Flooding Taxpayers Again

[question everything]

This is an editorial from the WSJ, chastising the 1%.. Still, I am curious what DUers' opinion.

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Federal flood insurance is a classic example of powerful government aiding the powerful, encouraging the affluent to build mansions near the shore. Congress finally had the gumption to reform the program in 2012, but now the beachfront homeowner and housing lobbies are trying to reverse this progress. National flood insurance is a 1960s-era program that had its finances blown sideways by Hurricane Katrina and again by Hurricane Sandy last year. The program is $24 billion in the red, with $350 million cash on hand and a $6.4 billion credit line—on $1.3 trillion of insurance in force. But thanks to the bipartisan Biggert-Waters reform signed by President Obama in July 2012, the federal insurer is slowly raising its rates to actuarially sound levels.

That's been a shock to the affluent beachcombers who are accustomed to artificially cheap insurance. Businesses, vacation homes and homes with "repetitive" flood losses will see rates rise 25% a year until those "rates reflect true risk," according to the Federal Emergency Management Agency (FEMA), which administers the federal insurance program. About 20% of the national insurer's 5.5 million policyholders will be affected.

Cue the caterwauling from the 1% and their elected representatives. In June the House voted 281-146 to delay premium increases for a year, a turnaround from the 406-22 vote that passed Biggert-Waters only a year ago. California Democrat Maxine Waters is protesting that she didn't know what was in the law that bears her name—which seems plausible to those who have followed her career. She'd like more Americans to build homes in flood zones and have poor Americans pick up the tab when insurance premiums don't cover losses. Republicans are also backing a reform rollback. New York Republican Michael Grimm is sponsoring a House bill to delay rate increases for four years, which might as well be forever.

(snip)

When Republicans hear such good sense from the Obama Administration, they ought to embrace it. They should not endorse another taxpayer subsidy for those who want to live next to the ocean while sticking others with the costs of their lifestyle.

http://online.wsj.com/news/articles/SB10001424052702304337404579210323959746680

(If you cannot open the link, copy and paste the title onto google)

[question everything]

1. No one? Not a single comment?

[mrgorth]

2. I'm confused

I'm confused by this: "California Democrat Maxine Waters is protesting that she didn't know what was in the law that bears her name—which seems plausible to those who have followed her career. She'd like more Americans to build homes in flood zones and have poor Americans pick up the tab when insurance premiums don't cover losses." Is that sarcasm or something?

[question everything]

3. The facts are correct

and the WSJ took advantage to needle her:

From another source

"That law was intended to make the National Flood Insurance Program more financially self-sustainable, but it did so by increasing premiums far more than Waters and other lawmakers expected. A $400 annual premium, for example, could jump to $4,000 and even as high as $15,000, according to some worst-case-scenarios."

http://theadvocate.com/news/neworleans/neworleansnews/7533219-123/bill-to-block-higher-flood-insurance

So one can ask how come the law is not what they intended..

[StopFEMAnowGeorgia]

4. and here's the truth

The author of the WSJ article is woefully misinformed on who will be impacted by BW12. A few facts for you:

1. NFIP has a maximum coverage of 250k. How many mansions are only worth 250K?
2. Most high-end homes are new builds and meet or exceed Base flood elevation so they aren't being charged high premiums on the 250k they can get coverage on.
3. The people being hit are those living in older houses built before flood maps were adopted. I'm talking your average 1500 sqft ranch house. In this area these houses are worth around 125k. These people have done nothing wrong, broken no rules, but are being punished for living in an old house.
3. Since the inception of the NFIP through 2012 the program has collected 6 billion more in premiums than it has paid. At the same time, insurance companies who service the policies but have NO RISK collect a 30% commission. If they service the claim they can get upwards of another 30%.
4. This isn't a coastal issue. Floods happen all over the country. In Georgia the coastal counties have paid 69% of the premiums and only filed 13% of the claims. ALL of the counties that have collected more than they've paid are inland counties.
5. I don't get the Republican blame. There is support from both parties in both houses to delay implementation and go back to the drawing board.
6. I'd like to meet this 1% that is caterwauling becuase I don't believe they exist. I was at a town hall meeting today in Brunswick, GA. The couple of hundred attendees were working class people who are afraid of losing their homes because they can't afford the new flood insurance premiums.
7. Taxpayers are not truly subsidizing the NFIP. They will, however, be on the hook for hundreds of thousands of foreclosures thanks to unaffordable flood insurance. My own house, my 1300 sqft cottage built in 1940 will quite possibly be one of those.

I have facts. Ask me questions if you want to know the truth about Biggert-Waters.

htts://www.facebook.com/StopFEMAnowGeorgia

[question everything]

6. Thank you for the detailed response

This is what I like about DU - there is a lot of knowledge around.

And... this is why I posted it because I am not aware of this. Thankfully, our home is not in a flood zone. So far. Maps can change.

The question still is: why did our lawmakers "shoot first" and ask questions later? How come no one raised these points that you and, no doubt, others have?

We have a do-nothing congress and when it does something it is trash.

Again, thank you for taking the time and welcome to DU.

[StopFEMAnowGeorgia]

7. Thanks

Thanks for the opportunity to share the facts on the terrible impacts of Biggert-Waters. There is a lot of misinformation out there and I am trying to do my small part to educate people.

Here's what happened when it was passed..the Act was tacked onto some kind of transportation bill that also allowed for the BP oil speill fines to be transferred to the Gulf states. Also, the word "subsidy" is a trigger. "Oh, rich people are getting subsidies on their insurance? that's bad, I will vote to remove the subsidy". But, taxpayers aren't directly subsidizing the NFIP. Add in some major screw-ups by FEMA and we have the disaster that is Biggert-Waters.

[StopFEMAnowGeorgia]

5. another point

I forgot to mention the group of people who are really being hurt by BW12. Properties purchased after July 6, 2012 move to the "full actuarial rate" when the policy renews after Oct 1 2013. But, no one knew this was happening. Insurance agents, mortgage companies and Realtors were clueless. FEMA didn't release implementation details and premiums until March 28, 2013. In many cases, had the mortgage company known the premiums were going to be as much as 8-15% of the value of the house the loan would have been denied.

New maps are being released. The trend is more people are being re-mapped as high risk than are being moved into low risk. I wonder how gracious you all will be when you are suddenly expected to pay several thousand dollars for flood insurance each year.