We see some Representatives want the National Flood Insurance Program (NFIP) to be actuarial.
We do too, but we can’t find detailed comprehensive overview of the Program to tell if it is, or not.
Testimony indicates that the NFIP:
– Paid commission and management fees of 33% to 66% to Insurance Companies having No Risk.
– Paid for Un-insured properties to be re-built.
– No Reserves were kept. Surpluses reverted to the Treasury.
– Nor is there any estimate of the cost of planning policy for (Theoretical) Acceleration of Climate Change that is built into the BW-12.
Unfortunately, we can’t find a comprehensive financial breakdown of the Flood Insurance program,
so there is no way to tell if it is actuarial, or not,,,
The Best Table of the NFIP finances we have seen was obtained from Rep.Coble’s Office (NC) , but we were disappointed to see that the table did not :
– Break out Commissions and Management Fees paid to Insurance Companies
– Differentiate between Claims Paid to Insured property owners, vs. Un-insured property owners .
– Indicate Amounts reverted to Treasury
If you have information to clarify these issues and demonstrate that NFIP is not actuarial, we would appreciate seeing that,
otherwise we believe It’s not right to force insured folks to pay absurd Ins. Commissions, or to pay to re-build un-insured property.
Please delay BW-12 until the Policy Holders get some answers.
Unless a mistake is made in the NFIP, they do not pay assistance. FEMA does that outside of the NFIP. People need to stop confusing FEMA payments with Flood insurance claims payments. They are not related.
Scott,
We are not talking about FEMA Loans or Aid for homeowners, Businesses, or local Governments. I wish it weren’t true, but we are talking about NFIP paying to rebuild uninsured properties.
The best information we have obtained indicates houses located behind an ACOE levee do not have to have Flood Insurance, but are covered by NFIP and do not have to purchase insurance in the future.
For New Orleans, houses built under water level, behind Levee, did not, and do not have to have Flood Ins. but were covered by NFIP.
Congressional Testimony by a major Insurance Company officer indicated that un-insured house-owners not in flood zones, collected NFIP settlements BEFORE insured homeowners, providing they sign up to buy Flood Ins. in the future. ( He advised that was not a good policy.)
We have asked these questions of numerous government Representative, and do not yet have clarity.
There is considerable confusion about the NFIP and a Congressional Research Service report indicated that it has not been possible to determine if NFIP was actuarial or not.
We disagree that Rates should be raised dramatically until these issues are clarified.
So it is clear…The Bigger Waters Act was passed without any input from FEMA. FEMA does not make the law. Waters just didn’t read her own bill and when she realized the hardship it was going to cause she put up her “Stop FEMA Now” website. Hilarious. I guess she doesn’t know how it all works. Congress makes the laws and FEMA follows them. FEMA is just doing what SHE put into law. It doesn’t matter whether you are Democrat/Republican it’s still Congress pushing/shoving laws into place without knowing all the fact and once again it’s the middle class getting hurt.
Don’t be so quick to give FEMA a pass. No statute like B-W gets crafted without agency input. There is nothing in the legislative history indicating FEMA warned B-W would have this kind of impact. Either FEMA had a sufficiently poor understanding of NFIP workings it didn’t know what B-W would do (bad) or it knew and didn’t make this clear (worse). Also, since B-W has been enacted, FEMA has done nothing to mitigate its potential adverse impacts. One explanation is this is FEMA’s passive-aggressive response to years of being trapped between congressional deficit hawks and local governments. Another is FEMA likes B-W since, by pinning public blame for the NFIP deficit on subsidized and grandfathered insureds, it distracts attention from any scrutiny of FEMA’s failure to keep administrative expenses (now 54% of premiums) under control or have adequately monitored Katrina payments for fraud. A third is, like the “Far Side” cartoon where the old lady nails the dog door shut and then calls for her annoying poodle “Fifi” to come running in, some people in FEMA really want to see insureds get “boinked” on the head. I suspect there may be truth in all three explanations.
You can’t make an affordable flood insurance program actuarally sound on a going-forward basis when you burden it at the start with $24 billion in debt from a prior regime. The position Rep. Hensarling is advancing is somewhere between “have your cake and eat it, too” and “let them eat cake.”
We see some Representatives want the National Flood Insurance Program (NFIP) to be actuarial.
We do too, but we can’t find detailed comprehensive overview of the Program to tell if it is, or not.
