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As long as the National Flood Insurance Program (NFIP) exists, yes. https://www.npr.org/sections/money/2017/09/29/554603161/episode-797-flood-money https://www

As long as the National Flood Insurance Program (NFIP) exists, yes. https://www.npr.org/sections/money/2017/09/29/554603161/episode-797-flood-money https://www.npr.org/sections/money/2017/09/29/554603161/epis... tl;dl: They are the insurer of last resort. They have paid out 10x the value of some houses that are constantly flooding.

yieldcrv 4y ago
wow, pays to read federal legislation... and who are we kidding, pays even more to write it! I'm a master of my areas of the federal code, I was not aware of this area!
zzleeper 4y ago
I find it insane how the US govt constantly subsidizes certain activities without many people realizing. NFIP, the implicit guarantees on FHLBs, and a bunch of others just lead to misaligned incentives all over the place :/
- chiefalchemist 4y ago
  And yet we're told Uncle Sam believes in the free market? We don't have Capitalism. We have Crony Capitalism. The latter has little to do with the former.
  - krapp 4y ago
    >We don't have Capitalism. We have Crony Capitalism. The latter has little to do with the former. As any true Scotsman knows.
  - codyb 4y ago
    There's also the fact that if we don't subsidize places where natural disasters occur millions of people are going to start moving rather quickly. Everywhere's a disaster zone now, we need to account for that, do our best to warn people, and do our best to help people get back to it. This is true here, and around the globe. Mass migrations are _destabilizing_. It's not crony capitalism, it's common sense for stability. And there are certainly places that are absolutely irredeemable and shouldn't have insurance. But this idea that letting people whose homes are destroyed in natural disasters need to be hung out to dry won't be worse than helping them get back onto their feet both for them and most likely for you is a bit odd.
    - FartyMcFarter 4y ago
      There is a middle ground though. If a specific area floods very frequently, it seems silly to keep bailing it out. At some point we have to cut our losses and face reality and just stop investing there.
      - plasticchris 4y ago
        Agreed, and the regular insurance companies figured out the solution a long time ago: raise premiums until their expected value exceeds the payouts over the average duration of this type of policy.
      - aperson_hello 4y ago
        And most of the places that have major recurring flooding issues are hyper local (for now at least). We're talking neighborhoods or parts of neighborhoods, not full cities (yet). The number of affected properties is relatively small, but they make up a large portion of overall claims. Stop covering those locations (even if it's a coordinated buyout program of sorts) and the problem sorts itself out... Edit: and then install retaining infrastructure in place of those houses and you stop future issues too for neighbors
        astura 4y ago
        >The number of affected properties is relatively small, but they make up a large portion of overall claims. Specifically, 1% of properties make up 25% of all claims.
      - codyb 4y ago
        Yea... but... wouldn't the Fort Myers area count as part of the middle ground that's fine? They don't get hit hard consistently. Should we say that NYC should be abandoned cause Sandy hit 10 years ago and another might hit again one day? And also I actually said in my post "there are areas we shouldn't".
        NickC25 4y ago
  - daniel-cussen 4y ago
    [dead]
  - pyrale 4y ago
    I would say they're deeply related: the former is the fable we use to justify that we keep letting the latter happen.
  - refurb 4y ago
    Calling it crony capitalism is kind of silly. Do you expect the US to just abandon vast swaths of the country that are at risk of natural disasters? No homes along the Gulf coast, no homes in tornado alley, no homes along the earthquake faults along the West coast?
    - kasey_junk 4y ago
      There is no equivalent to NFIP for tornado or earth quake insurance. We leave that to private insurers (and sometimes the states have programs). That is one of the biggest arguments against the NFIP. It’s a specific subsidy that benefits some areas more than others (it’s also a deeply regressive policy).
      - refurb 4y ago
        If an massive earthquake levels SF the government will most certainly come in and rescue homeowners. So it’s either subsidy upfront or on the backend?
        kasey_junk 4y ago
        They didn’t in 1989. The relief bill was entirely for repairing damaged infrastructure. FEMA specifically mentions that you can’t expect replacement housing costs to be paid in many of their documents: https://www.fema.gov/fact-sheet/earthquake-survivors-apply-fema-disaster-assistance-may-31 https://www.fema.gov/fact-sheet/earthquake-survivors-apply-f...
        refurb 4y ago
        ‘89 saw minimal damage save for a few neighborhoods like the Marina. If SF sees 50% of houses uninhabitable and 12% have earthquake insurance you think the govt will shrug and say “too bad”?
        kasey_junk 4y ago
        In 2020 the house passed a supplemental bill to enable funds that can go to home replacement for Puerto Rican earthquake victims because the existing law doesn’t allow it. The Senate never passed it and the President promised to veto it. I have no crystal ball to know what might happen in the future but right now there is no earthquake equivalent to national flood insurance and recent history suggests the federal government doesn’t have the appetite to add it.
  - iwillbenice 4y ago
    Ah there it is. The usual doomer mentality that is so common I want to vomit when I see it. A mixed-market economy is not "Crony Capitalism". Stop exaggerating for upvotes.
    - freen 4y ago
      50 cents of every dollar earned by farmers in the US is paid by tax dollars buying excess food at fixed, over market prices. Lookup the strategic cheese reserve. Does the government pay half your salary? They take half of mine.
      - iwillbenice 4y ago
        Nothing of what you said changes my original point: We live in a mixed-market economy. The government manages some buffers (food, oil). And I'd really like to understand how the government "takes half" of your salary. Either you're super rich (probably not), or you're exaggerating.
        chiefalchemist 4y ago
