RMS Estimates Harvey Re/insurance Loss At Max $40 Billion (Including NFIP)

RMS Estimates Harvey Re/insurance Loss At Max $40 Billion (Including NFIP)

RMS Estimates Harvey Re/insurance Loss At Max $40 Billion (Including NFIP)

One thing we've learned at the Federal Trade Commission is that scams often follow the news - especially when there's a natural disaster, like Hurricane Harvey or Irma, in the headlines.

Critics of crop insurance point out that some farmers plant crops in high risk areas just to collect the insurance. They could lay bare the federal government's failure to police a basic tenet of its own disaster policy: that properties with government-backed mortgages in risky areas carry flood insurance.

Teams of adjusters are on the ground in Texas, Louisiana and now Florida visiting homes and businesses and, in many situations, Wright Flood is processing payments to policy holders.

As part of its hurricane relief package, Congress reauthorized the flood insurance program last week so it could issue policies beyond a previous deadline of October 1. "We should not be losing money every year on flood insurance".

RMS' estimate is based on analysis of RMS ensemble footprints, hazard reconstructions of Harvey's wind field and storm surge, using version 17.0 of its RMS North Atlantic Hurricane Models and RMS U.S. Inland Flood Model. If you are in a flood zone, the issues that affect the price are the zone itself, your structure's elevation and the amount of insurance you select. The same subsidies advocate might say that to take a position against subsidies is to prevent growth and push people into rural areas where they prefer not to live. Yet, efforts to reform the flood insurance program are rare.

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That would likely put Harvey as the second costliest storm in the history of the federal insurance program, said Roy E. Wright, the Federal Emergency Management Agency's deputy associate administrator for insurance and mitigation.

The folly of the government's flood insurance program has been evident for decades, and some Midwestern communities have been in on the action. Reinsurance policies purchased by FEMA could cover about $1 billion, a small fraction of what the program will need.

Extensive flood damage can lead to financial ruin for the uninsured. But he predicted that the storm damage in Florida and other affected states could rival the almost $9 billion paid out after Superstorm Sandy in 2012. CoreLogic estimates that National Flood Insurance Program-insured flood losses from Harvey alone will be $6 billion to $9 billion. Lawmakers could make a general fund appropriation to forgive all or a portion of the National Flood Insurance Program's debt, but it has shown no interest in doing so.

But the case against subsidized flood insurance is not a case against growth; it is a case against distorted growth.

What can be done to fix the program? How likely are even modest policy reforms about premiums or redrawing flood plain maps to better reflect real risk? However, an outcry from homeowners in high-risk areas such as coastal Florida led to the Homeowners Flood Insurance Affordability Act, passed in 2014, that limited or rescinded numerous Biggert-Waters rate increases. The caterwauling from seaside homeowners was so loud that Congress rescinded the reforms and lowered the rates. It is to help them rebuild. To me, this suggests that increasing taxpayer support for the NFIP will have to be part of the solution so that pricey premiums don't become a deterrent to someone buying insurance. Zone AE has the highest risk and rates.

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