Friday, October 27, 2017

Meanwhile, In the Delusional States of America

I suppose if you locked your doors, disconnected the power and drew your shutters you might manage to get through a day without being exposed to some head-shaking example of lunacy from the Delusional States of America.

How about this one. FEMA, America's Federal Emergency Management Agency, charged with keeping Americans secure in their own homes, has weighed in on the National Flood Insurance Program.

This is a tough one for Congress. America is getting hammered by a lot of severe flooding. Some of the worst occurs during severe storm events, hurricanes and such. Some of it is flash flooding inland caused by severe rain storms of protracted duration. A lot of that happening now.

The problem is that, since the private insurers bid adieu to flood insurance, the government stepped in. That problem is made all the worse when the government is afraid to raise premiums to make the programme self-sustaining. They wanted to do that but it raised a furor, especially in the flood-prone south and the heartland states - places that keep the Republicans in power. The proposed rate increases would not only cost a lot - a lot - but they would also sink housing prices. That gets voters pissed off and Donald Trump is a fiery object lesson of what can happen when voters are pissed off.

And so FEMA's latest proposals to the flood insurance programme raised eyebrows when it turned out that it completely omitted any reference to sea level rise.

“This climate-change denying insurance proposal will encourage people to continue building in areas likely to be flooded by hurricane surges and sea-level rise,” said Jaclyn Lopez, Florida director for the Center for Biological Diversity. “Hurricanes Harvey, Maria and Irma should be the wake-up call to all Americans that we can’t ignore climate change anymore and must take immediate, common sense steps to protect our future.”

FEMA is responsible for developing comprehensive criteria for land use and management that restricts development of land exposed to flood risk. Communities can voluntarily participate in the National Flood Insurance Program, adopting land use and control measures to obtain lower-cost flood insurance.

“The overarching purpose of this program is to keep development out of flood prone areas but this continues to be ignored putting people and wildlife at increased risk,” said Lopez.

Good one, FEMA.


rumleyfips said...

Republicans will never read this Mound; what with their heads stuck in that sand and all.

Owen Gray said...

They keep looking up when it rains, Mound, but they never see the water rising.

Anonymous said...

I'm surprised that US private insurers no longer cover flooding. I've always bought sewer backup coverage and bought overland flood coverage when it became available this year. With deregulation in the States, there should be plenty of ways to offer crappy policies that have huge deductibles or tricky exclusions so they don't respond in most floods.


The Mound of Sound said...

Insurance of any sort is actuarial, Cap. To recover the amount of claims paid out plus a generous profit the premiums had to skyrocket. Supply and demand. Few wanted to pay the price and, socialism haters that they are, they turned to government demanding relief. Then, when government decided it wasn't right to run deficits and therefore tried to up premiums these same, socialism haters went ape shit. Then again we have enough of our own contradictions and hypocrisy that we shouldn't be smug.

Anonymous said...

After years of advising insurers on when to hold and when to fold on property, auto and commercial liability claims, I have a general idea how the business works. That's why I was surprised that no private insurers offered flood coverage.

Indeed, your post made me curious enough about the US market to do some googling. While you're right that the vast majority of flood coverage is written by the NFIP, there are private insurers willing underwrite the risk, even in places like Florida. These include some big names like AIG and Chubb.

In fact, some 20,000 Floridians have private flood policies thanks to the relaxing of regulations to allow private flood policies to qualify as suitable as a condition for home loans.

The concern, of course, is that private insurers will cherry-pick the low-risk clients and leave the rest to the government. Of course, this drives up the cost of NFIP policies since greater risk is spread among fewer clients. To the GOP this will naturally be seen as government failure and justification for privatization, when in fact, it's a failure of the market.

The cheapest insurance is achieved by spreading risk among as many clients as possible. Government insurance usually achieves this - as long as private insurers aren't allowed to siphon off the low-risk clients whose premiums help subsidize the others. In some cases, large insurers may have larger risk pools than small governments, which can then make private insurance cheaper. But that won't be the case with NFIB since it's national in scope.

Thanks for the interesting post, Mound.