When is the last time you had to explain a $7000 to $8000 flood quote to a client? On top of that, why should a person with a $1,000,000 home pay twice as much for his $250,000/$100,000 flood coverage than the person next to him with a $500,000 home?
…went to Congress asking for a bailout, and all the fiscal conservatives (both of them) demanded that an insurance industry watchdog be appointed to oversee the use of federal funds in propping-up FEMA?
…had to get rid of their Agency aircraft? No more “Hovering with Brownie” incidents.
…slashed some of their own bloated middle management, particularly those who have resisted running the Agency like a business instead of an entitlement?
…had a flood in their offices and found out that their RM declined to purchase an NFIP policy because someone redrew the flood zone maps under duress and the building was no longer in a 10-year flood plain?
What’s good for Chrysler or GM should be good for FEMA.
I’m still wondering why the rest of us taxpayers get to pay for someone elses decision to buy/build where it regularly floods. There is a very good reason why insurance companies don’t cover flood.
There’s such a simple answer to why “Flood Program Premiums Do Not Adequately Reflect Flood Risk,” that it’s laughable. The reason is….(drum roll please) that this “program,” like any other government undertaking is socialist; and what socialism lacks is a price system which is determined by the millions & billions of individual transactions that incrementally move goods and services to equilibrium pricing. This is the main reason the Soviet Union fell (which downfall incidentally was predicted decades before by Ludwig von Mises among others, that is those who actually know economics). If flood insurance were left to the free market (you know, that arena where people make choices based on their voluntary preferences, not based on whether somebody will kill them or put them in a cage if they don’t pay for something they don’t want-hey, there’s an extremist idea: people shouldn’t be forced by violence to pay for something they don’t want!) the “proper” pricing would be…I don’t know; maybe nobody would offer it, maybe premiums would be less than they are now, maybe more. Not to put too fine a point on it but the current flood insurance scenario reflects only the whims, prejudices, and other base qualities of bureaucrats, politicians and their beneficiaries/henchmen.
The government will pay claims year after year on the same flooded property for a premium that is inadequately priced for the expected loss. And to think we need government health care?
The reason you more for the more expensive house if because there is a greater exposure. Now I know what you are going to say, thi limits are the same, but most property losses are not a total loss. The person with the million dollar house has a greater chance of incuring a higher loss due to the fact that more property is exposed.
Flood rates are based on zone (SFHA vs. non-SFHA) and height above base flood elevation.
The $500,000 house might be 4 feet above BFE while the $1million house is only 1 foot above. Rates are very different. One might be pre-FIRM the other post-FIRM.
The total value has NOTHING to do with it. There are a lot of other rating factors.
1-The NFIP has no actuarially sound relationship between premium and risk.
2-Base Flood Elevations are at best guesswork.
3-Multiple elevation studies produce multiple elevations.
4-New Digital Flood Insurance Rate Maps (DFIRM) do not have new underlying research.
5-The implied accuracy of DFIRM’s is attainable only at considerable additional resources and expense to affected communities.
6-The NFIP now has a 30year data base, of how, where and severity of flooding incidents, which is completely ignored in their rate setting process.
7-The NFIP is a cash cow for the insurance and/or mortgage industry.
8-In the “Watermark”, an NFIP publication, there appears to be a servant-master relationship between the NFIP and the insurance industry.
9-“Follow the Money”,even the GAO questions the finacial relationship between the NFIP and the insurance industry.
10-The only positive for the NFIP is the great testament it will make for those of us firmly convinced that government is not the answer, and actually creates larger problems than it solves.
First of all, isn’t it true that FEMA has to determine that a flood has actually ocurred in order for the coverage to be used in the event of a claim? Also, wasn’t it just recently established the those homes that were required to carry flood coverage weren’t even in a flood zone?? What happened to all the collected premium that has never been used for all those years? Is this the beginnings of another request for a bailout….??? Next they will be threatening Chapter 7,11 or 13!
