This is the first time an effort has been made to price flood insurance accurately. It will probably end up on the heap with the first effort. The underpricing of flood insurance has led to continued building on the coast and in other flood prone areas.
There’s no doubt that flood insurance pricing needed to improved with more segmentation but this 2.0 program misses the mark. It’s ridiculous that a new property owner’s (buyer) flood rate is impacted by whether or not that the previous owner (seller) has an NFIP policy. Additionally there is no mechanism in place to verify/audit the prior policy other than inputting a policy number – which can be any active number. Won’t take long for real estate agents and mortgage brokers to game this one unless an agent demands to see the actual prior flood dec page.
If 25% of flood losses are occurring in “preferred zones” then they aren’t really preferred zones and FEMA did need to address this. FEMA needs to understand that the segmentation & pricing is a dynamic process as new construction and developments impact the chances of flooding. Here’s my guess on the likely outcome – FEMA won’t be able to figure out a better model and politicians will reverse this like they did last time like they did with the Biggert-Waters flood act.
Is it Opposite Day? Based on Sen. Cassidy’s claims, it must be. Wonder if he even knows what “actuarial” means. I think he’s confusing “correcting the rating system to no longer subsidize my constituents’ flood rates at everybody else’s expense” with “actuarial disaster.”
This is the first time an effort has been made to price flood insurance accurately. It will probably end up on the heap with the first effort. The underpricing of flood insurance has led to continued building on the coast and in other flood prone areas.
There’s no doubt that flood insurance pricing needed to improved with more segmentation but this 2.0 program misses the mark. It’s ridiculous that a new property owner’s (buyer) flood rate is impacted by whether or not that the previous owner (seller) has an NFIP policy. Additionally there is no mechanism in place to verify/audit the prior policy other than inputting a policy number – which can be any active number. Won’t take long for real estate agents and mortgage brokers to game this one unless an agent demands to see the actual prior flood dec page.
If 25% of flood losses are occurring in “preferred zones” then they aren’t really preferred zones and FEMA did need to address this. FEMA needs to understand that the segmentation & pricing is a dynamic process as new construction and developments impact the chances of flooding. Here’s my guess on the likely outcome – FEMA won’t be able to figure out a better model and politicians will reverse this like they did last time like they did with the Biggert-Waters flood act.
Is it Opposite Day? Based on Sen. Cassidy’s claims, it must be. Wonder if he even knows what “actuarial” means. I think he’s confusing “correcting the rating system to no longer subsidize my constituents’ flood rates at everybody else’s expense” with “actuarial disaster.”