        At first, half sounds like hyperbole, I'll give you that. But then think about all the various taxes we pay directly (e.g., gasoline, internet and phone services, etc.). Then add on the taxes that are embedded in the costs of any of the other goods we buy. It adds up. Finally, if you consider The Fed a government agency, any time The Fed devalues your money (i.e., "prints" money and creates inflation) that's also all but a tax. That is, we have less to spend. It might not be half, but it's certainly significantly more than your income tax rate.
        freen 4y ago
        Exactly. If you live in a major metropolitan area, or own a home that has rapidly appreciated, well, it all adds up quickly. Also consider: import taxes raise the price of goods, and thus are a wealth transfer from consumers to producers. Sugar is the classic example: import tariffs increase the effective tax burden of the lowest income quartile substantially, as they spend a larger percentage of their income on food. Anything with high fructose corn syrup, sweetener, or sugar is more expensive. And the corn farmers get that money.
- JustSomeNobody 4y ago
  Homeowners insurance in FL is a mess. The number 2 insurer is the state of FL (Citizens Property Insurance Corporation). I have no doubt they'll be the largest (and possibly only) in the years ahead.
  - FuriouslyAdrift 4y ago
    The Florida CPIC is backed by re-insurance companies and they are bailing on Florida due to the high risk. https://www.insurancejournal.com/news/southeast/2022/10/25/691475.htm https://www.insurancejournal.com/news/southeast/2022/10/25/6...
  - lotsofpulp 4y ago
    I read that this was not due to flood losses, but rather excessive fraud that the state is not policing causing untenable losses. https://www.nbcnews.com/news/us-news/roofing-scams-florida-property-insurance-hurricane-rcna29649 https://www.nbcnews.com/news/us-news/roofing-scams-florida-p...
- FuriouslyAdrift 4y ago
  Congress passed a bill seting the rates to be risk-adjusted in 2012, causing a 10x increase in rates in some areas. Congress then passed another bill in 2013 bringing back the 1968 rates under Obama. https://en.wikipedia.org/wiki/Homeowner_Flood_Insurance_Affordability_Act_of_2013 https://en.wikipedia.org/wiki/Homeowner_Flood_Insurance_Affo...
- eloff 4y ago
  Yup, government coming in and distorting the free market in all kinds of ways is very wasteful. However, there are cases where the benefits outweigh the drawbacks. For example, it's nice to get your energy, metals, computers, industrial machines domestically instead of being at the mercy of a foreign country. Especially if the foreign country isn't ideologically aligned with yours.
  - LeanderK 4y ago
    in this example it is wasteful but it also decreases risks in the long term. The free market does not have to produce the most efficient solution, it just often does.
    - Sakos 4y ago
      The free market is only able to optimize towards local maxima. That maxima might have plenty of downsides that don't affect its performance, but have negative effects on human beings and society that aren't captured by market mechanisms.
- bcrl 4y ago
  Privatize the profits, have the government cover the loses. Looks just like corporate welfare.
jquery 4y ago
Is earthquake insurance in California comparable to this? Am I a fool if I don't buy earthquake insurance?
- lotsofpulp 4y ago
  No, because federal taxpayers may or may not bail out Californians for earthquake losses.
  - gfhgfdhgdfhgdf 4y ago
    They do bail out California homes for wildfire losses though.
    - shagmin 4y ago
      Is there a citation from this? From a quick search I can only find re-imbursements for state & local firefighters working on federal property. Typical homeowner's insurance covers fire already in most places at least.
    - astura 4y ago
      Fire loss should be covered by the homeowners/business insurance.
Tepix 4y ago
So, why does it still cover these areas? Does the government really want to incentivize building there again and again?
- thatguy0900 4y ago
  Do you want your party in the news for shutting multiple whole cities down and forcing all of the poor people there to move from their ancestral homes? Regardless of the reality of it that's the kind of personal stories the news salivates over
  - NickC25 4y ago
    Yeah, I would. An actual conservative would probably also like this, because the flip side to your point is "government stops spending massive (and wasteful) amounts of money supporting the rebuilding of an area constantly hit by massive hurricanes that's also due to be completely underwater within the next 50 years"
    - thatguy0900 4y ago
      Republicans won't even agree that the climate change is happening much less agree that Florida will be underwater. They would probably be fine with getting rid of loss leading govt insurance programs in general though. I don't think any Democrat is going to go for the optics of pushing poor minorities out of their neighborhoods no matter what nature's plans are.
- lotsofpulp 4y ago
  Because Florida has a lot of electoral college votes, and used to be a swing state in the recent past.
  - gfhgfdhgdfhgdf 4y ago
    What about California's wildfires and their federal relief subsidies?
js2 4y ago
Despite that, most people in flood zones don’t have flood insurance. > A 2020 survey conducted by the group found that 27% of all American homeowners insurance policyholders said they had flood insurance. And Wharton’s Risk Management and Decision Processes Center similarly found that, on average, 30% of homes in the highest-risk areas nationwide have flood coverage. [...] About 56% of consumers incorrectly assumed floods would be covered by their homeowners’ policies, according to a 2021 survey by the National Association of Insurance Commissioners. https://www.nbcnews.com/news/us-news/hundreds-thousands-florida-homes-lie-flood-risk-areas-not-recognized-f-rcna50002 https://www.nbcnews.com/news/us-news/hundreds-thousands-flor... > President Joe Biden declared nine counties disaster areas Thursday, making residents eligible for federal aid to pay for minor home repairs, short-term housing and other emergency costs. But of the 1.8 million households in those nine counties, only 29 percent have federal flood insurance, according to an analysis of government records by POLITICO’s E&E News. That leaves 1.3 million households at ground zero without federal flood coverage. https://www.politico.com/news/2022/10/01/hurricane-ian-will-financially-ruin-homeowners-00059615 https://www.politico.com/news/2022/10/01/hurricane-ian-will-...

