The Coalition for Sustainable Flood Insurance (CSFI) has been established in order to combat the anticipated effect of FEMA’s latest flood mapping. In combination with the Biggert-Waters Act of 2012, the mapping will result in the unintended consequence of skyrocketing flood insurance premiums across south-Louisiana as well as other regions across the nation.
GNO, Inc. is the driving force behind CSFI which includes representatives from 23 Louisiana parishes and 16 states, with another six states in the process of joining. On August 8, a roundtable discussion was held that included FEMA’s David Miller who heads up the National Flood Insurance Program (NFIP). The program has subsidized flood insurance premiums since 1968.
CSFI has identified three major problems according to GNO Senior Policy Associate Caitlin Berni.
“(Section 207 of) Biggert-Waters calls for the phasing out of grandfathered in rates,” she said “which will eliminate subsidized flood insurance premiums. Secondly, we believe that FEMA’s flood mapping is incomplete since it fails to recognize flood protection measures undertaken by our communities. Lastly, it is claimed that NFIP faces a $25 billion deficit but the methodology employed in calculating that figure is highly questionable.”
New FEMA maps, which outline base flood elevation, do not recognize the protections afforded south-Louisiana by the many levees constructed but not recognized by the Army Corps of Engineers. Neither do they credit the many pumping systems which have been installed. One of the August 8 conference’s primary objectives was to convince David Miller that these measures should be credited when calculating flood risk.
CSFI adherents argue that the flood prevention measures are effective and reduce the risk of flooding greatly. They should result in insurance rate reductions which correspond to the reduction in the chance of a protected area flooding. The argument is difficult to verify since FEMA does not release the actuarial tables publicly.
GNO was tasked with producing a report that addresses several unanswered questions from the conference.
“These issues are not strictly local issues,” claimed GNO President Michael Hecht in a weekly update conference call. “All of coastal and riverine America will be affected. Long-term sustainability of NFIP is in the nation’s best interest.”
GNO realized that a broad-based coalition is vital to CSFI’s success since, ultimately, it relies upon Congressional action.
“How is the $25 billion NFIP deficit calculated?” asked Caitlin Berni rhetorically. “Over the last 30 years, $6 billion more in premiums have been collected than have been paid out. What accounts for the $31 billion negative swing? What portion of premiums actually goes towards coverage? Are there additional programs beyond flood insurance being funded by NFIP premiums?”
Critics blame Hurricane Katrina and Hurricane Sandy for the huge deficit but, over the life of NFIP, it has taken in much more than it has paid out. In most years the program ran at significant surplus. Where did the surpluses go? Terrebonne Parish President Michel Claudet shed some light on that question.
“I’ve seen charts which show that only 43 cents of every dollar collected by NFIP in premiums have gone to payment of claims,” he stated. “Ten cents goes to debt service and eight cents goes to establishment of a reserve fund.”
39 cents of every dollar paid into NFIP in premiums has gone to something else. Many people are asking, ‘what?,’ and this is a question that GNO is attempting to answer. In years of surplus, was money diverted away from NFIP?
Caitlin Berni made another salient point.
“40% of all federally backed mortgages that are required to have coverage do not have flood insurance,” she declared. “Would NFIP be solvent if everyone who is required to purchase flood insurance actually purchased it?”