Flood Insurance

Schumer Insists on Keeping Beachfront Bailouts for Wealthy Americans' Vacation Homes

The senate majority leader is stymying long-needed increases in federal flood insurance rates.

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The National Flood Insurance Program (NFIP) run by the Federal Emergency Management Agency (FEMA) is $20.5 billion in the hole, even after Congress canceled $16 billion in debt in 2017. This financial shortfall is largely because the program does not charge nearly enough in premiums to pay for the flood damage on the properties it insures. For decades, taxpayer bailouts of the NFIP have enabled people to live and build in flood-prone areas instead of bearing the risks themselves.

In order to address this problem, the NFIP has been working on its new Risk Rating 2.0 initiative, with the aim of charging premiums that more accurately reflect the unique flooding risks of individual properties. The agency had planned to release its updated rates later this year.

Not so fast, says Senate Majority Leader Chuck Schumer (D–N.Y.). The senator's office recently informed FEMA that adjusted premiums could have a "severe impact" on homeowners, and urged Congress and the Biden administration to work together toward "affordable protection" for flood-prone communities. Schumer raised a similar alarm shortly after the changes were first announced: "How can we ram through a national flood insurance plan that could unfairly put a bull's-eye on the backs of Long Island and New York homeowners without more consultation?" he asked at an April 2019 press conference. "Halt. Stop. Stop this plan."

Actually, lots of beachfront dwellers in New York (and elsewhere) have been "unfairly" taking advantage of taxpayers. A recent study by the nonprofit research group First Street Foundation calculates that the average estimated annual loss for each of the 4.3 million properties most at risk of flooding is $4,419, whereas NFIP premiums average $981. In other words, their flood insurance premiums would have to increase 4.5 times over their current rates to fairly cover the flooding risks to these properties.

Forbes reports that for the 1.5 million properties located in FEMA's Special Flood Hazard Areas (SFHA), flood insurance premiums could rise to almost $8,000 per year. Below is a First Street Foundation map showing the average expected loss per property versus the average premiums paid in New York's counties. In New York state, the expected annual loss for properties in SFHAs is $5,126, while premiums average $1,860 per year. One of the biggest disparities between risks and payments can be found in Northport on Long Island, where the spread is $9,362 in losses versus $685 in premiums netting to a difference of 1,266.5 percent.

 

In a fascinating 2016 Stanford Law Review article, legal scholars Omri Ben-Shahar and Kyle D. Logue argue that insurance can serve "as a form of private regulation of safety—a contractual device controlling and incentivizing behavior prior to the occurrence of losses." They point out that as a result of "direct government provision of subsidized insurance, private markets no longer generate price signals regarding the cost of living in severe-weather regions." Suppressing the true cost of insurance encourages "private parties to (rationally) assume excessive risk, and dump the cost of living in the path of storms on others. Indeed, much of the development of storm-stricken coastal areas is due to insurance subsidies, and would likely not have happened at the same magnitude otherwise."

Living on the beach on Long Island (or anywhere else) is surely lovely, but Schumer should recognize that the rest of us should not be subsidizing his constituents' choice to dwell in flood-prone zones.

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  1. “the rest of us should not be subsidizing HIS constituents’ choice to dwell in flood-prone zones”

    You forgot the emphasis; that is the point of the subsidy.

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    2. Nice graphic on expected risk vs. premiums.

  2. Well no shit. That’s his property we’re talking about. Your property can go get fucked.

  3. What good is having power if you can’t dole out trillions of dollars to people you know?

    1. Everyone who votes for him (and every other critter since they are all culpable) is the problem

    2. I visited the museum of the The Palace of the Inquisition
      in Cartagena, Colombia a couple of years ago.

      There are some great punishment ideas there that could be used on corrupt pols to help them keep on the straight an narrow. Much more persuasive than simple citizen kangaroo courts and tar and feathers.

    3. “The Gov-Gun power to STEAL…”, lefty principle 101.

    4. Well, there’s also the punishing your enemies with petty, vindictive regulations. Don’t forget that.

  4. “Living on the beach on Long Island (or anywhere else) is surely lovely, but Schumer should recognize that the rest of us should not be subsidizing his constituents’ choice to dwell in flood-prone zones.”

    And the rest of us should recognize that elections have consequences that go beyond mean tweets.

    1. And the rest of us should recognize that subsidizing flood insurance isn’t an enumerated power of the federal government.

    2. How long has Schumer been in the senate? Fucking forever? The voters can’t be trusted to throw out grifters since they’re too inept to propose any alternatives.

  5. Yep, those Democrats really believe in making the rich “pay their fair share”, don’t they?

    1. Well, let’s think about that. Where does the money come from to cover the shortfall between payments and premiums? It’s deficit spending so you could argue it comes out of either incomes taxes or debt. If income taxes, well most income taxes are paid by other relatively wealthy people. So this program is just sort of socialism for the upper middle class and upper class. Which is right in line with what the Democrats want.

  6. But storm-damaged houses provide construction jobs for union workers! Why do hate the working class? In fact, we should have a national program to damage houses that aren’t in flood-prone areas to increase the number of jobs and provide benefits for all the nation’s workers instead of just a few!

    #TearDownThisWall
    #AndThatOneToo

    1. Please don’t give them ideas!

  7. Starting to support a wealth tax.

    1. Thanks.

      I’m wealthy. Earned it all myself.

      And, I’m not a Democrat.

      Why do you want to take your anger out on me? I didn’t steal from you nor block your opportunities to garner wealth.

      1. I don’t support a wealth tax, but this is an interesting place we’re In, don’t you think? What happens when you have a class of very wealthy people who want socialism for everyone else?

