Despite all the face-saving media spins and agency testimony to the contrary, the NFIP’s “repetitive loss” properties are the combined result of repetitive fraud and repetitive fk-ups – and it’s past time for FEMA to stop the face-saving cover-up, man-up and address these two very real problems.
Sun Herald Reporter Geoff Pender recently asked current FEMA administrator Craig Fugate, “What, if anything, is being done to improve the National Flood Insurance Program?”
I wanted to start with an overhaul of FEMA regulations and policies first, because the law itself has a lot of what I would call flexibility, in many cases, but our administration and rules and policies are restrictive.
“Restrictive”? It was the agency’s loose-as-a-goose administration of the WYO program that allowed insurance companies to shovel money out of Treasury following Katrina.
Ignoring the agency’s responsibility for all but inviting $18 billion in debt, some or all attributable to fraud, Fugate went on to say the FEMA needs, “to provide flood insurance because nobody else will do it…” – and, in doing so, left coastal property owners twisting in the wind.
The Times Picayune picks up Five years after Hurricane Katrina…
The state’s biggest insurers retreated in the wake of the storm. State Farm, which had 35 percent of the homeowners policies in the state at the end of 2004, now has 28 percent and is not writing new homeowners policies in the New Orleans area.
Allstate, which had 22 percent of the homeowners policies in the state at the end of 2004, has shrunk by one-third, and now has 14 percent of the market. The company will write new business in the New Orleans area, but only if the wind coverage comes from Citizens. Other major insurers such as Louisiana Farm Bureau Mutual Insurance Co. and Travelers also have sought to reduce business…
wind-only policies…from Citizens basically have vanished, even though back in 2006 Citizens predicted that these riskiest type of policies would become 30 percent of its growing book of business.
A meaningful solution to the problem Congress has adding wind coverage to the NFIP was suggested in a recent email message I received – “limit the multiperil option to owner occupied residences”:
Dauphin Island, Alabama has had seven disaster declarations in the past 25 years. It also has the highest repetitive NFIP losses. Those beach houses are almost universally rentals… Homes owned by investors should be made to make money without subsidized flood insurance.
Hurricane Katrina damaged or destroyed more than 94,000 homes in Mississippi‘s three coastal counties — Jackson, Harrison and Hancock — according to a U.S. Department of Housing and Urban Development analysis. Many residents have been unable or unwilling to rebuild.
Joe Floyd, a home builder in Hancock County, said higher insurance costs, increased elevation requirements and the slow economy have conspired to keep people from coming back. It has been devastating for his business, he said.
“There was a lot of work the first year, but the price of insurance is so high that people just can’t afford to build,” he said. “Those that could, built that first year. There is nobody building now.”
Naturally, then, the NFIP is under water:
Austin Perez, environmental policy representative for the National Association of Realtors, said “it’s not true” the NFIP encourages rebuilding in sensitive areas. Instead, he said, it allows residents to live in coastal areas with some degree of confidence they will not be ruined financially.
“If there were no flood insurance, the taxpayers would pick up the bill in the form of disaster relief,” Perez said. “This program actually reduces the risk to taxpayers in the event of the flood.”