Testimony indicates that the NFIP:
– Paid commission and management fees of 33% to 66% to Insurance Companies having No Risk.
– Paid for Un-insured properties to be re-built.
– No Reserves were kept. Surpluses reverted to the Treasury.
– Nor is there any estimate of the cost of planning policy for (Theoretical) Acceleration of Climate Change that is built into the BW-12.
Unfortunately, we can’t find a comprehensive financial breakdown of the Flood Insurance program,
so there is no way to tell if it is actuarial, or not,,,
The Best Table of the NFIP finances we have seen was obtained from Rep.Coble’s Office (NC) , but we were disappointed to see that the table did not :
– Break out Commissions and Management Fees paid to Insurance Companies
– Differentiate between Claims Paid to Insured property owners, vs. Un-insured property owners .
– Indicate Amounts reverted to Treasury
If you have information to clarify these issues and demonstrate that NFIP is not actuarial, we would appreciate seeing that,
otherwise we believe It’s not right to force insured folks to pay absurd Ins. Commissions, or to pay to re-build un-insured property.
Please delay BW-12 until the Policy Holders get some answers.
Bill Price USLandAlliance.US 336 -214-2676
Unless a mistake is made in the NFIP, they do not pay assistance. FEMA does that outside of the NFIP. People need to stop confusing FEMA payments with Flood insurance claims payments. They are not related.
Scott,
We are not talking about FEMA Loans or Aid for homeowners, Businesses, or local Governments. I wish it weren’t true, but we are talking about NFIP paying to rebuild uninsured properties.
The best information we have obtained indicates houses located behind an ACOE levee do not have to have Flood Insurance, but are covered by NFIP and do not have to purchase insurance in the future.
For New Orleans, houses built under water level, behind Levee, did not, and do not have to have Flood Ins. but were covered by NFIP.
Congressional Testimony by a major Insurance Company officer indicated that un-insured house-owners not in flood zones, collected NFIP settlements BEFORE insured homeowners, providing they sign up to buy Flood Ins. in the future. ( He advised that was not a good policy.)
We have asked these questions of numerous government Representative, and do not yet have clarity.
There is considerable confusion about the NFIP and a Congressional Research Service report indicated that it has not been possible to determine if NFIP was actuarial or not.
We disagree that Rates should be raised dramatically until these issues are clarified.
Bill Price
Great posts Bill!!
I have clarity re: this whole BW 12 law…
VOTE DEMOCRATIC IN 2014
and
STOP FEMA NOW!!!!!
So it is clear…The Bigger Waters Act was passed without any input from FEMA. FEMA does not make the law. Waters just didn’t read her own bill and when she realized the hardship it was going to cause she put up her “Stop FEMA Now” website. Hilarious. I guess she doesn’t know how it all works. Congress makes the laws and FEMA follows them. FEMA is just doing what SHE put into law. It doesn’t matter whether you are Democrat/Republican it’s still Congress pushing/shoving laws into place without knowing all the fact and once again it’s the middle class getting hurt.
Don’t be so quick to give FEMA a pass. No statute like B-W gets crafted without agency input. There is nothing in the legislative history indicating FEMA warned B-W would have this kind of impact. Either FEMA had a sufficiently poor understanding of NFIP workings it didn’t know what B-W would do (bad) or it knew and didn’t make this clear (worse). Also, since B-W has been enacted, FEMA has done nothing to mitigate its potential adverse impacts. One explanation is this is FEMA’s passive-aggressive response to years of being trapped between congressional deficit hawks and local governments. Another is FEMA likes B-W since, by pinning public blame for the NFIP deficit on subsidized and grandfathered insureds, it distracts attention from any scrutiny of FEMA’s failure to keep administrative expenses (now 54% of premiums) under control or have adequately monitored Katrina payments for fraud. A third is, like the “Far Side” cartoon where the old lady nails the dog door shut and then calls for her annoying poodle “Fifi” to come running in, some people in FEMA really want to see insureds get “boinked” on the head. I suspect there may be truth in all three explanations.
You can’t make an affordable flood insurance program actuarally sound on a going-forward basis when you burden it at the start with $24 billion in debt from a prior regime. The position Rep. Hensarling is advancing is somewhere between “have your cake and eat it, too” and “let them eat cake.”
I plan to post more Sources, Copies of Congressional Research, and OMB documents on USLA.US by Friday. ( Have to work some time.)
Bill Price