Sen. Schumer Calls to Refund Flood Insurance Program

Source University of California Davis Center for Watershed Sciences FEMA Texas Department of Transportation USGS Credit Katie Park  NPR

Source University of California Davis Center for Watershed Sciences FEMA Texas Department of Transportation USGS Credit Katie Park NPR

The federal flood insurance program covers $105 billion in property in areas of Texas affected by Harvey's rains, Bloomberg Intelligence estimated.

The good news for homeowners is that government agencies are mobilizing to provide relief.

What happens if the program expires?

Hensarling pushed for more aggressive changes to the program as part of the five year re-authorization.

Fitch Ratings has said that hurricane Harvey is unlikely to result in any ratings downgrades of property/casualty re/insurers as the storm is expected to be an earnings event, and while the insured loss is likely to fall within insurers' retentions, the storm could wipe out the National Flood Insurance Program's (NFIP) reinsurance program.

Homeowners insurance does not include flood damage.

Among the more credible estimates for Harvey's damage was issued on Wednesday by RMS, the risk modelling firm that works for insurance companies.

"There's perhaps no better case study in how stubbornly America refuses to engage with climate change-and the hard choices that come along with it-than federal flood insurance, a massive, wasteful, and unnecessary giveaway of a program", writes David Dayen at the New Republic. The policies generate about $3.3 billion in premiums annually.

A quick lesson: if you do live inside the 100 year flood plan, you are required by your mortgage company to buy flood insurance. A 2006 government study found that compliance was lowest in the Midwest and highest in the West.

Source University of California Davis Center for Watershed Sciences FEMA Texas Department of Transportation USGS Credit Katie Park  NPR
Source University of California Davis Center for Watershed Sciences FEMA Texas Department of Transportation USGS Credit Katie Park NPR

A program that is supposed to pay for itself is clearly not doing so. The damage from Harvey will potentially lead FEMA to hit that borrowing level.

"But the average amount these grants pay out historically is more like $5,000".

"I just don't think a short-term reauthorization bill gets the job done", House Financial Services Committee Chairman Jeb Hensarling, Texas Republican, told Bloomberg.

When it comes to a long term overhaul of the program, the politics may be particularly jumbled in Harvey's wake, Collender noted.

Like other insurance, flood insurance pricing depends upon the insured property's location and known risk. The private insurers sell the policies, but the federal government sets the rates on which premiums are based, using flood-risk maps produced by FEMA.

The panel has since reined that in to a 6.5 percent increase that will be phased in gradually, a move that helped attract support from influential trade groups representing home builders and real estate agents.

House Speaker Paul Ryan's (R-Wis.) office assured to FOX Business that the program responsible for 4.9 million policyholders, including more than 590,000 in the state of Texas, will be reauthorized.

Plus: Congress needs to renew children's health insurance, the FAA, and National Flood Insurance - $25 billion in debt, set to expire September 30. They say you can act now, or pay much more later.

If you receive one of these calls, you should not respond at all - and you should certainly not hand over any personal details, as this information may be used in identity theft, or give them any money.

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