mouthofthetyne.com September 26 2017




Why 85% of Houston homeowners have no flood insurance

September 26 2017, 04:02 | Van Peters

How Harvey Squeezes Congress on Flood Insurance

Harvey flooding focuses attention on troubled flood insurance program

The problem with the program, Lightbody and other advocates say, is that it encourages building in flood-prone areas, thus putting homes and businesses in the path of future storms and virtually ensuring that the flood insurance program will continue to pile up future losses.

Insured flood losses from homes in the 70 Texas and Louisiana counties affected by hurricane Harvey have been estimated at between $6.5bn and $9.5bn, by property analytics firm CoreLogic.

The program has always been a federal backstop for areas prone to flooding, providing coverage to homeowners when insurance companies won't.

Loretta Worters, a spokesperson for the Insurance Information Institute, said floods do have a least one positive effect: They convince people who had shrugged off the risk to their homes to buy policies.

Members of Congress only have 12 working days after they return from their August recess to not only raise the debt ceiling and reauthorize the NFIP, but also determine how they're going to fund the government and renew the Children's Health Insurance Program.

Congress will be tasked with reauthorizing the National Flood Insurance Program once lawmakers reconvene in September.

Others advocate getting rid of NFIP altogether and going back to private flood insurance.

FEMA has $1.7 billion available to pay Harvey claims and $5.8 billion in borrowing authority, not including additional resources that reinsurance may provide, according to the agency.

Flood insurance essentially guarantees, up to a limit, money for the program's 5 million policyholders to fix damage or rebuild.

FEMA may raise the rates of flood insurance nationwide, to offset the cost to cleanup and fix homes damaged during the natural disaster in Texas. "Largely as a result of these deficiencies, the NFIP owes more than $25 billion to the U.S. Treasury". "But most of the program's 100-year flood maps are woefully obsolete, relocation nearly never happens, and Uncle Sam has continued to cut multiple checks for repetitive losses", Grunwald writes.

An Associated Press investigation found there are 25,000 fewer flood-insured properties in Harris County, Texas, than there were just five years ago - a sharp 9 percent drop.

A spokeswoman for GOP House Speaker Paul D. Ryan said that while details are still being worked through, "the flood insurance program will be reauthorized". Statewide, there were 21,547 National Flood Insurance Program policies in 2017, down more than 18 percent from 26,524 policies in 2013. By the time this storm is over, houses in the region are expected to suffer up to $30 billion in damages.

Furthermore, Fitch underlines that catastrophe losses in the first-half of the year for the reinsurance sector were below average, meaning firms will be able to better absorb any impact from Harvey.

Offering a more conservative prediction, Watson estimates Harvey's direct financial costs ranging from $72 billion to $85 billion.

Flood insurance is different from homeowner's insurance.

"If it rains where you live, you should get flood insurance".

Michael Hecht heads GNO Inc., which is sprear-heading the Coaltion for Sustainable Flood Insurance involving a national alliance.



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