While the power to issue regulations is not the power to change the law, there are those who do have the power – but none have a magic wand. Change is never easy. It takes commitment and hard work. In that regard, few have the depth of commitment of Mississippi’s Congressman Gene Taylor and even fewer are willing to work as long or as hard has he has worked to bring about needed change in the National Flood Insurance Program.
On his way out the door this morning, Sop posted Congressman Taylor’s testimony before the House Subcommittee on Housing and Community Opportunity on Scribd’ and you’ll find it at the end of this post. He also tossed me the links to two stories – making this a Sop and Nowdy tag-team post. First up, Flood insurance reform falls short, committee told, by Anita Lee for the Sun Herald:
A House bill to reauthorize the National Flood Insurance Program through September 2015 falls far short of reform the program needs for financial solvency, experts and politicians testified during a congressional subcommittee hearing Thursday.
NFIP’s instability was the main reason cited by those who oppose U.S. Rep. Gene Taylor’s proposal to offer optional wind coverage. Taylor, D-Miss, was joined by Rep. Steve Scalise, R-La., in advocating wind coverage through NFIP. Both talked about the inherent conflict in having private insurance companies adjust their own wind claims, along with NFIP claims, after hurricanes.
Taylor pointed out that insurance companies such as State Farm and Nationwide denied claims for wind damage to flooded properties, contributing to a $53 billion federal tab for Katrina recovery. Average homeowners, federal judges and even congressmen were unable to get their wind claims paid, he said…
Scalise, pointing to the disruption caused when FEMA was twice forced recently to discontinue the issuance of new policies because the program’s authorization lapsed, noted the current temporary extension will only last for another six weeks.
“It’s time to stop stringing along homeowners with these short-term patches and finally pass much-needed reforms to the flood insurance program,” Scalise said. “By allowing the NFIP to cover wind and hail, Louisiana homeowners will have one less thing to worry about in the aftermath of a major storm.”
SLABBED reader James Barbieri was at the meeting and last night he posted a comment reporting on his bird’s eye view:
The business community, including the insurers, the homebuilders and the realtors are genuinely scared….the NFIP is an income stream and a precondition for business….and if this is not fixed….existing coastal real estate values will continue to lag ….as the “true” cost of hurricane exposure is internalized……
James also wrote of his concern about Taylor’s continue reference to fraudulent claims handling and said he thought it self-defeating to the point it made a case for “killing the whole thing”. According to Bruce Albert’s story, “Matt Brady, spokesman for the National Association of Mutual Insurance Companies” accused Taylor of “trying to have it ‘both ways,’ asking for an expansion of a federal flood insurance program, which he ‘continues to criticize’.”
“Self-defeating” is not a word in the coastal vocabulary and people here are more likely to consider those who had difficulty getting their claims paid and aren’t critical better suited for bait than fishing. If you use what Editilla might call “Katrina Shorthand”, think of Taylor and the people he represents as a Brett Farve playing every down – the first as hard as the last and not stopping when the lights go out, maybe not even when the doors are looked.
All the money in the world spent collecting data indicative of the population hardest hit by Hurricane Katrina can not compare to what can be learned looking in their eyes and seeing generations that have lived on and loved the land that eventually became known as the Gulf Coast of these United States. Some are actually “rocket scientists” but none have to be to understand the damage from Katrina was man-made — a result of those whose poor stewardship of the natural barriers to wind and water left little or nothing to protect the land, lives, and livelihood of those who live along the Gulf Coast; made worse by those who twisted both their words and the truth to void their contractual obligation to people who still do business with a shake of hands.
So, when Taylor takes the insurance industry to task, he may look like he’s fighting a losing battle – and he’s lost several since Katrina – but our nation’s coastal population wasn’t bred to win battles. The Katrina warriors are out to win the war and Taylor is leading their charge for change. Will he win? Did the rules change after the Super Bowl game?
Sop’s Scribd’ post of Taylor’s testimony is below. Follow the links to the news stories Sop selected and you’ll find more information on what took place at the hearing; and, with Anita Lee’s story you’ll also find a link to the NFIP testimony and other documents.
[scribd id=30300758 key=key-131kapvuababizprp9ig mode=list]
You slabbers just drive Editilla crazy. Did you know that?
It’s the Lede Thingy. Sooooo, Nowdy will impale a particular subject with the wit’n’flame, and then sop will lay another one like cotton-candy-grahdoo… and then Nowdy will lance another miscreant… jeez louie what’s a Ladder climber t’do d’oh?
So!
We have decided to just switch posts during the day, so youz gotta keep checking back, and when y’all swing them into stuff we are hanging too, like this today: http://insurancenewsnet.com/article.aspx?id=182296
{Americans seem to be sloooowly waking up to the idea that the Corps of Engineers (in order to cover it’s Failed Ass) is going to stick it to them for the repairs at Thrice da’Price!}
{I mean, the Nat Assn of Home Builders????}
{Whoa!}
Most of the time, you know, we’ll just do a Ling Generale to the slabberation.
