Late last month I opined that there should be restrictions and/or limits on how much subsidized insurance and government funding is applied to rebuilding flooded houses after a natural disaster like Hurricane Harvey. My view wasn't universally approved; some readers objected, in comments and via e-mail, claiming that I was being heartless and uncaring, or words to that effect.
Well, now comes this report, which demonstrates exactly what I meant. Bold, underlined text is my emphasis.
Brian Harmon had just finished spending over $300,000 to fix his home in Kingwood, Texas, when Hurricane Harvey sent floodwaters “completely over the roof.”
The six-bedroom house, which has an indoor swimming pool, sits along the San Jacinto River. It has flooded 22 times since 1979, making it one of the most flood-damaged properties in the country.
Between 1979 and 2015, government records show the federal flood insurance program paid out more than $1.8 million to rebuild the house—a property that Mr. Harmon figured was worth $600,000 to $800,000 before Harvey hit late last month.
. . .
As they tally up the losses from Hurricanes Harvey and Irma, government officials are looking for ways to step up purchases of frequently-flooded houses, which have become a huge drain on the financially troubled federal flood insurance program.
Homes and other properties with repetitive flood losses account for just 2% of the roughly 1.5 million properties that currently have flood insurance, according to government estimates. But such properties have accounted for about 30% of flood claims paid over the program’s history.
“We are seeing a very acute need to move far faster” on property buyouts, said Roy Wright, who directs the National Flood Insurance Program. “It’s a clear priority to address these multiple-loss properties.”
In a buyout program, homes are typically razed and the land left as open space.
Even before Harvey and Irma, the flood program owed the U.S. Treasury $24.6 billion, as payouts have exceeded the amount of insurance premiums it takes in.
The program paid out more than $47 billion in insurance claims since 2000, according to government figures.
Insurance payouts from Harvey alone are expected to total $11 billion, said Mr. Wright, noting the program had already received nearly 85,000 claims tied to the disaster as of Wednesday. It is too early to estimate losses tied to Irma, but Mr. Wright expects both storms to be among the most costly in the program’s history.
There's more at the link.
Let's assume that Hurricane Irma will cost about the same as Hurricane Harvey in terms of insurance payouts. That's $22 billion in total. Let's assume, too, that the historical average holds, and that about 30% of those claims will be repeat claims from properties that had previously been damaged by flooding. That's $6.6 billion. That money might as well be poured down the drain . . . because it's merely repeating previous repairs. What's more, if those properties are permitted to reinsure at subsidized rates, we - the taxpayers of America - will be on the hook yet again for future repairs, which are certain to arise when the next hurricane hits those properties.
This is stupid. It's sick. It's disgusting! It's our money, as taxpayers, being wasted.
The taxpayer-subsidized federal flood insurance program should be modified AT ONCE. Those who are presently insured under it should be able to keep their insurance . . . but for one future claim only. As soon as they make a flood-related claim, the payout should be in the form of a forced purchase of their property, and a razing of any and all buildings on it. The property owner(s) can use the payout to settle any outstanding debts on the properties, and apply the balance to buying or building another home in a less flood-prone area. We, the taxpayers of this country, should no longer be liable for any repeat claims on their former property - otherwise we're subsidizing failure. We're subsidizing the repair, cleanup and construction industries, as well as the property owners.
I also propose that any new or replacement construction in flood-prone areas, and any repairs to properties formerly covered by the federal flood insurance program, should be automatically denied access to that program. Those who build or rebuild in such areas should be forced to pay for insurance at commercial rates, which should not be subsidized by the rest of us. Why should we pay for damages that we know are almost certain to be incurred in future? Is that a proper use of our taxes? I maintain it's not.
What say you, readers? Are you happy at the thought that your taxes are about to be used for the 23rd time to rebuild that flooded house in Kingwood?