This article did not really address rates. Are the rates for this coverage sufficient to warrant risk or is the government (taxpayers) subsidizing both the premiums as well as the claim payments? My guess, since they have to raise the debt level, is that the premiums are not as high as they should be. I am just trying to get full picture.
Andrew, you hit it on the head. They rae losing money hand over fist and the something for nothing Congress wants to give the flood residents something for nothing. Good way to get votes, huh. Spend your money and mine and it doesn\’t cost the politicians anything. But, our society in general expects something for nothing.
Nan: The problem is the government doesn\’t charge enough premium now, much less when they add coverages. We have enough wlefare in our country already. If the government would use accurate statistical data and charge a premium accoringly, I would support it, but as it is now, they subsidize low permiums with my tax dollars and yours. BTW, I was raised in a flood zone and have experiened flood three times in my life.
There are a couple of NFIP annual reports online, which while long and boring provide a couple of interesting insights.
1. In areas, only 25% of the properties in a disginated flood zone had purchased Flood Insurance.
2. Only 20% of the Flood policies are renewed after 5 years. I am doing this from memory, but I beleive the figures are correct.
Now these are in designated flood zones which should be a mandatory purchase if the owner has a loan that is from a financial institiude that is federally insured.
Granted there are non-convential loans out there, but somewhere the current system is broken and this doesn\’t appear to fix it.
The statisices you qoute appear to be from the gulf coast from Katrina. I hvae read similar. It is always telling to see the elevated buildings in flood areas. With new ownership and 5-10 years without flooding, they almost always always make the ground level finished and not coverred and then complain when the finished area is not covered.
Adjuster Joe, I don\’t know if you are new to the business or maybe you work for State Farm, but the whole purpose of insurance is to put you back in the position you were in before the loss. Not to make a profit or put you in a better position but to put you back to where you were. Why do you think policies have co-inusurance penalties for not insuring to at least 80% of replacement cost? The companies want you to be insured to replacement cost.
My point about coastal vs inland was there are flood prone areas in inland areas where there are lakes, rivers even ponds that when you have very heavy rain fall the water rises and you have flooding. It does not matter where you live you will always have the chance of flood occurring. It might take a hundred years but it will happen.
I agree the rates need to be adequate but the limits need to be increased because of inflation.
Our agency offers flood insurance to every client purchasing homeowners or commercial property. If they do not purchase we have a waiver signed. Even if they are not in a flood zone we offer the preferred program. If you do not purchase flood insurance, no matter where you live it is just foolish.
BTW, I hope you are not assigned to me in the event I have a claim.
Linda, You should take some insurance coursework. When government steps in, it means that it is not economically feasible for private carriers to write the coverage. Therefore, the GOV\’T SUBSIDIZES IT. The gov\’t already loses billions on flood insurance. Why should we now lose more billions? You apparently have never been taught the economic principles of risk allocation. BTW, the reason for the replacment cost coverage endorsement requiring 80% to value coverage is to get the insured to pay enough premium. The insurnce industry is forced to do many things by the courts and some stupid things they do b/c they are run by bean counters, not insurance professionals. Look at Warren buffet, even though he is a billionaire, he looks at insurance as a tool only to get working capital (to use the premium before it is paid out in claims), which oges agianst the age old risk allocation statistics. Does that make him right? I don\’t think so. No, flood insurance should not be new and improved.
Adhustor Joe – you have scared me and verify my point that too many property adjustors don\’t understand the coverage. Many flood zones we find are Zone X. The area hasn\’t been surveyed in years and likely could be flood potential. With increased building these areas could likely be Zone A\’s. You can\’t judge catastrpohe by zones or location to coast. Most floods are not coastalunless hurricane related. Melting nows, heavy rains, loss of flood plaines are the problem. Fed flood limits must be increased -and surveys need to be stepped up
ML, what are you taling about? You have not a clue as to risk allocation. Your statement is that people should move into flood zones and the gov\’t should subsidize them. Now, that is rich. I usually have respet for agents but you and Linda have shown you don\’t have a clue. But, you are probably one of the people who have health insurance with a $10 co-pay and are upset that it doesn\’t pay 100%.