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When is the last time you had to explain a $7000 to $8000 flood quote to a client? On top of that, why should a person with a $1,000,000 home pay twice as much for his $250,000/$100,000 flood coverage than the person next to him with a $500,000 home?
…went to Congress asking for a bailout, and all the fiscal conservatives (both of them) demanded that an insurance industry watchdog be appointed to oversee the use of federal funds in propping-up FEMA?
…had to get rid of their Agency aircraft? No more “Hovering with Brownie” incidents.
…slashed some of their own bloated middle management, particularly those who have resisted running the Agency like a business instead of an entitlement?
…had a flood in their offices and found out that their RM declined to purchase an NFIP policy because someone redrew the flood zone maps under duress and the building was no longer in a 10-year flood plain?
What’s good for Chrysler or GM should be good for FEMA.
Great comment!
I’m still wondering why the rest of us taxpayers get to pay for someone elses decision to buy/build where it regularly floods. There is a very good reason why insurance companies don’t cover flood.
There’s such a simple answer to why “Flood Program Premiums Do Not Adequately Reflect Flood Risk,” that it’s laughable. The reason is….(drum roll please) that this “program,” like any other government undertaking is socialist; and what socialism lacks is a price system which is determined by the millions & billions of individual transactions that incrementally move goods and services to equilibrium pricing. This is the main reason the Soviet Union fell (which downfall incidentally was predicted decades before by Ludwig von Mises among others, that is those who actually know economics). If flood insurance were left to the free market (you know, that arena where people make choices based on their voluntary preferences, not based on whether somebody will kill them or put them in a cage if they don’t pay for something they don’t want-hey, there’s an extremist idea: people shouldn’t be forced by violence to pay for something they don’t want!) the “proper” pricing would be…I don’t know; maybe nobody would offer it, maybe premiums would be less than they are now, maybe more. Not to put too fine a point on it but the current flood insurance scenario reflects only the whims, prejudices, and other base qualities of bureaucrats, politicians and their beneficiaries/henchmen.
The government will pay claims year after year on the same flooded property for a premium that is inadequately priced for the expected loss. And to think we need government health care?
The reason you more for the more expensive house if because there is a greater exposure. Now I know what you are going to say, thi limits are the same, but most property losses are not a total loss. The person with the million dollar house has a greater chance of incuring a higher loss due to the fact that more property is exposed.
Flood rates are based on zone (SFHA vs. non-SFHA) and height above base flood elevation.
The $500,000 house might be 4 feet above BFE while the $1million house is only 1 foot above. Rates are very different. One might be pre-FIRM the other post-FIRM.
The total value has NOTHING to do with it. There are a lot of other rating factors.
More government insurance please. When bomb making, don’t forget the nails!
1-The NFIP has no actuarially sound relationship between premium and risk.
2-Base Flood Elevations are at best guesswork.
3-Multiple elevation studies produce multiple elevations.
4-New Digital Flood Insurance Rate Maps (DFIRM) do not have new underlying research.
5-The implied accuracy of DFIRM’s is attainable only at considerable additional resources and expense to affected communities.
6-The NFIP now has a 30year data base, of how, where and severity of flooding incidents, which is completely ignored in their rate setting process.
7-The NFIP is a cash cow for the insurance and/or mortgage industry.
8-In the “Watermark”, an NFIP publication, there appears to be a servant-master relationship between the NFIP and the insurance industry.
9-“Follow the Money”,even the GAO questions the finacial relationship between the NFIP and the insurance industry.
10-The only positive for the NFIP is the great testament it will make for those of us firmly convinced that government is not the answer, and actually creates larger problems than it solves.
First of all, isn’t it true that FEMA has to determine that a flood has actually ocurred in order for the coverage to be used in the event of a claim? Also, wasn’t it just recently established the those homes that were required to carry flood coverage weren’t even in a flood zone?? What happened to all the collected premium that has never been used for all those years? Is this the beginnings of another request for a bailout….??? Next they will be threatening Chapter 7,11 or 13!