I have serious reservations about this proposal. While it is always a good thing to review and evaluate how any government program is working, looking at in isolation is not. The National Flood Insurane Program has many problems, but what is the alternative? Are private insurers clamoring for the chance to write flood coverage? If they are, no IIABNY members have told me about it.
According to another article, Rep. Miller asked rhetorically, "What in the world is the federal government doing in the flood insurance business?" The answer to that question, of course, is that private insurers found the flood insurance business to be a losing proposition. Congress created the NFIP in the 1960's to fill the void left by private insurers who were losing their collective shirts in it. Have market conditions changed since then to the point where property owners no longer need a government program? I will be curious to hear testimony on that question if and when the relevant congressional committee holds hearings on this bill.
Rep. Miller has done us a favor by opening the debate. She's laid down her cards -- the NFIP should go. Let's have an open, intelligent discussion about how this country should protect property owners from the risk of flood loss.
As always, I'd like to hear your thoughts on this bill and the flood insurance situation in general. So, flood me with your opinions ("flood me" -- get it?) in the comments.
Legislation Introduced To Phase Out NFIP
February 8, 2011The legislation to phase out the National Flood Insurance Program, H.R. 435, was introduced by Rep. Candice Miller, R-Mich. (File Photo: AP)
NU Online News Service, Feb. 8, 3:10 p.m. EST
WASHINGTON—Legislation has been introduced in Congress that would phase out the National Flood Insurance Program by the end of 2013.
The legislation, H.R. 435, was introduced by Rep. Candice Miller, R-Mich.
The bill would also immediately end all remapping of the program mandated by prior reauthorizations of the program, thereby ending the agency’s authority to charge more to current customers based on new maps mandated by the 2003 law that remains in effect.
Earlier this month, Rep. Miller had asked colleagues to support the measure.
That Congress may take a long look at the program was also acknowledged earlier this week by Rep. Scott Garrett, R-N.J., chairman of the Capital Markets Subcommittee of the House Financial Services Committee, which has prime jurisdiction over the program.
During an appearance at a housing conference Monday, Rep. Garrett said, “The government's history in pricing risk is extremely poor,” citing the Federal Deposit Insurance Corporation, the National Flood Insurance Program, and the Pension Benefit Guaranty Corp. as three entities with “terrible records of properly pricing for risk.”
The current program expires Sept. 30, the end of the current fiscal year. The program has been extended five times, with several lapses, since the origin
You can bet that every company's guidelines would require a distance of no less than 2 miles to coastal waters or any body of water subject to flood. =oP
Posted by: Pete Coste | March 23, 2011 at 11:27 AM
Peter, I suspect you're right. The alternative is to try and get state insurance departments to approve actuarially sound rates for properties within two miles of the water, then hope people will pay them. How likely do you suppose that is?
Posted by: Tim Dodge | March 25, 2011 at 07:23 AM
Thank you Candice Miller for caring enough to introduce this bill!!!! Just because the National Flood Insurance Program is in trouble, the people in Michigan shouldn't have to bail them out.
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