Floods and Flood Insurance

While South Central states suffer from drought, the Midwest is paddling upstream against too much water and the flooding has once again put the spotlight on the National Flood Insurance Program with all its faults and foibles.

One Michigan lawmaker wants to end the program. Private insurers see that as a severely flawed plan, and agents in the Midwest say mixed messages from the Federal Emergency Management Agency, which manages the NFIP, are confusing agents and water-logged policyholders alike.

“Eliminating the National Flood Insurance Program is the worst policy option out there,” said Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies (NAMIC). He was responding to an amendment to HR 1309, the Flood Insurance Reform Act of 2011, by Rep. Candice Miller, R-Mich., which would shut down the program as of January 2012.

Miller said the U.S. government should not be in the insurance business and has done a lousy job of it since the inception of the NFIP in 1968. “I believe that the National Flood Insurance Program is a waste of taxpayer’s dollars, it is a boondoggle, and it needs to be eradicated,” Miller said in an address to the U.S. House of Representatives.

Grande countered that the NFIP is not “without its flaws,” but closing it would put millions of homeowners at risk and cost taxpayers billions of dollars.

The NFIP is about $18 billion in debt to the U.S. Treasury, largely as a result of aiding communities after Hurricane Katrina.

Meanwhile, FEMA is urging more people to buy flood insurance, but agents say the push is confusing property owners in the Missouri River basin. The Associated Press reported that FEMA wants agents to sell the coverage even though the policies contain provisions that seem to exclude Missouri River flood damage. Federal officials say some damage might be covered but some might not, and the answer will be clearer once the water recedes.

That muddied response is frustrating agents who sell flood insurance because they can’t give their customers a definitive answer, according to the AP. The mandatory 30-day waiting period in flood insurance policies is the culprit. FEMA said the Missouri flood officially began on June 1 so only policies bought by May 2 would cover the resulting damage. But the agency has continued to encourage people downstream to buy the insurance, noting that some damage might be covered if it is attributed to locally heavy rains or other conditions not affected by the waiting period, the AP reported.

As for all that water hanging around the Midwest, folks in Texas and Oklahoma sure would like to have it.

Topics USA Agencies Flood Missouri