Federal flood insurance program nears its limit in time and money

Federal flood insurance program nears its limit in time and money”

The majority of homeowners in the area devastated by Hurricane Harvey lack flood insurance, leaving many who escaped the storm with little financial help to rebuild their homes and lives. Many people have lost their homes and it appears a lot of them do not have flood insurance.

Victims of the August 2016 flood have been given another extension, this one until December 31, to file claims with the National Flood Insurance Program.

As a result, from a reinsurance company perspective, losses are expected to mostly fall within primary insurers' retention levels under catastrophe reinsurance programs, Fitch said, with a small amount ceded to reinsurers.

The bill is a source of rare bipartisan agreement, as it was unanimously passed by the House Financial Services Committee in June and adopted by the full House unanimously past year. Many banks demand coverage in flood-prone areas, and sometimes even in lower-risk neighborhoods, before granting a mortgage.

But rather than extend the program to additional at-risk properties, Congress may be inclined to restrict it, particularly for high-risk properties that have been flooded repeatedly.

"It's a awful disaster just on the facts you see when you look at TV or the pictures", says Bob Hunter of the Consumer Federation of America, a former Texas insurance commissioner.

Parker says he's fielded a couple dozen calls in the last 24 hours from people who have decided now is the time to buy flood insurance.

But that model assumed Harvey would hit the Texas coast as a Category 3 hurricane and eviscerate more than 200,000 homes.

Seven months after devastating floods destroyed or damaged tens of thousands of homes in met...

Those lucky enough to have flood insurance are guaranteed up to $250,000 to cover rebuilding costs and $100,000 to replace personal possessions.

Insurance agents know, that's not a good situation when it comes to the sustainability of the nation's biggest parachute when it comes to flood coverage.

The Trump administration's FEMA director, Brock Long, wants to overhaul disaster relief, shifting more of the costs from the federal government to states, cities and homeowners. But according to the Insurance Council of Texas, only about 20 percent of homeowners have flood insurance.

The NFIP was last updated in 2014 and is set to expire September 30. While existing policies would remain in effect, the lack of available flood insurance could stall the sale of homes inside designated flood zones, where lenders typically require flood policies. In the meantime, the program has had to borrow billions from the Treasury because of claims arising from storms like Katrina and Sandy. When communities don't participate, it means their residents and business owners can not buy federal flood insurance and are thus ineligible for a federally backed loan.

"The program was paired with the idea that there would be flood plain management that would reduce the risks, so that when there were floods, there would be less damage", said Jennifer Wriggins, a professor who specializes in insurance at the University of Maine School of Law.

Earlier this year, Texas passed HB 1774, a tort reform bill created to target insurance abuse surrounding hailstorms.

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