The Weekend Wonk: John Oliver on Floods

November 4, 2017

New York Times:

In August, when Hurricane Harvey was bearing down on Texas, David Clutter was in court, trying one more time to make his insurer pay his flood claim — from Hurricane Sandy, five years before.

Mr. Clutter’s insurer is the federal government. As it resists his claims, he has been forced to take out a third mortgage on his house in Long Beach, N.Y., to pay for repairs to make it habitable for his wife and three children. He owes more than the house is worth, and his flood-insurance premiums just went up.

The government-run National Flood Insurance Program is, for now, virtually the only source of flood insurance for more than five million households in the United States. This hurricane season, as tens of thousands of Americans seek compensation for storm-inflicted water damage, they face a problem: The flood insurance program is broke and broken.

The program, administered by the Federal Emergency Management Agency, has been in the red since Hurricane Katrina flooded New Orleans in 2005. It still has more than a thousand disputed claims left over from Sandy. And in October, it exhausted its $30 billion borrowing capacity and had to get a bailout just to keep paying current claims.

Congress must decide by Dec. 8 whether to keep the program going. An unusual coalition of insurers, environmentalists and fiscal conservatives has joined the Trump administration in calling for fundamental changes in the program, including direct competition from private insurers. The fiscal conservatives note that the program was supposed to take the burden off taxpayers but has not, and environmentalists argue that it has become an enabler of construction on flood-prone coastlines, by charging premiums too low to reflect the true cost of building there.

The program has other troubles as well. It cannot force vulnerable households to buy insurance, even though they are required by law to have it. Its flood maps can’t keep up with new construction that can change an area’s flood risk. It has spent billions of dollars repairing houses that just flood again. Its records, for instance, show that a house in Spring, Tex., has been repaired 19 times, for a total of $912,732 — even though it is worth only $42,024.

And after really big floods, the program must rely on armies of subcontractors to determine payments, baffling and infuriating policyholders, like Mr. Clutter, who cannot figure out who is opposing their claims, or why.

Roy E. Wright, who has directed the flood insurance program for FEMA since June 2015, acknowledged in an interview on Friday that major changes were called for and said some were already in the works. The program’s rate-setting methods, for example, are 30 years old, he said, and new ones will be phased in over the next two years. But other changes — like cutting off coverage to homes that are repeatedly flooded — would require an act of Congress.

“The administration feels very strongly that there needs to be reform this year,” he said. “I believe strongly that we need to expand flood coverage in the United States, and the private insurers are part of that.”




One Response to “The Weekend Wonk: John Oliver on Floods”

  1. dumboldguy Says:

    An excellent piece from John Oliver—-informative, entertaining, and thought-provoking. Why did it get virtually no response from Crockers? Peter’s efforts to provide us with good stuff should not go unrewarded, especially on a topic as important as flooding and flood insurance/rebuilding.

    First, a personal note—-Wayne NJ is my home town, and I chuckled at the video clip of a reporter in a canoe in ankle deep water while folks waded by her. That was undoubtedly filmed on Fayette Avenue in the Mountain View section of town, a low-lying area along the Pompton River above its junction with the Passaic. It’s right off the main highway and easy for the camera crews to get to (and borrow a canoe for the blonde babe to paddle) .

    The homes there along the river were small pre-WW2 summer cottages that were later winterized and jacked up one story. I had a number of HS classmates who lived there, and they kept canoes and john-boats tied to the front steps and used them to get to the ends of the street for the school bus. The water was usually wadeable, so many just wore knee or hip boots and changed out to shoes at school. The other clips are from newer areas where the dummies-come-lately built houses after WW2 because the land in the flood plain was cheap and zoning regs allowed it. During Hurricane Irene, a huge shopping center built in 1969 along the bottom of the town near the Pompton-Passaic rivers confluence was waist to armpit deep.

    What we should be talking about here is the unsustainability of the flood insurance program and the idea of rebuilding flooded and hurricane damaged homes. Climate change induced flooding is only going to get worse and the very fact that we have a thing called “REPETiTIVE LOSS properties” should tell us something.

    Hate to say it because it’s tough on the residents, but it makes no sense to try to rebuild homes and roads in mountain ravines in Puerto Rico when the likelihood of severe hurricanes striking there is increasing. Nor does it make sense to rebuild Houston homes that have been flooded three years in a row, or some of the areas devastated by Sandy. If we are not going to take serious steps to fight climate change, we should not throw away money on “repetitive loss”.

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