National Flood Insurance Program is Under Water

By Staff writer at Full Measure, 10-22-17:


American homes in Houston, the Florida Keys, and Puerto Rico, are not the only things underwater this season, so is the entire National Flood Insurance Program, or NFIP. The Hurricanes accounted for an additional $16 billion in claims to the NFIP, which was already nearly $25 billion in debt before the storms hit.

Steve Ellis, the Vice President of Taxpayers for Common Sense, thinks it’s high time that the flood insurance program gets reformed, to stop subsidizing risky building.

Steve Ellis: the fundamental responsibility of government is to protect their citizens. But here you have a program that’s subsidizing people to actually build in harm’s way to stay in harm’s way.

Scott Thuman: Are you saying that they’re almost encouraged to keep building in places that they’re at high risk?

Steve Ellis: Absolutely. Basically this program is subsidizing people to rebuild and stay in these areas.

Scott Thuman: Because it’s so cheap.

Steve Ellis: Exactly.

Scott: Just how cheap? Nationwide, the average flood policy through the program costs only $712 a year, according to the Natural Resources Defense Council. Cheap rates lead to hefty payouts, and multiple claims. According to a recent report by Pew Charitable Trusts, there are 150,000 insured homes that have flooded at least twice. They represent only 1% of the properties in the program, but account for up to 30 percent of all payouts, at a cost of $12.5 billion.

Steve Ellis: Exactly, they make up a disproportionate amount of the losses even though they are a small number of the properties in the program.

Scott: Well how are we not fixing that?

Steve Ellis: Well it’s never politically popular to actually raise somebody’s insurance rates and then also there is a kind of an American shake your fist at Mother Nature and we will rebuild sort of aspect there as well. And so we just were big hearted people but we can’t afford to be soft headed.

And can’t keep affording big bailouts, Ellis says. On the House side, Congress voted to forgive 16 billion dollars of debt incurred from recent hurricane claims. So lesson learned? Not exactly. Mick Mulvaney, the Director of the Office of Management and Budget, wrote to the Senate,

“The NFIP is simply not fiscally sustainable in its present form. The White House wants major reforms: no coverage for new homes in flood plains. No subsidized rates for people who can afford to pay market rates. And no coverage for extreme repetitive loss properties.”

But those reforms weren’t included in the House bill. And until reforms are made, Ellis says the program creates a vicious cycle, for the homeowner and the taxpayer.

Steve Ellis: You know I’m not here to say you can’t build. It’s just we shouldn’t have to subsidize you to build and to rebuild in those areas, and so those are the sort of issues, it becomes less about what people do on their property and becomes more about what is the federal government, what is Uncle Sam or sometimes Uncle Sucker, doing to subsidize high risk development.



“Well, how are we not fixing that?”  Because our government doesn’t fix things or even change things, instead they just throw more money at it – our money.

For years, we’ve subsidized the rebuilding of homes after the Mississippi River floods her banks and after every hurricane that’s hit our coasts rather than try to discourage homeowners on rebuilding in flood plains, or at the very least, make the homeowner responsible. Why? Because subsidized voters are loyal and politicians want to be re-elected over and over.

Ellis says it’s the government’s responsibility to protect us, and he’s right – but only from our enemies, not from Mother Nature. If you take the risk of living in a flood plain, then it’s only right that you take the financial responsibility that goes with it.


Categories: Political

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6 replies

  1. It’s apparent that our “brain-trust” representatives in DC have determined that the concept of insurance is flawed. That is, that those at higher risk should pay more. Folks who live in flood-prone areas are like people who have a pre-existing condition, they are more apt to experience a problem than others who live on higher ground. In their pandering for votes, they’re ignoring honest logic – the same is true relative to health insurance and flood insurance. It seems to be so logical – if you knowingly build in a flood-prone area, you should expect to pay more for insurance. What’s wrong with that logic? The answer: it won’t get you any votes.


