I wonder how the rate structure will change on Flood in the aftermath of the Mississippi floods. This loss may end up being bigger than Katrina before all is said and done.
As a taxpayer, I don’t have a problem with low interest loans going to people who’ve been affected by these record breaking floods. Someone who is in a recognized flood zone who chooses not to get flood insurance, well that’s different.
My understanding is that the only reason that the Flood Insurance Program is “debt ridden’ is because congress used all of the ‘reserves’, which private sector insurers are required to maintain, were appropriated by congress for other uses. If those reserves had not been misappropriated the program would probably be solvent and the rates would likely have been considered adequate.
Rate increases shoul not be limited to a per-cent a year but based on actuarial information regarding probability of loss.
Greg, where did you get that understanding? I Googled “flood insurance program debt” and the search results bring up a host of sources that discuss why the program is in debt. Not a single one that I read said anything about Congress raiding the reserves to use for other purposes.
Even the Fox News story said the reason for the debt was Hurricane Katrina’s claims being worse than expected and the fact that premiums paid are not enough to cover expected losses. All of the stories states that the system was self-sufficent up until Katrina hit.
If Congress raided the reserves, I think that would be a terrible thing, but I would like to see some evidence of it before I spread rumors that that was the reason for the debt.
Do you mean kind of like when they moved the Social Security Trust Fund to the General Fund to spend on Social Programs? They wouldn’t do that, would they?
I’m not saying they didn’t do it. I’m saying that I see no evidence that they did. No stories in the news about it, no on-line studies saying that’s what happened.
Why would you think that’s the reason when the reason reported in the news (Katrina claims and insuffficient premiums) makes so much more sense?
The insurance companies that write the flood insurance on behalf of the NFIP (National Flood Insurance Program)do not reserve any money. But, the NFIP does not reserve either, so they pay claims out of the premium they receive. Their reserve is essentially the Treasury Dept, which they can borrow from (and are currently in debt by about $17.5M). They have always paid back the debt the few times they have borrowed…until Katrina. The NFIP was not structured to handle a catastrophic (man-made) flood.
In most cases (except for older, pre-FIRM homes), the rates have actuarial basis…they are not jacked up to cover Katrina or other flood events. And right now, they are limited to how high they can go each year (Congress is looking into increasing that ceiling).
It may or may not be true on the reserves being raided, but the Government has lied about so many things to the American People in past years, it leads to natural skepticism about anything they say or do. One should not put any faith in the main stream media since they are only shilling for the administration. More truthful info is found on the internet and Fox.
Well, if you look at my first response, I mentioned the intenet as my sources and that even Fox said the problem with the Flood program debt was Katrina and insufficent premiums… but people will believe whatever they want to believe because it makes them feel good.
If they would quit lowering the rates to people already covered under the program and calling them “preferred program” and making us do all new applications, this would keep them from losing as much money. Typical government program.
These politicians don’t dare not re-authorize NFIP in wake of the Mississippi flooding. This looks like the 100 year flood to me. Where will the money come from? The program and the government is broke. Oh, that’s right. We have Ben Bernanke who can keep the presses going for more money.
Other Point of View, it was about a year ago that I heard it, I believe from a company field rep. I just remember that it was about the time that they ran the second or third temporary extension on the flood program.
The NFIP problem is in allowing flood-prone communities to opt out of the NFIP and FEMA recommended flood mitigation plans, then having to pay in the millions when these areas flood year after year. Make them participate, do the flood control work and pay the real cost of the insurance. This would also stop the grants and loans that also pump up the national debt.
You may be onto something Furrie. The last major flood on the Mississippi was in 93. That was a piece of cake compared to this one. Cities and towns were built on or close to the river when the country was settled to provide cheap accessible transportation and trade not the mention the water supply. Unfortunately, the river will flood from time to time when all the other rivers pour into it. In my view, the Army Corps of engineers has done a substandard job in flood control over the years and their levee system is a joke, particularly in the lower reaches. We should have built some pipelines long ago to pump out excessive water and ship to the more barren parts of the states. West Texas could certainly use the water since they have had wildfires burning for the past month. Flood prone areas shouldn’t be allowed to opt out of protection. We are just subsidizing them every time this happens.
I wonder how the rate structure will change on Flood in the aftermath of the Mississippi floods. This loss may end up being bigger than Katrina before all is said and done.
Unfortunately for the tax payers, unlike Katrina many do not have flood insurance, so they will get low interest loans and grants.