yieldcrv 4y ago

wow, pays to read federal legislation... and who are we kidding, pays even more to write it! I'm a master of my areas of the federal code, I was not aware of this area!

zzleeper 4y ago

I find it insane how the US govt constantly subsidizes certain activities without many people realizing. NFIP, the implicit guarantees on FHLBs, and a bunch of others just lead to misaligned incentives all over the place :/

chiefalchemist 4y ago
And yet we're told Uncle Sam believes in the free market? We don't have Capitalism. We have Crony Capitalism. The latter has little to do with the former.
- krapp 4y ago
  >We don't have Capitalism. We have Crony Capitalism. The latter has little to do with the former. As any true Scotsman knows.
- codyb 4y ago
  There's also the fact that if we don't subsidize places where natural disasters occur millions of people are going to start moving rather quickly. Everywhere's a disaster zone now, we need to account for that, do our best to warn people, and do our best to help people get back to it. This is true here, and around the globe. Mass migrations are _destabilizing_. It's not crony capitalism, it's common sense for stability. And there are certainly places that are absolutely irredeemable and shouldn't have insurance. But this idea that letting people whose homes are destroyed in natural disasters need to be hung out to dry won't be worse than helping them get back onto their feet both for them and most likely for you is a bit odd.
  - FartyMcFarter 4y ago
    There is a middle ground though. If a specific area floods very frequently, it seems silly to keep bailing it out. At some point we have to cut our losses and face reality and just stop investing there.
    - plasticchris 4y ago
      Agreed, and the regular insurance companies figured out the solution a long time ago: raise premiums until their expected value exceeds the payouts over the average duration of this type of policy.
    - aperson_hello 4y ago
      And most of the places that have major recurring flooding issues are hyper local (for now at least). We're talking neighborhoods or parts of neighborhoods, not full cities (yet). The number of affected properties is relatively small, but they make up a large portion of overall claims. Stop covering those locations (even if it's a coordinated buyout program of sorts) and the problem sorts itself out... Edit: and then install retaining infrastructure in place of those houses and you stop future issues too for neighbors
      - astura 4y ago
        >The number of affected properties is relatively small, but they make up a large portion of overall claims. Specifically, 1% of properties make up 25% of all claims.
    - codyb 4y ago
      Yea... but... wouldn't the Fort Myers area count as part of the middle ground that's fine? They don't get hit hard consistently. Should we say that NYC should be abandoned cause Sandy hit 10 years ago and another might hit again one day? And also I actually said in my post "there are areas we shouldn't".
      - NickC25 4y ago
- daniel-cussen 4y ago
  [dead]
- pyrale 4y ago
  I would say they're deeply related: the former is the fable we use to justify that we keep letting the latter happen.
- refurb 4y ago
  Calling it crony capitalism is kind of silly. Do you expect the US to just abandon vast swaths of the country that are at risk of natural disasters? No homes along the Gulf coast, no homes in tornado alley, no homes along the earthquake faults along the West coast?
  - kasey_junk 4y ago
    There is no equivalent to NFIP for tornado or earth quake insurance. We leave that to private insurers (and sometimes the states have programs). That is one of the biggest arguments against the NFIP. It’s a specific subsidy that benefits some areas more than others (it’s also a deeply regressive policy).
    - refurb 4y ago
      If an massive earthquake levels SF the government will most certainly come in and rescue homeowners. So it’s either subsidy upfront or on the backend?
      - kasey_junk 4y ago
        They didn’t in 1989. The relief bill was entirely for repairing damaged infrastructure. FEMA specifically mentions that you can’t expect replacement housing costs to be paid in many of their documents: https://www.fema.gov/fact-sheet/earthquake-survivors-apply-fema-disaster-assistance-may-31 https://www.fema.gov/fact-sheet/earthquake-survivors-apply-f...
        refurb 4y ago
        ‘89 saw minimal damage save for a few neighborhoods like the Marina. If SF sees 50% of houses uninhabitable and 12% have earthquake insurance you think the govt will shrug and say “too bad”?