    2. Yes, let’s “fix” one bad policy with an even worse policy. I’m sure that will work.

  8. >>How can we ram through a national flood insurance plan that could unfairly put a bull’s-eye on the backs of Long Island and New York homeowners without more consultation

    the ACA is a roadmap?

  9. The senate majority leader is corrupt? Nah bruh.

  10. The Republicans will come out strong against this waste of taxpayer dollars, right? Right?

    1. No, because if they cared, they would have changed the premiums a long time ago when then controlled the House and Senate and the White House.

      1. It isn’t just the premiums. There are simply places that have recurring natural disasters where we should tell people that if they rebuild they won’t be offered insurance through this program.

        FEMA actually did that years back here in flood prone sections of the Russian River in northern California that have flooded at least once every ten years.

        No mas!

      2. I’m curious about this. Did FEMA just come up with this idea for Risk Rating 2.0 on its own? Or was it instructed to do so by Congress or a president? If so, which one? Many questions not answered in the article.

  11. So Reason did everything in their power, which wasn’t much, to put this asshole in power but is shocked that he’s doing exactly what any disinterested observer could easily predict? Fuck you Ron.

    1. Oh stop it. “Everything in their power” … really? How much influence do you think this magazine has? And quite frankly it was Trump who sabotaged the Georgia races so I have no idea why you people are still sticking by him.

      1. “…And quite frankly it was Trump who sabotaged the Georgia races…”
        Bullshit.

  12. Oh Senator Troytsky…gotta love him…well connected “friends and families” are always given special treatment…just like the real Troytsky….shows the sickness in NYC if this guy gets elected time and again..sick sick people

  13. Trade NYC and LI for the Falkland Islands….great Trade for the US…

  14. You don’t increase the rates for the uninsurable. You eliminate coverage. There is no power in the Constitution for the feds to run a property casualty insurance program, let alone one that is designed to lose money…

    1. Bingo. Go to the head of the class.

      They are offering insurance coverage in areas where private industry WILL NOT provide such coverage at any price. What does that tell you?

  15. Does anyone realize that the coverage under the Federal Flood Insurance Program is capped?

    I’m not sure of the current limit but in 2005 my 60 year old house was flooded by the failure of the federal designed and constructed levees/flood walls in New Orleans the cap was a little over $200,00.00.

    Many existing communities are threatened by sea level rise and coastal erosion.

    Should we say these long existent communities as SOL and without compensation or charge the exorbitant premiums to continue their traditional life?

    I believe that some adjustment of the premiums is justified for new construction or re-construction of substantially damaged properties. Repair of less damaged properties might be allowed.

    However as I understand it under the current program multi-million properties would not be covered.

    1. Current limits shown here, looks like $350k residential and $1 million commercial.

      Do that all the way up the coast, you’re talking real money.

  16. Some federal disaster areas should be reclassified as federal stupidity areas.

  17. Looking at the map of expected losses on home insurance policies for NY, shows us that NY is a net insurance loss for insurers, and it’s no wonder Schumer wants this subsidy for his state, at the expense of others. This when NY doesn’t have a huge amount of coastline, and surely has a lot of builders building in low lying areas thanks to those federal subsidies.

    The moral approach of no government subsidies, is to the disadvantage of people living in those low lying homes. which I expect will eventually go away after the country goes broke. Then the land owners, developers and politicians who got those subsides making development of their property profitable, will be long gone, and homeowners will find they can’t afford to repair their homes after the next flood, getting screwed by politicians selling favors that shouldn’t be sold.

    1. “This when NY doesn’t have a huge amount of coastline”

      …but I’m guessing the coastline it *does* have is very important to some very important coastal property owners.

  18. Schumer is way past due to stand trial for Capital Felony Treason. These elitist scum are nothing but a parasitic burden on the entire rest of the country.

  19. As I learned in Sunday School ‘the wise man built his house upon a rock and the foolish man built his house upon the sand’.

    Matthew 7:24-27 24″Therefore everyone who hears these words of mine and puts them into practice is like a wise man who built his house on the rock. 25The rain came down, the streams rose, and the winds blew and beat against that house; yet it did not fall, because it had its foundation on the rock. 26But everyone who hears these words of mine and does not put them into practice is like a foolish man who built his house on sand. 27The rain came down, the streams rose, and the winds blew and beat against that house, and it fell with a great crash.”

  20. I’m totally shocked to find blatant self-indulgence in the ranks of our Democrat elites!

  21. more blue state welfare

  22. Fuck you, you pos Chuckie and fuck them. Let the rich peoples houses float away if they don’t want to pay.

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  24. In a fascinating 2016 Stanford Law Review article, legal scholars Omri Ben-Shahar and Kyle D. Logue argue that insurance can serve “as a form of private regulation of safety—a contractual device controlling and incentivizing behavior prior to the occurrence of losses

    It took until 2016 for legal scholars to realize this? I hope the word “fascinating” is dripping with sarcasm.

  25. While New York is the example because it is Schumer’s area, this would affect New Orleans, Houston, and other major cities as well. It just happens to be that a Democratic senator with flood-prone constituents is the one in charge when the rate hike is brought up. No Republican from Houston, other parts of the Gulf Coast, or Florida would have been actively encouraging this plan either.

  26. A policy that encourages more development in flood zones so the problem can grow in scale at government expense over time. Schumer can’t let go of something that self creates more government. It’s what he lives for every day he goes to work.

  27. Humans climbed to the top of the food chain by being the smartest and most adaptable creature on the planet.

    Instead of this absurd and quixotic plan to manage the temperature of the earth no matter the economic cost, we’d be smart to quit subsidizing the desire of the wealthiest among us to live in beachfront mansions.

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