House Passes Flood Insurance Program Extension with Reforms

By | November 15, 2017

  • November 15, 2017 at 11:02 am
    Bill Newton says:
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    Latest on NFIP

  • November 15, 2017 at 11:26 am
    PolarBeaRepeal says:
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    This is a thorough review of the key aspects of the reform bill and the parties most significantly affected by the terms. One thing missing is the speculation about what the US Senate will do, if any Senators have been informally surveyed on it.

    First, FSC Chairman, Hensarling, provides a concise description of the benefits of the bill to the public (e.g. ‘affordable rates…’), which is overlooked in the mild criticism by Maxine Waters. Hensarling uses hyperbole in characterizing the bill as being ‘revolutionary’. IMO, it’s a few musket shots in the right direction, but not a ‘revolution’ until there is intent to completely break free from NFIP.

    Second, various stakeholders’ comments add insight into the potential impacts, whether substantiated or supported with facts. Obviously, the provisions that irk some; e.g. reducing the (allegedly excessive) expense allowance to WYO carriers will not sit well with the PCIAA and ‘Big I’. The suggestion that this reduction will reduce consumer choice is speculative, but is debatable due to the fact that some agents/ agencies/ insurers who operate efficiently will welcome increased volume of PIFs abandoned by those who aren’t run as efficiently and abandon the WYO.

    Until someone can state otherwise, I’ll assume the (3%?) redux in expense allowance is justified by data / stats. If so, this cost savings can only be beneficial to consumers. Anyone who argues against it must assume the public won’t learn about the stats used to make the change. Agents and insurers can’t be so ignorant to not review the data.

    Third, there are the requisite provisions to mitigate and reduce the risks over time, as well as move toward actuarially / statutory adequate rates that are required to cautiously accelerate moving away from NFIP as a primary source of flood peril cover; i.e. kick a ‘smaller can’ down the ‘shorter’ road.

    Fourth, the requirement for an annual actuarial review of the financial position of NFIP is surprising; I assumed there were such reviews on an annual basis. I will seek out how this has changed. The additional actuarial projections add some structure to NFIP that is needed to prevent future financial problems, such as the current $30B deficit.

    Fifth, the ‘Democrats & Others’ section warrants several, separate comments at a later time. For now, Democrat politicians opted to focus on short term issues while the NFIP reform bill takes a long-term approach to the issue, as does the American Academy of Actuaries’ CPC summary comments. The latter is comforting because they are professionals whose credentialing and standards of practice require them to consider all known implications and facts. The SmarterSafe.org comments are also informative – at this time – as it represents multiple interests & stakeholders. SmartSafer.org correctly considers the House bill to be only a step toward a solution to multiple problems of NFIP.

    The links to sources of information surrounding the bill are also likely to be helpful, but I haven’t reviewed them yet.

    • November 15, 2017 at 4:06 pm
      Agent says:
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      Polar, good summary as usual. The NFIP has been dysfunctional for many years. It was a mess long time coming. I had a couple of WYO carriers, Travelers being one who exited that market altogether. All we have left is Wright Flood and don’t know what they will do in the near future. Back in the day, I actually wrote some coverage direct with NFIP on a Commercial Property. Dealing with government bureaucrats is not fun.

      • November 15, 2017 at 8:31 pm
        PolarBeaRepeal says:
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        The reforms should help you, but we won’t know what the final bill will be yet. I don’t know your market area…. and don’t need to know… but the overall approach in the House passed bill is likely to help the market provide better choices, hopefully at adequate but affordable prices that give incentives to mitigate the risk.

    • November 15, 2017 at 8:32 pm
      PolarBeaRepeal says:
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      the 3rd paragraph, starting with ‘Second…’ should have ‘unsubstantiated’ in place of ‘substantiated’. bear culpa.

