effect. If it is interested in long-term, meaningful reform that is fair to all, CFA’s opposition to giving B-W the time-out it deserves makes no sense.

  • February 19, 2014 at 2:39 pm
    FixFloodNow says:
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    The NFIP program received $49 billion Dollars from 1978 to 2012 and incurred losses of $43 billion.. This comes out to $6 billion excess that should be more than enough for overhead…

    Business and Familes who do not live in coastal areas will loss their buildings and homes unless the NFIP flood maps are upgraded and the rate increase & sales commissions and capped.

    • February 20, 2014 at 10:17 am
      Libby says:
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      How can you say $6B is more than enough to cover overhead? Do you know what the average expense ratio is for a P&C carrier? 35%. $6B is only 15% of $49B. But the rates that are being proposed are far in excess of what NFIP might need to balance it’s books. They need to be investigated.

      • February 20, 2014 at 4:38 pm
        Bill Price says:
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        Libby,
        The point is that we can’t find out what the Expenses have been.
        Nor can we find out what has been paid for 33% to 66% Commissions, Management fees, or how much paid to rebuild uninsured property ( as in New Orleans, nor does anyone even seem to have any idea of the Impacts of Sea Level Rise Planning Policy built into BW-12.
        We believe Policy Holders deserve Complete Disclosure of NFIP finances, before being forced out of their homes with Exhorbant Fees and ill-founded policies.
        Bill Price

        • February 24, 2014 at 2:11 pm
          Libby says:
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          I don’t disagree Mr. Price, hence my last sentence “They need to be investigated.”

  • February 19, 2014 at 7:42 pm
    phil says:
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    I’m going to be screwed by this bill . I have paid on average $1500.00 a year since 1993 AND HAVE NEVER MADE A CLAIM ! This bill is bad , poorly implemented and badly thought out .People will be in houses they can’t afford to stay in and can’t sell.

  • February 19, 2014 at 10:04 pm
    jen says:
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    What about the family who purchases there first home along a small creek in Midwestern IL? (That would be me.) My town has never had a flood insurance claim that has paid over $5000 on a residential property. My premium increased from $800 a year to $5200! The NFIP needs to focus on better regulating premiums based on location and true flood risk. Contrary to CFA’s comment, this is a curse for me and my family! I do not oppose to paying a fair price for my flood insurance, but $5200 a year? Not to mention this is on a $75,000 mortgage! Unbelievable!!

  • February 20, 2014 at 12:46 am
    California Resident says:
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    Our property, built in 2004, is right smack in the middle of the California Central Valley which is by no means a luxury home on the coast…can you say drought and ‘dust bowl’! (Normal rainfall is 11 inches annually…last year four inches…this year less than one inch!) FEMA remapped our city in 2009 and somehow scooped up an additional 8,900 homes in our city of 100,000 residents (someone has to pick up the Katrina tab!!!). These were homes that were built according to specs of an earlier year’s FEMA flood maps and were formerly in the ‘low risk’ zone. So basically here we are in a dry, arid dust bowl, required to pay exorbitant flood insurance premiums, when we all know full well it is to pay up for the management, or more correctly, the mismanagement of Katrina.

  • February 20, 2014 at 9:51 am
    D says:
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    Guys stop with these hurtful comments!!!! The insurance companies and brokers NEED to make their 30% of the increase premiums. Please, please don’t take that away from them. They need to eat too

  • February 20, 2014 at 3:02 pm
    Rusty says:
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    30% to insurers, their agents and brokers? The truth is a 10% commission to agents and brokers, which is the prevailing rate throughout the industry, and whatever companies make is a crapshoot. Some years it’s a lot, but when there are heavy claims in other years, not much, if anything, or even a loss. That’s the nature of insurance in general – good and bad years ebb and flow (no pun intended). What saves insurers from going under in bad years is investment income. Increased rates don’t actually make up for those already incurred losses insurer because they only apply going forward as an quantification of expected claims based on past history. The difference with flood insurance is that the federal government subsidizes it with our tax money which it puts at risk on every policy issued. So, people, like it or not, we’re all in the insurance business when flood coverage is involved.

    • February 20, 2014 at 4:44 pm
      Bill Price says:
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      Rusty,
      So why can’t we get a Comprehensive overview of commissions, Management Fees and Claims paid to Insureds vs. Un-insureds ??
      Why is all the Reporting from CRS and OMB so obtuse?
      If NFIP is not Actuarial, it should be easy to exhibit with a comprehensive financial analysis.
      Bill Price

  • February 20, 2014 at 4:29 pm
    Bill Price says:
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    DT: Feb. 20, 2014
    TO: Consumer Federation of America
    J. Robert Hunter CFA Director of Insurance
    Barry Zigas CFA Director of Housing Policy
    RE: CFA Press Release||
    Consumer Group Blasts ‘Misleading’ Senate Bill to Delay Flood Insurance Hikes<<

    Mr. Hunter,,, Mr. Zigas referred me to you.
    We believe that Flood Insurance should be Actuarial, but a CBO Report stated they couldn’t tell in NFIP was Actuarial or not; and we have not been able to find Answers to the subjoined questions from Congressional Research Service or OMB reports, or House and Senate Representatives.
    We don’t think it’s right to require Flood Insurance Policy Holders to pay Exorbitant Insurance Commissions, to pay to rebuild Uninsured properties, or to be forced out of their Homes by Theoretical Sea Level Rise planning policy, without valid Comprehensive Actuarial information exhibited for the NFIP .

    Questions:
    1) Amount of 33% Commissions paid to Insurance Companies ( With No risk)
    2) Amount of Management Fees paid to Insurance Cos ( With No Risk) related to the above Commissionable Policies.
    3) Breakdown of 66% “Write Your Own” Commissions and Fees paid to Insurance Companies ( with no Risk)
    4) Breakdown of Claims paid to Insured Property Owners vs. Uninsured Property Owners (Such as – Properties below Water Level, behind a Levee, as in New Orleans.)
    5) What is the Impact of theoretical 39” Sea Level Rise / 2100 Flood Mapping and Planning likely required by Technical Mapping Committee? ( This will terminate many Home and Business Bank loans, and make Septic Tanks and much Infrastructure theoretically Non-compliant.)
    Have you seen answers to the above Questions ?

    Thank you,

    USLandAlliance.US
    Bill Price 336-214-2676



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