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Special Report — Disaster Relief & Flood Insurance

Posted By Administration, Tuesday, June 11, 2019


Congress still hasn’t done a long-term renewal of the National Flood Insurance Program (NFIP). President Trump — however — has signed a $19.1 billion disaster relief bill that includes an extension of the NFIP for four months.

The new extension date is September 30th.

PIA National’s vice president of government relations Jon Gentile alternately praised and criticized the extension. “It is fortunate that we avoided a lapse in the flood insurance program, albeit again at the last minute,” Gentile said. “Last week’s political showmanship needlessly delayed funds for disaster-stricken areas and almost led to the NFIP lapsing at the beginning of hurricane season.”

This is the 12th short term extension since the NFIP expired in September of 2017.

“Passing the buck time and time again with short term extensions only produces uncertainty for consumers, the insurance industry and real estate markets,” Gentile noted. “Congress must get serious and pass a long-term reauthorization that has a chance of passing both chambers, and that also recognizes the key role independent insurance agents play in delivering this important program to homeowners and business owners.”

The time — he pointed out — for endless delays is up. “Congress must get serious and pass a long-term reauthorization that has a chance of passing both chambers, and that also recognizes the key role independent insurance agents play in delivering this important program to homeowners and business owners.”

That said, the start of a long-term solution is going to be worked on this week in the House. California Rep. Maxine Waters chairs the House Financial Services Committee. She and the committee are going to take a hard look at a proposal to renew the NFIP through 2024.

Waters said her focus is going to be affordability.

“We must put partisanship and ideology aside and ensure the continued affordability and availability of coverage for millions of Americans,” she said. “We must renew the NFIP for the long term with a plan that ensures affordable flood insurance continues to be available to communities across our country as the first order of business.”

In the Senate, Louisiana’s two senators aren’t so sure they like the direction Waters and her committee are taking those reforms. They say the proposal the committee is looking at is too broad. It requires Federal Emergency Management Agency (FEMA) to put policies in place that make flood insurance more affordable.

What it doesn’t do is spell out what those policies should contain.

Louisiana Sen. Bill Cassidy — a Republican — said, “This proposal is a genuine effort to solve a serious problem, but it lacks reforms needed to ensure the program is sustainable and that families won’t be hit with drastic premium increases. Our first priority should be to make sure this program works for the homeowners that depend on it.”

Sen. John Kennedy — Louisiana’s other senator and also a Republican — says the House efforts are encouraging but he, too, is concerned with affordability. “We need reforms to the program as well as a long-term reauthorization,” he said. “I look forward to the opportunity to vote on proposals that will keep insurance affordable in Louisiana.”

Cassidy and Kennedy — and others in the senate — want more accurate risk assessments, parts that make insurance more affordable, mitigation funding and funding for buyouts of properties with repeat losses.

All that might be coming in the future. For now, the extension is just in time. A report from the National Oceanic and Atmospheric Administration (NOAA) says with the start of the hurricane season 7.2 million homes along 19 of the Gulf and Atlantic coast states are at risk of storm surge damage.

CoreLogic looked at storm surge data based this year’s slightly above average hurricane predictions. It found the potential damage and reconstruction costs from the predicted nine to 15 hurricanes could hit $1.8 trillion.

With that dire prediction in mind, the National Association of Insurance Commissioners (NAIC) says most of us like the idea of flood insurance and support the purchasing of flood insurance but very few buy.

  41% of Americans agree or strongly agree that flood insurance is a good idea

  Just 17% have actually purchased flood insurance

As an asterisk, the NAIC said some of the survey’s respondents don’t really understand what the insurance covers. Most think homeowners insurance covers flood damage.

NAIC President and Maine Insurance Superintendent Eric Cioppa said as you know, it does not. He pointed out that data from the Federal Emergency Management Agency (FEMA) on flood insurance shows that just 3% of homeowners have purchased flood insurance.

“This disparity perhaps reflects the common, though incorrect, assumption that homeowners’ insurance covers flooding,” he said.

Millennials — those born between 1981 and 1996 — are the group most likely to purchase flood insurance.

  They are 3x more likely to have purchased flood insurance than Baby Boomers

  They are more likely — 25% to 16% — to purchase than the 1965 to 1980 born Gen Xers

  57% of millennials strongly agree or agree that a flood insurance purchase is a good idea

  41% of Gen X feel that way

  24% of Baby Boomers agree

As for the disaster bill. Over half will go to infrastructure work to help rebuild from hurricanes, floods and other disasters.

  $3.2 billion goes to the Army Corps of Engineers to do repairs and construction for hurricane protection projects

  The Department of Defense gets $2.7 billion for repair to military bases

  $1.65 billion goes to the Federal Highway Administration to reimburse states and territories for storm repairs

  $2.4 billion is for the Department of Housing and Urban Development for community disaster-related block grants

  The Environmental Protection Agency gets $349 million for water system repair

Source links: PIA National, The Advocate, PropertyCasualty360.com, Insurance Business America, Engineering News Record

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