  • November 15, 2017 at 1:53 pm
    jeana says:
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    ideas
    1) encourage maps to be on the internet for all, so people can decide what risks are where and decide if they want to buy or build in that area.
    2) if you have been flooded twice and a certain % of home rebuilt, you can not purchase flood insurance the same as before, you need a very high deductible and limit coverage.
    3)all people who work on flood homes, have to be listed and audits performed, if they gouge the system, they and anyone that worked on that project will be investigated for fraud. All companies who work on flood homes their company name, address and owner has to be listed on internet and phone #.
    4) cities and towns who redirect water can not create more flooding in non flooded areas, they need to do something else such as create proper drainage, make parks to be excess water retention areas or not build in that area. many cities allowed builders to build in flood zones, looking the other way hopeing it would not happen. problems are many.
    5) this will not affect the poor as some listed as many people who rent don’t buy renters insurance, you can bet they don’t buy flood insurance.
    6) (60 yr old home owners- not rentals) retirees in a long time resident should be capped from increases of flood of no more than 3 % per year.
    7) commercial buildings need to raise foundation before building or not build in that area, new city codes need to be addressed.
    everyone needs to put some effort into this, its not just the home owners, it starts before the home was built.

    • November 19, 2017 at 6:23 pm
      okt0ber says:
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      Flood maps ARE on the internet already for anyone to see. And the people who are working to repair flooded homes are paid by the homeowners, not directly by insurance companies. You clearly don’t have much experience with flood insurance, flood maps, or how the claim process goes. It’s no one’s business who a homeowner hires to repair their homes.

    • November 20, 2017 at 11:47 am
      Houstonian says:
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      Hi Jeana,
      Good ideas! I want to add some thoughts.
      1.) Flood maps are available online, however, they are disturbingly difficult to understand and have not been updated in ages. If I didn’t work in insurance, I would have a significantly hard time understanding what I’m looking at when I pull up the online maps. They should be updated and made more user friendly to the average homebuyer.
      2.) If you home is flooded twice or more, the coverage should absolutely be based on risk. That being said, people who cannot sell their homes, but want to get out, should be supported by a government buy-out program. Many of these people were not informed about the flood risk when they bought their homes and should not be financially penalized for mistakes their developers made.
      3.) Adjusters are responsible for ensuring that the amount paid in a claim is sufficient for the work. Asking for audits to prevent gouging will hold up the claim process for individuals which can already take months. Would you like to live in a dingy hotel for almost two years while your contractor undergoes audits and inspections? If we limit the number of flooded homes, adjusters will have more time to ensure that price gouging doesn’t happen, and people will be less likely to use sketchy contractors.
      4.) Cities and towns should absolutely be revising their drainage systems and flood plains. They should be making the construction changes now to prevent spending more in catastrophic events later. They can spend the money now or later, but one way or another it will be spent, and it’s best spent on preventative measures not catastrophic measures.
      5.) When it comes to lower-income people living in apartments, the key is educating them on insurance and providing cost effective policies. Many apartments require renters insurance. Maybe they should also start requiring flood insurance? Typical renters flood policy is only $125.00 a year, usually less than the asked deposit. Of course, we should always have emergency resources available for lower-income families, if you were in their shoes, you would want support also.
      6.) If you cap increases on older residents, you undo the majority of the changes above. I can understand wanting to remain in your home and neighborhood, but if the area is flood prone, it is best to get out, especially if you may need medical assistance. We should not encourage anyone to stay by capping the expenses. Many of the casualties from the recent Hurricanes were seniors. Provide buy-out assistance and encourage all to move to a safer location.
      7.) Commercial locations do need revised codes, like residences, to prevent continuous flooding. Businesses that are renting can attempt to find new locations. Owners of current business property can rebuild with raised foundations, but may also need a buy-out opportunity since the commercial property would likely be unsellable.

      It’s going to be a painful process for these people and business owners to move and up-root their lives. Keep in mind, most of these people did not know they were in these risky areas, and government assistance needs to be there to make sure that they get the assistance and motivation they need to move to more secure areas.

  • November 15, 2017 at 2:31 pm
    Dee says:
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    Nice changes but I just took savings to pay off my home as I can’t afford the $4200 a year and home owners is going up as fast at $3200. Just this week I got a notice that my home is pre firm 1945 and my rates will go up 18 to 25% a year until it reaches market rate. It doesn’t really matter if you can’t afford it. BTW this home has never flooded and I have paid in well over $42k in my 33 years living here enough is enough.

    • November 17, 2017 at 3:58 pm
      Agent says:
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      You had a loan over 33 years and didn’t have it paid off?