But whateva. You can put a Boat on a Ship but not the other way around, and none of that matters when a deep-water well sparks off like Molock’s Roman Candle!
Happy B’Earth Day Y’all!
I’m glad I washed behind my ears this morning Editilla as today’s Slabbed has a certain senatorial flavor. 🙂
Great post Nowdy. The only thing I can add is that the ding dongs who point to the NFIP’s deficit without considering the cause do the country as a whole a great disservice.
I am certain, as James mentioned, that Gene probably made some sphincters tighten up a good bit in insurance circles with his testimony. If there was justice in this country the perpetrators would already be in jail.
sop
Sorry, guys, I couldn’t say thank you until I put in code to keep the text from bunching up.
Now, I realized I didn’t put the charts in! Will get to that next. You better pass on your brain next time you need me to finish a post, Sop!
Please read the written statement. Gene only got to give a 5-minute version in the hearing.
There are new numbers in there and it addresses all of the closed-minded arguments against the bill.
The bill should be revised….include some sequencing, where fixing the broken parts of the current system would be the precondition to multiperil expansion.
GAO has already pointed-out some operational deficiencies (particularly data) that are hampering FEMA management. OIG reports have also highlighted problems.
Problem is FEMA complains it needs more authority over the states or homeowners … and no one thinks they deserve to be running a hotdog stand…..with Maustad’s memo (blank check) being a prime example of how the appearance of selling-out to well-connected business interests (aka crony capitalism) can kill political support for a program.
Anyway, this is where leadership is important….we’re in the battlefield no man’s land…you’re dead where you are….you must choose: attack or retreat. Pray you’ve got the right person in charge.
Brian, I have a follow-up post on the charts in the document, will try and get up tonight.
The root of the problem, James is the law. FEMA might as well run a hot dog stand – every function it provides is contracted. But rather than chat, I need to get those charts up.
James,
We can’t wait for pigs to fly.
NFIP, FEMA, the insurers, the flood plain managers, all the interested lobby groups, 95 percent of Congress, and even the GAO have no clue what the real problems are so they won’t recognize solutions.
The flood program is designed to fail in a major flood event and then is mismanaged so that it fails in mid-sized events as well.
Every facet of the flood program needs to be redesigned to eliminate the conflicts of interest, the lack of accountability, the poor oversight and management of contractors, the revolving door, etc.
Our bill would fix NFIP by migrating the hurricane risk out of a stupid system and into a new rational and efficient program that provides much better insurance coverage and much better mitigation of hurricane risk.
While I am not a supporter of adding wind to the NFIP becuase the Feds are totally incompetent at about everything. The people in Washington are so wasteful we might as well throw money at worthy people like the residents of the Gulf coastal areas.
They are much more worthy of my tax dollars than Andy Stern and the “thugs” at SEIU and the con artists at Goldman Sachs.
The government can’t run a program efficiently when it allows contractors to control every financial decision in the program.
NFIP doesn’t throw money at coastal residents. It throws money at insurance companies and contractors with no accountability.
Then FEMA throws money at more contractors to very inefficiently provide assistance for all the uninsured or insured but unpaid losses that NFIP and homeowners insurance were supposed to prevent.
In a normal year, 30% of NFIP premiums are pocketed by the insurers by formula for commissions and administrative costs but they are not audited so NFIP doesn’t know what they actually spend. In a catastrophe they get another windfall of subsidies exceeding their actual adjustment costs. So in 2006 60% of NFIP premiums went to insurers, not claims or reserves.
They also of course have an unregulated conflict of interest to max out every hurricane flood claim.
In the meantime FEMA is paying other contractors to produce flood maps that always end up leaving 25 to 50 percent of the flooded properties outside the mapped flood hazard area, yet the mappers and flood plain managers are never held accountable.
Then after every flood, they all come to Congress and say the only problem is that the premiums are not high enough.
Brian you are correct, but the insurance industry is not the one that made the rules for the WYO program. The Feds did it and did it incompetently. That is not the insurance industry’s fault. They saw a cash cow and, as “for profit” organizations, they jumped all over it.
Thanks for confirming my point about the incompetency of the federal government to run anything efficiently.
I agree with Sup, it was a mistake for the government to abdicate its responsibility to be good stewards of the treasury by allowing private interests access to the treasury and to run the program. The middle men should be cut out everywhere possible with perhaps only adjusting contracted out. These problems never existed before the WYO program was established.
Additionally those contractors that failed to discharge their fiduciary responsibility to the program should be prosecuted to the fullest extent of the law. Stealing money is the same whether it is an armed robber in a bank or a business executive doing the same with a pen.
sop