        kasey_junk 4y ago
        In 2020 the house passed a supplemental bill to enable funds that can go to home replacement for Puerto Rican earthquake victims because the existing law doesn’t allow it. The Senate never passed it and the President promised to veto it. I have no crystal ball to know what might happen in the future but right now there is no earthquake equivalent to national flood insurance and recent history suggests the federal government doesn’t have the appetite to add it.
- iwillbenice 4y ago
  Ah there it is. The usual doomer mentality that is so common I want to vomit when I see it. A mixed-market economy is not "Crony Capitalism". Stop exaggerating for upvotes.
  - freen 4y ago
    50 cents of every dollar earned by farmers in the US is paid by tax dollars buying excess food at fixed, over market prices. Lookup the strategic cheese reserve. Does the government pay half your salary? They take half of mine.
    - iwillbenice 4y ago
      Nothing of what you said changes my original point: We live in a mixed-market economy. The government manages some buffers (food, oil). And I'd really like to understand how the government "takes half" of your salary. Either you're super rich (probably not), or you're exaggerating.
      - chiefalchemist 4y ago
        At first, half sounds like hyperbole, I'll give you that. But then think about all the various taxes we pay directly (e.g., gasoline, internet and phone services, etc.). Then add on the taxes that are embedded in the costs of any of the other goods we buy. It adds up. Finally, if you consider The Fed a government agency, any time The Fed devalues your money (i.e., "prints" money and creates inflation) that's also all but a tax. That is, we have less to spend. It might not be half, but it's certainly significantly more than your income tax rate.
        freen 4y ago
        Exactly. If you live in a major metropolitan area, or own a home that has rapidly appreciated, well, it all adds up quickly. Also consider: import taxes raise the price of goods, and thus are a wealth transfer from consumers to producers. Sugar is the classic example: import tariffs increase the effective tax burden of the lowest income quartile substantially, as they spend a larger percentage of their income on food. Anything with high fructose corn syrup, sweetener, or sugar is more expensive. And the corn farmers get that money.
JustSomeNobody 4y ago
Homeowners insurance in FL is a mess. The number 2 insurer is the state of FL (Citizens Property Insurance Corporation). I have no doubt they'll be the largest (and possibly only) in the years ahead.
- FuriouslyAdrift 4y ago
  The Florida CPIC is backed by re-insurance companies and they are bailing on Florida due to the high risk. https://www.insurancejournal.com/news/southeast/2022/10/25/691475.htm https://www.insurancejournal.com/news/southeast/2022/10/25/6...
- lotsofpulp 4y ago
  I read that this was not due to flood losses, but rather excessive fraud that the state is not policing causing untenable losses. https://www.nbcnews.com/news/us-news/roofing-scams-florida-property-insurance-hurricane-rcna29649 https://www.nbcnews.com/news/us-news/roofing-scams-florida-p...
FuriouslyAdrift 4y ago
Congress passed a bill seting the rates to be risk-adjusted in 2012, causing a 10x increase in rates in some areas. Congress then passed another bill in 2013 bringing back the 1968 rates under Obama. https://en.wikipedia.org/wiki/Homeowner_Flood_Insurance_Affordability_Act_of_2013 https://en.wikipedia.org/wiki/Homeowner_Flood_Insurance_Affo...
eloff 4y ago
Yup, government coming in and distorting the free market in all kinds of ways is very wasteful. However, there are cases where the benefits outweigh the drawbacks. For example, it's nice to get your energy, metals, computers, industrial machines domestically instead of being at the mercy of a foreign country. Especially if the foreign country isn't ideologically aligned with yours.
- LeanderK 4y ago
  in this example it is wasteful but it also decreases risks in the long term. The free market does not have to produce the most efficient solution, it just often does.
  - Sakos 4y ago
    The free market is only able to optimize towards local maxima. That maxima might have plenty of downsides that don't affect its performance, but have negative effects on human beings and society that aren't captured by market mechanisms.
bcrl 4y ago
Privatize the profits, have the government cover the loses. Looks just like corporate welfare.