As a taxpayer, I don’t have a problem with low interest loans going to people who’ve been affected by these record breaking floods. Someone who is in a recognized flood zone who chooses not to get flood insurance, well that’s different.
My understanding is that the only reason that the Flood Insurance Program is “debt ridden’ is because congress used all of the ‘reserves’, which private sector insurers are required to maintain, were appropriated by congress for other uses. If those reserves had not been misappropriated the program would probably be solvent and the rates would likely have been considered adequate.
Rate increases shoul not be limited to a per-cent a year but based on actuarial information regarding probability of loss.
Greg, where did you get that understanding? I Googled “flood insurance program debt” and the search results bring up a host of sources that discuss why the program is in debt. Not a single one that I read said anything about Congress raiding the reserves to use for other purposes.
Even the Fox News story said the reason for the debt was Hurricane Katrina’s claims being worse than expected and the fact that premiums paid are not enough to cover expected losses. All of the stories states that the system was self-sufficent up until Katrina hit.
If Congress raided the reserves, I think that would be a terrible thing, but I would like to see some evidence of it before I spread rumors that that was the reason for the debt.
Do you mean kind of like when they moved the Social Security Trust Fund to the General Fund to spend on Social Programs? They wouldn’t do that, would they?
I’m not saying they didn’t do it. I’m saying that I see no evidence that they did. No stories in the news about it, no on-line studies saying that’s what happened.
Why would you think that’s the reason when the reason reported in the news (Katrina claims and insuffficient premiums) makes so much more sense?
When did “they” do that? Please present proof.
The insurance companies that write the flood insurance on behalf of the NFIP (National Flood Insurance Program)do not reserve any money. But, the NFIP does not reserve either, so they pay claims out of the premium they receive. Their reserve is essentially the Treasury Dept, which they can borrow from (and are currently in debt by about $17.5M). They have always paid back the debt the few times they have borrowed…until Katrina. The NFIP was not structured to handle a catastrophic (man-made) flood.
In most cases (except for older, pre-FIRM homes), the rates have actuarial basis…they are not jacked up to cover Katrina or other flood events. And right now, they are limited to how high they can go each year (Congress is looking into increasing that ceiling).
It may or may not be true on the reserves being raided, but the Government has lied about so many things to the American People in past years, it leads to natural skepticism about anything they say or do. One should not put any faith in the main stream media since they are only shilling for the administration. More truthful info is found on the internet and Fox.
Well, if you look at my first response, I mentioned the intenet as my sources and that even Fox said the problem with the Flood program debt was Katrina and insufficent premiums… but people will believe whatever they want to believe because it makes them feel good.
Hi Agent
I may be dating myself, but except for the reference to Fox, you sound exactly like a 60’s Berkeley free speech radical.
Not sayin your wrong, just enjoying a bit of historical perspective.
ypu’re
Who knew Friday 13 would cause my fingers to fail. you’re is what I meant.
If they would quit lowering the rates to people already covered under the program and calling them “preferred program” and making us do all new applications, this would keep them from losing as much money. Typical government program.
These politicians don’t dare not re-authorize NFIP in wake of the Mississippi flooding. This looks like the 100 year flood to me. Where will the money come from? The program and the government is broke. Oh, that’s right. We have Ben Bernanke who can keep the presses going for more money.
Other Point of View, it was about a year ago that I heard it, I believe from a company field rep. I just remember that it was about the time that they ran the second or third temporary extension on the flood program.
The NFIP problem is in allowing flood-prone communities to opt out of the NFIP and FEMA recommended flood mitigation plans, then having to pay in the millions when these areas flood year after year. Make them participate, do the flood control work and pay the real cost of the insurance. This would also stop the grants and loans that also pump up the national debt.
You may be onto something Furrie. The last major flood on the Mississippi was in 93. That was a piece of cake compared to this one. Cities and towns were built on or close to the river when the country was settled to provide cheap accessible transportation and trade not the mention the water supply. Unfortunately, the river will flood from time to time when all the other rivers pour into it. In my view, the Army Corps of engineers has done a substandard job in flood control over the years and their levee system is a joke, particularly in the lower reaches. We should have built some pipelines long ago to pump out excessive water and ship to the more barren parts of the states. West Texas could certainly use the water since they have had wildfires burning for the past month. Flood prone areas shouldn’t be allowed to opt out of protection. We are just subsidizing them every time this happens.