      • November 19, 2017 at 9:50 am
        PolarBeaRepeal says:
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        Re-fi-ed. Re-fi-ed the re-fi. Lower rates recently make it too appealing to not do re-fi’s. But I’d shorten the term of the re-fi to as small as possible before rates RISE AGAIN, along with a hyuuuuge increase in GDP.

        • November 19, 2017 at 9:55 am
          PolarBeaRepeal says:
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          Clarification: shorten the term UNTIL rates are expected to soon rise again. Then, lengthen the term in re-fis before the rise occurs. bear culpa.

    • November 19, 2017 at 6:25 pm
      okt0ber says:
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      The rates will go up by that much until it gets to the rate it should be. Get an elevation certificate and if your house is high enough elevation the rate increases still significant slow down.

  • November 16, 2017 at 11:10 am
    PolarBeaRepeal says:
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    The associated poll on what to do with the NFIP has TWO options that prescribe mandating flood coverage, albeit two different policies; i.e. flood and HO. Combined, they yield 40% of the vote. I wonder how many of the 31 voters for those two options are inside, or outside, a flood zone?

    Why not add a 3rd ‘mandate’ option to the poll?; i.e. MANDATE withdrawal from flood zones over the next half-century through local government purchase of private properties in flood zones.

    • November 16, 2017 at 12:25 pm
      Confused says:
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      “MANDATE withdrawal from flood zones”

      I thought you Republicans were all for small Government and not telling people what they can and can’t do. If someone knows the risk but chooses to live in a flood zone anyway, why should the Government force relocation?

      • November 16, 2017 at 1:08 pm
        NC P&C Agent says:
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        Because the government (taxpayer) is subsidizing them living there through the Flood program?

        • November 16, 2017 at 3:33 pm
          CarrierGuy says:
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          Not if the homeowners have to pay actuarially sound premiums – which would be a real improvement in the program. Not one that most legislators will get behind, though.

        • November 16, 2017 at 3:52 pm
          Confused says:
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          NC P&C — Polar said one option is “if local government purchase of private properties in flood zones.” The taxpayer would still be subsidizing them, just instead of paying them to stay, we’re paying them to leave.

          Anyway, your point is moot if the NIFP charged appropriate rates as CarrierGuy mentioned. That’s how you solve the NIFP problem without increasing taxpayer expense.

          • November 17, 2017 at 8:29 am
            PolarBeaRepeal says:
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            You continually provide meaningless replies to long term problems.

            Subsidies to END the flood risk is a one-time subsidy by local governments. That is far superior and desirable relative to ONGOING federal subsidies that are ultimately paid by taxpayers as an ongoing WEALTH TRANSFER.

        • November 16, 2017 at 6:23 pm
          PolarBeaRepeal says:
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          Psst; geo hydro dynamics studies suggest the premiums in many flood plains are prohibitively expensive; i.e. uninsurable after many other risks vacate other flood plains.

      • November 16, 2017 at 6:20 pm
        PolarBeaRepeal says:
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        Mandating things that lower costs and risks is a reasonable exception. But notice the quotes around my ‘mandate’ suggestion… it implies a pseudo mandate. I’d allow people to remain in flood zones as long as it doesn’t interfere with local municipalities plans to put flood plain areas to alternate uses. IF so, the use of the legal force of eminent domain seizure of property, with reasonable compensation, for the benefit of the public at large, is well within the boundaries of conservative principles.

        • November 17, 2017 at 8:34 am
          PolarBeaRepeal says:
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          Addendum; risks choosing to remain in high risk flood zones could obtain insurance – at proper rates. This would almost be akin to self-insurance, in a small pool of such high risk exposures.

  • December 8, 2017 at 7:24 pm
    Mario Perez says:
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    Elevation is a tricky thing. If you bought your house and the elevation was enough at that time where no insurance was required but now with new restrictions/elevation requirements what are you supposed to do? Raise your house I don’t think it’s feasible for most in this situation. I do agree homes with multiple flood claims should have higher rates but not prohibitive. Of course if you don’t have a mortgage flood insurance is not a problem no one can make you take out insurance then it is just a risk you take.



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