Huron Daily Tribune
Speaking on the floor of the House of Representatives Friday, U.S. Rep. Candice Miller discussed the Flood Insurance Reform Act of 2011 (HR 1309), which provides a five year reauthorization and updates the National Flood Insurance Program (NFIP).
Miller has offered amendments which would terminate NFIP or make changes to the program. Miller delivered the following remarks on the floor during the debate to begin work on HR 1309:
“Mr. Speaker, I rise to support this rule, but I am strongly, strongly opposed to the underlining bill — the National Flood Insurance Program. And I would start with this basic premise — Why in the world is the federal government even involved in the flood insurance business? Is that our core purpose of being the federal government? It’s ridiculous. This program was started in 1968 and the government began writing policies in the early 1970’s, and no great surprise, the federal government is doing a lousy job of being in the insurance business.
“This program is currently over $19 billion in debt, and we now need to raise the debt ceiling on this program to about $25 billion. And recently, the Federal Emergency Management Agency administrator testified to congress that the flood insurance program, no great surprise, is likely to stay in debt, massive debt, forever. And it is easy to understand why because this program is not actuarially sound. And because the federal government can be treated apparently as a bottomless pit of money, so we don’t need to base premiums on any normal risk evaluation — which is a matrix that private sector insurance companies have to do. In fact, we actually encourage people to build in flood prone areas that repeatedly flood. Just consider this one statistic: Only 1 percent of the properties in this program are considered to be repetitive losses, 1 percent. Yet that 1 percent accounts for 40 percent of the claims because they repeatedly flood and the federal government subsidizes them to reconstruct.
“At a time of extreme financial distress for our nation, the federal government is subsidizing flood insurance — why? If it is so great, why don’t we start a fire insurance program? How about a wildfire insurance program? How about an earthquake protection insurance program? The truth is that if we have a natural disaster in our country, this congress, Americans, will always stand up and help that part of the country, that area of the country that is suffering. We will always help our fellow Americans. This program may have been well intentioned at the beginning, but it has evolved into something that is unrecognizable any more. And if we truly ever want to downsize to right size government, the federal government, we can’t just be nibbling around the edges of reforming a program that is ridiculous at its very core. We can’t be reforming useless government programs: They need to be eliminated. And I believe that the (NFIP) is a waste of taxpayer’s dollars, it is a boondoggle, and it needs to be eradicated...”
Miller offered the following amendments, which will be debated next week:
Termination Amendment: Terminates NFIP by Jan. 1, 2012 and allow states to form regional insurance compacts to spread risk. Continues to allow FEMA to assist in their efforts in producing high quality flood maps, as well as assist states and the private sector to insure against flood loss.
Television & Radio Ad Termination Amendment: Terminates current spending on television and radio commercials being aired to promote the flood insurance program in all 50 states and directs remaining funds to pay down NFIP’s debt. Would continue FEMA’s mailing programs that are used to notify current policy holders of changes to their policies and maps as well as other educational publications they produce. Over the past year, the NFIP has spent $500,000 producing television commercials and more than $7 million buying ad time.
We too oppose the NFIP, primarily because many local residents have been forced to purchase flood insurance against their will. As Miller reports, one out of every four property owners in the program receives subsidized rates and others in less flood prone areas are forced to pay significantly higher rates than they should.
NFIP is a bad deal for Michigan because these rates are not set in an actuarially sound method. For example, from 1978 to 2010, Michigan residents paid $284.4 million in premiums and received $45 million in claims. That means Michigan policy holders paid more than six times in premiums to what they received in benefits.
Meanwhile, because of heavily subsidized rates in other areas of the country, residents in Louisiana paid $3.9 billion in premiums and received $16 billion in claims.