jquery 4y ago

Is earthquake insurance in California comparable to this? Am I a fool if I don't buy earthquake insurance?

lotsofpulp 4y ago
No, because federal taxpayers may or may not bail out Californians for earthquake losses.
- gfhgfdhgdfhgdf 4y ago
  They do bail out California homes for wildfire losses though.
  - shagmin 4y ago
    Is there a citation from this? From a quick search I can only find re-imbursements for state & local firefighters working on federal property. Typical homeowner's insurance covers fire already in most places at least.
  - astura 4y ago
    Fire loss should be covered by the homeowners/business insurance.

Tepix 4y ago

So, why does it still cover these areas? Does the government really want to incentivize building there again and again?

thatguy0900 4y ago
Do you want your party in the news for shutting multiple whole cities down and forcing all of the poor people there to move from their ancestral homes? Regardless of the reality of it that's the kind of personal stories the news salivates over
- NickC25 4y ago
  Yeah, I would. An actual conservative would probably also like this, because the flip side to your point is "government stops spending massive (and wasteful) amounts of money supporting the rebuilding of an area constantly hit by massive hurricanes that's also due to be completely underwater within the next 50 years"
  - thatguy0900 4y ago
    Republicans won't even agree that the climate change is happening much less agree that Florida will be underwater. They would probably be fine with getting rid of loss leading govt insurance programs in general though. I don't think any Democrat is going to go for the optics of pushing poor minorities out of their neighborhoods no matter what nature's plans are.
lotsofpulp 4y ago
Because Florida has a lot of electoral college votes, and used to be a swing state in the recent past.
- gfhgfdhgdfhgdf 4y ago
  What about California's wildfires and their federal relief subsidies?

js2 4y ago

Despite that, most people in flood zones don’t have flood insurance. > A 2020 survey conducted by the group found that 27% of all American homeowners insurance policyholders said they had flood insurance. And Wharton’s Risk Management and Decision Processes Center similarly found that, on average, 30% of homes in the highest-risk areas nationwide have flood coverage. [...] About 56% of consumers incorrectly assumed floods would be covered by their homeowners’ policies, according to a 2021 survey by the National Association of Insurance Commissioners. https://www.nbcnews.com/news/us-news/hundreds-thousands-florida-homes-lie-flood-risk-areas-not-recognized-f-rcna50002 https://www.nbcnews.com/news/us-news/hundreds-thousands-flor... > President Joe Biden declared nine counties disaster areas Thursday, making residents eligible for federal aid to pay for minor home repairs, short-term housing and other emergency costs. But of the 1.8 million households in those nine counties, only 29 percent have federal flood insurance, according to an analysis of government records by POLITICO’s E&E News. That leaves 1.3 million households at ground zero without federal flood coverage. https://www.politico.com/news/2022/10/01/hurricane-ian-will-financially-ruin-homeowners-00059615 https://www.politico.com/news/2022/10/01/hurricane-ian-will-...