TOPICS
TOPICS
Dems seeking retroactive coverage for hurricane victims
As Congress considers long-term proposals to spur recovery in hurricane-ravaged areas, a rift has emerged between Democrats and Republicans over legislation to provide some hurricane victims with retroactive coverage under the federal flood insurance program.
The proposal would apply to property owners who suffered hurricane flood damage this year but did not have flood insurance policies because their property was not located in federally designated flood areas that are subject to mandatory purchase requirements. To be eligible, those property owners would have to have purchased other types of hazard insurance before Hurricane Katrina struck.
Rep. Gene Taylor, D-Miss., introduced the temporary buy-in proposal in September as a stand-alone bill, and Rep. Melvin Watt, D-N.C., has included similar provisions in a larger hurricane relief package introduced earlier this month. Watt, who chairs the Congressional Black Caucus, also tried to attach the buy-in proposal to a flood insurance overhaul bill during last week's House Financial Services Committee markup.
"These were people who were outside the floodplain," said Watt, whose amendment failed on a 34-32 vote after more than an hour of contentious debate. "There wasn't any reason for these people to buy flood insurance."
The flood program, administered by the Federal Emergency Management Agency, offers low-cost flood insurance to property owners in high-risk areas, provided they take steps to mitigate flood damage. Watt said his amendment was prompted in part by FEMA's announcement that, starting Dec. 1, it would stop subsidizing hotel rooms for hurricane evacuees. He said providing some of those evacuees with retroactive flood insurance would be a "humanitarian gesture."
But Republicans said allowing retroactive coverage for some homeowners would turn the whole concept of insurance on its head. "If we did this, why would anybody buy health insurance? Why would anybody buy auto insurance? Why would anybody buy fire insurance?" said Rep. Jeb Hensarling, R-Texas. "We will rue the day that we did this."
Financial Services Capital Markets Subcommittee Chairman Richard Baker, R-La., agreed that the proposal would set a "difficult" precedent. Baker said it also would lead to an enormous increase in the amount of money that FEMA would have to borrow from the Treasury Department to pay out hurricane-related claims.
"I just don't know that we should go there," Baker said. "I am not opposed to this for any other reason than I do not believe it would be in the best interests of our constituents right now."
The flood program is funded by premiums and does not use taxpayer funds to pay claims or operating expenses. But FEMA is allowed to borrow funds from Treasury -- which it later repays with interest -- to pay catastrophic NFIP claims that exceed the flood program's budget. The House and Senate last week approved emergency legislation to increase FEMA's borrowing authority from $3.5 billion to $18.5 billion to pay claims related to hurricanes Katrina and Rita.
COMMENTS
- Will we first require those that would receive the benefits from an insurance policy to pay the premiums from the beginning of the Federal Flood Insurance program, or from when the house was built, whichever came last? Gee, if I can buy my insurance retroactively after I find that I need it, the whole concept of insurance is void. GovExec.com reader Posted December 12, 2005 1:52 PM
- I am so tired of the government wanting to take everyone’s losses at my expense that it is time to stop the insanity. If the people did not have the sense to get flood insurance when they lived below a levee they should lose their financial assets, not be given mine or my grandchildren’s. Get rid of government guarantees on most things and we would see much better decision-making by the people. Just look at the cry of the elderly about having so many choices in Medicare for drugs. They do not want choices and they want the cost to go to others. Get rid of SBA, student loans, agricultural subsidies, crop insurance, mortgage insurance, pension insurance, deposit insurance, the Commerce Department, the Energy Department, the Education Department, and on and on. America is strong because the citizens had the power to take risks to develop great returns. Government has changed that so that people can take stupid risks (like living under the levee without flood insurance and lenders would not require it so they got more loans with greater fees). The stupid risks divert money from potential actions that would provide value added to the country. Now the USA is subsidizing everyone and no one is developing value added goods and services that will maintain this country in the future. Expect the USA to fall in economic power to the likes of China, India, and other developing countries. Taxpayer Posted December 12, 2005 8:15 AM
- When I owned a home in the near west suburbs of Chicago, in a little village named Westchester, I was required by my mortgage lender to buy flood insurance because my home was in a flood plain, according to the flood insurance map. Flood insurance, even in the minimum amounts available, is very expensive, costing in my case four times my annual homeowners’ premium for far less coverage. I appealed and even had my own engineering study done, but to no avail. I had to purchase the stupid flood insurance despite there being a near zero probability of ever collecting a cent. So, I find it hard to believe that a city under sea level is not in a flood plain and thus homeowners are not required to buy flood insurance. Go figure. EPA Contracting Officer Posted December 6, 2005 4:53 PM
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