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This article did not really address rates. Are the rates for this coverage sufficient to warrant risk or is the government (taxpayers) subsidizing both the premiums as well as the claim payments? My guess, since they have to raise the debt level, is that the premiums are not as high as they should be. I am just trying to get full picture.
Andrew, you hit it on the head. They rae losing money hand over fist and the something for nothing Congress wants to give the flood residents something for nothing. Good way to get votes, huh. Spend your money and mine and it doesn\’t cost the politicians anything. But, our society in general expects something for nothing.
Nan: The problem is the government doesn\’t charge enough premium now, much less when they add coverages. We have enough wlefare in our country already. If the government would use accurate statistical data and charge a premium accoringly, I would support it, but as it is now, they subsidize low permiums with my tax dollars and yours. BTW, I was raised in a flood zone and have experiened flood three times in my life.
There are a couple of NFIP annual reports online, which while long and boring provide a couple of interesting insights.
1. In areas, only 25% of the properties in a disginated flood zone had purchased Flood Insurance.
2. Only 20% of the Flood policies are renewed after 5 years. I am doing this from memory, but I beleive the figures are correct.
Now these are in designated flood zones which should be a mandatory purchase if the owner has a loan that is from a financial institiude that is federally insured.
Granted there are non-convential loans out there, but somewhere the current system is broken and this doesn\’t appear to fix it.
The statisices you qoute appear to be from the gulf coast from Katrina. I hvae read similar. It is always telling to see the elevated buildings in flood areas. With new ownership and 5-10 years without flooding, they almost always always make the ground level finished and not coverred and then complain when the finished area is not covered.
Adjuster Joe, I don\’t know if you are new to the business or maybe you work for State Farm, but the whole purpose of insurance is to put you back in the position you were in before the loss. Not to make a profit or put you in a better position but to put you back to where you were. Why do you think policies have co-inusurance penalties for not insuring to at least 80% of replacement cost? The companies want you to be insured to replacement cost.
My point about coastal vs inland was there are flood prone areas in inland areas where there are lakes, rivers even ponds that when you have very heavy rain fall the water rises and you have flooding. It does not matter where you live you will always have the chance of flood occurring. It might take a hundred years but it will happen.
I agree the rates need to be adequate but the limits need to be increased because of inflation.
Our agency offers flood insurance to every client purchasing homeowners or commercial property. If they do not purchase we have a waiver signed. Even if they are not in a flood zone we offer the preferred program. If you do not purchase flood insurance, no matter where you live it is just foolish.
BTW, I hope you are not assigned to me in the event I have a claim.
Linda, You should take some insurance coursework. When government steps in, it means that it is not economically feasible for private carriers to write the coverage. Therefore, the GOV\’T SUBSIDIZES IT. The gov\’t already loses billions on flood insurance. Why should we now lose more billions? You apparently have never been taught the economic principles of risk allocation. BTW, the reason for the replacment cost coverage endorsement requiring 80% to value coverage is to get the insured to pay enough premium. The insurnce industry is forced to do many things by the courts and some stupid things they do b/c they are run by bean counters, not insurance professionals. Look at Warren buffet, even though he is a billionaire, he looks at insurance as a tool only to get working capital (to use the premium before it is paid out in claims), which oges agianst the age old risk allocation statistics. Does that make him right? I don\’t think so. No, flood insurance should not be new and improved.
Adhustor Joe – you have scared me and verify my point that too many property adjustors don\’t understand the coverage. Many flood zones we find are Zone X. The area hasn\’t been surveyed in years and likely could be flood potential. With increased building these areas could likely be Zone A\’s. You can\’t judge catastrpohe by zones or location to coast. Most floods are not coastalunless hurricane related. Melting nows, heavy rains, loss of flood plaines are the problem. Fed flood limits must be increased -and surveys need to be stepped up
A. Joe – As an underwriter I know – 80% com-insurance cost less than 100%. So much for your expertise.
ML, what are you taling about? You have not a clue as to risk allocation. Your statement is that people should move into flood zones and the gov\’t should subsidize them. Now, that is rich. I usually have respet for agents but you and Linda have shown you don\’t have a clue. But, you are probably one of the people who have health insurance with a $10 co-pay and are upset that it doesn\’t pay 100%.