    • The bill for funding more relief was passed and it included money to bail out the NFIP – don’t you know that makes all the inland taxpayers happy? We’re the gift that never stops giving.


  2. Flood insurance: please don’t get me started. I live on a mountain in PA. We frequently see ads on TV about house insurance. So even on mountains you might get flooded…so the ad goes. So buy insurance from the govt!

    It’s another pyramid scheme and like social security, medicare and all the other garbage the government, both federal and state, produce for us, it’s a scam to get us to vote for whoever is in office presently. The scam will collapse unless we throw more and more of our tax dollars at it. Ergo, this is why we have such high taxes. Between hidden taxes and outright federal, state, county and other local taxes we pay about half our income in taxes. That is unbelievable.
    Of course if you are low income you might see money coming your way from the income tax with out paying anything.

    Our government is so flawed. I used to think, ” yes, but it’s the best government in the world!” But now I think we are becoming a socialistic and communistic as the other European states. It’s not such a great country.

    We are in trouble here. How much more should we be taxed?


    • Indeed, we are in trouble, tannngl. As harsh as it sounds, the costs to rebuild homes after a disaster should be left up to charities and the homeowners. If it were left to that, then the voters would be eager to buy that insurance themselves.

      Liked by 1 person

  3. Excellent post and commentary, Kathy. Even as someone living in the Houston area who came dangerously close to being flooded, I agree 110%.

    Once again we have a problem that would easily resolve itself if only Americans would follow the guidance gifted to us by our wise Founders and live strictly by the letter of the Constitution. Nowhere in the Constitution does it say that the federal government has an obligation to rescue people from every risk they choose to take. The reason we stupidly took on the ill-advised role of doing so is because someone whined that flood insurance was too costly in the private market, so some politicians with big egos decided they’d play the heroes with the taxpayers’ money and socialize the risks amongst us all.

    Let’s consider what would happen if we actually followed the Constitution and let the free market deal with homeowners who choose to live in flood-prone areas.

    • The cost of flood insurance would be appropriately scaled to the risk, which means it would be far more expensive than it currently is, but most importantly it would mean that the people who perceive some benefit from living in the flood-prone areas would be the ones paying a premium for that choice. Needless to say far fewer people would likely make that choice, and right there the problem with dense populations living in flood-prone areas resolves itself on its own.

    • Employers who need workers in flood-prone areas (such as off-shore oil drillers or fishing operations) would naturally be forced to pay more to entice people to either commute from further away or to compensate them for the cost of flood-insurance. Yes, companies would pass these costs on to consumers, but this again places the cost where it naturally belongs. Why shouldn’t the ultimate consumers of gasoline and fish pay for the added costs of delivering those products?

    That’s the beauty of the free market. Everyone pays their appropriate share of the cost according to their own perceived benefit, and most critically THEY have the power to control those costs. Don’t like the high cost of flood insurance? Live somewhere else. Love the high pay from oil drilling but hate the long commute or the cost of flood-insurance? Find another line of work if you don’t like those options. Don’t like the high cost of fish? Don’t buy fish. These are the choices we are forced to make in the free market, and it is incredibly unfair that taxpayers are involuntarily put in a position of subsidizing people so that they never have to make hard choices.

    This doesn’t mean that the federal gov’t has no role to play when an act of nature creates an emergency situation. If there’s a 500-year flood, regardless of where it happens, I have no problem with the feds assisting locals with basic, short-term emergency recovery. That’s a reasonable use of tax dollars, IMO, and seems consistent with the role of the federal gov’t as envisioned by the Founders. If we limited the feds involvement to such a role, we wouldn’t be facing a fiscal crisis right now.

    Another lesson that will go unlearned.


    • The other beauty of the free market is that when more people buy a product it drives the price down. Think of the money it would have saved the taxpayers if even half of those people living along the coast had bought flood insurance.

      I’m with you on the extent of federal help stopping once lives are no longer in danger. The rebuilding process needs to be left to the cities and volunteers, who do a better job anyway.

      Liked by 1 person

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