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Another Reason for an NFIP Fix

Posted By Administration, Tuesday, August 8, 2017

Come the end of September the National Flood Insurance Program (NFIP) expires. Both houses of Congress are working on renewal plans. Once each one passes, a conference committee will be needed to work out the final bill.

A new report just out from the Natural Resources Defense Council (NRDC) shows how complicated renewal will be and maybe how Congress and the NFIP are missing the proverbial — and no pun intended since it’s about flooding — boat.

The NRDC’s Seeking Higher Ground report says for every $100 the NFIP spends to rebuild homes that have been flooded — some have to be rebuilt quite often — it only spends $1.72 to help those with the insurance move to somewhere less prone to flooding.

The report calls on Congress to amend what it’s doing for the NFIP renewal to include dollars to relocate instead of — as the report puts it — flood, rebuild, repeat. Some homeowners, the NRDC contends don’t want to rebuild. Spokesman Rob Moore said they want out but can’t get out because their insurance rebuilds only.

“Flood insurance traps homeowners in a situation no one wants to be in: forced to rebuild in a location that will inevitably flood again. It’s time to start helping people move to higher ground, rather than make them wait for the next flood,” Moore said.

The report also notes with global warming and the prediction of rising seas that the NFIP’s current $25 billion in debt could rise even higher with millions more in payouts because of the flood, rebuild, repeat method.

Here are more points from the report that support the NRDC position:

  On its books the NFIP has over 30,000 homes with severe repetitive losses

  On average these properties have flooded five times

  They flood on average every two years

  60% of the 30,000 homes are worth under $250,000

  They account for just 0.6% of the 5.1 million homes insured by the NFIP

  However, they take up 9.6% of all the damages paid by the NFIP from 1978 to 2015

  That’s $5.5 billion total

  Of those homes, 1 in 10 have received payments that have exceeded — over the number of times claims were filed — the value of the home

The report also predicts future costs:

  Rising sea levels could cause 2.5 million properties to continually flood

  Those damages could cost the NFIP an additional $447 billion to repeatedly rebuild homes that ought not be rebuilt

  Over 500,000 of the 16 million homes in this category are worth less than $250,000

  It would cost $52 billion to $163 billion to buyout those properties

  Compare that to the $72 billion to $224 billion to repeatedly rebuild them

Louisiana, Texas, New Jersey, New York, Florida and — believe it or not — Missouri are the states with the most at risk properties that will be flooded and rebuilt and then repeated.

The NRDC wants Congress to reauthorize the NFIP with reforms that will make it easier for these property owners and for the taxpayers who subsidize the rebuilding of these homes.

  Options should be put into place to let those homeowners move rather than rebuild

  Require the disclosure of flood histories to people purchasing homes in these areas

  Make more flood data available to the public so taxpayers know where most of the flooding is occurring, the cost to them for those damages and what communities are doing to minimize damage

  Flood maps should show potential rising seas


Source link: PropertyCasualty360.com

Tags:  Another Reason for an NFIP Fix  Insurance Content  Insurance Industry  Insurance News  Weekly Industry News 

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