THIS is why the Federally subsidized flood insurance program needs to be killed!

Late last month I opined that there should be restrictions and/or limits on how much subsidized insurance and government funding is applied to rebuilding flooded houses after a natural disaster like Hurricane Harvey.  My view wasn’t universally approved;  some readers objected, in comments and via e-mail, claiming that I was being heartless and uncaring, or words to that effect.

Well, now comes this report, which demonstrates exactly what I meant.  Bold, underlined text is my emphasis.

Brian Harmon had just finished spending over $300,000 to fix his home in Kingwood, Texas, when Hurricane Harvey sent floodwaters “completely over the roof.”

The six-bedroom house, which has an indoor swimming pool, sits along the San Jacinto River. It has flooded 22 times since 1979, making it one of the most flood-damaged properties in the country.

Between 1979 and 2015, government records show the federal flood insurance program paid out more than $1.8 million to rebuild the house—a property that Mr. Harmon figured was worth $600,000 to $800,000 before Harvey hit late last month.

. . .

As they tally up the losses from Hurricanes Harvey and Irma, government officials are looking for ways to step up purchases of frequently-flooded houses, which have become a huge drain on the financially troubled federal flood insurance program.

Homes and other properties with repetitive flood losses account for just 2% of the roughly 1.5 million properties that currently have flood insurance, according to government estimates. But such properties have accounted for about 30% of flood claims paid over the program’s history.

“We are seeing a very acute need to move far faster” on property buyouts, said Roy Wright, who directs the National Flood Insurance Program. “It’s a clear priority to address these multiple-loss properties.”

In a buyout program, homes are typically razed and the land left as open space.

Even before Harvey and Irma, the flood program owed the U.S. Treasury $24.6 billion, as payouts have exceeded the amount of insurance premiums it takes in.

The program paid out more than $47 billion in insurance claims since 2000, according to government figures.

Insurance payouts from Harvey alone are expected to total $11 billion, said Mr. Wright, noting the program had already received nearly 85,000 claims tied to the disaster as of Wednesday. It is too early to estimate losses tied to Irma, but Mr. Wright expects both storms to be among the most costly in the program’s history.

There’s more at the link.

Let’s assume that Hurricane Irma will cost about the same as Hurricane Harvey in terms of insurance payouts.  That’s $22 billion in total.  Let’s assume, too, that the historical average holds, and that about 30% of those claims will be repeat claims from properties that had previously been damaged by flooding.  That’s $6.6 billion.  That money might as well be poured down the drain . . . because it’s merely repeating previous repairs.  What’s more, if those properties are permitted to reinsure at subsidized rates, we – the taxpayers of America – will be on the hook yet again for future repairs, which are certain to arise when the next hurricane hits those properties.

This is stupid.  It’s sick.  It’s disgusting!  It’s our money, as taxpayers, being wasted.

The taxpayer-subsidized federal flood insurance program should be modified AT ONCE.  Those who are presently insured under it should be able to keep their insurance . . . but for one future claim only.  As soon as they make a flood-related claim, the payout should be in the form of a forced purchase of their property, and a razing of any and all buildings on it.  The property owner(s) can use the payout to settle any outstanding debts on the properties, and apply the balance to buying or building another home in a less flood-prone area.  We, the taxpayers of this country, should no longer be liable for any repeat claims on their former property – otherwise we’re subsidizing failure.  We’re subsidizing the repair, cleanup and construction industries, as well as the property owners.

I also propose that any new or replacement construction in flood-prone areas, and any repairs to properties formerly covered by the federal flood insurance program, should be automatically denied access to that program.  Those who build or rebuild in such areas should be forced to pay for insurance at commercial rates, which should not be subsidized by the rest of us.  Why should we pay for damages that we know are almost certain to be incurred in future?  Is that a proper use of our taxes?  I maintain it’s not.

What say you, readers?  Are you happy at the thought that your taxes are about to be used for the 23rd time to rebuild that flooded house in Kingwood?



  1. There are whole towns in this situation, Hamilton Wa. is one that floods regularly ( effectively annually) but because the residents refuse to move ,even after offers of compensation, the waste goes on.

  2. Can't disagree at all. The has an almost supernatural ability to do the most stupid things that anyone can conceive of. This is just another of thousands (millions?) of examples.

    I can see insurance paying out once or twice, but 23 times? I think a free market policy would have raised the rates so high the owner would have gotten the message not to build there, that's if they insured it in the first place.

    Insurance is supposed to be risk mitigation; protection from the unexpected. If you're sure the bad thing is going to happen, you're not buying insurance. You're making installment payments to fix the bad thing. If you don't save enough money to fix the bad thing, you're stuck.

  3. Congratulations, you just condemned a huge part of Houston Texas and surrounding areas.

    Condemn the 2% that are repeat claims, sure. The 50-100 year flood victims should not be forced out, particularly if their flood damage is a small fraction of the home cost. No one should build in the 10 year flood plain. Probably 75% of the country could incur flood damage, with the right 100 year storm, of enough magnitude to require repairs and claims (were they insured).

    The other issue is poor management of the drainage system. Many of these people flooded by Harvey are in homes that have never before flooded in recorded history. Why? My bet is reductions in drainage capacity. The current codes require 'detention' to 'slow the input of rains into the system' to prevent overtaxing it. When the detentions are overwhelmed, the reduced drainage backs up more and voila, man made disaster! Should homeowners be required to tear down because the Houston city engineering can't keep drainage ditches flowing and their previously safe home is now 3' under water??? Happened a LOT with Harvey!

    It is easy to pick out the repeat offenders. The hard part is not punishing the masses for the offenses of the few.

  4. My question is why Houston has not changed the building codes? You want to rebuild in the same property? Fine, but you need to do it on stilts and make it hurricane resistant.
    Compare the homes in the Florida Keys built to Miami Dade Hurricane code versus the piles of firewood that were houses not following code.

  5. I wholeheartedly agree with your premise. The truth of the matter is this: in Wisconsin the Department of Natural Resources rejiggered the flood plain maps and designated ANY body of water (pond, lake, puddle of water) that could float a board as navigable waters and therefore in the "flood plain".
    It was a land grab of enormous proportion. It was liberalism run amok in their overreach to governmentise anything not nailed down!
    So I can see your proposal, in the first years being and doing what it was intended for. But in the future I bet the government would begin to creep further and further up the slough!


  6. Mark Leigh, I hear your side of the discussion. Here in Wisconsin, a couple of towns on the Wisconsin and Kickapoo rivers have been moved. Gays Mills, Wisconsin is the latest. Yes, there are a couple of taverns in the old part of town that refused to move, BUT, no insurance company will insure them. They are not eligible for disaster relief. The owners are well aware that "tain't nobody gonna come in a FEMA boat to save der a**"
    That's how you get people to move; don't give them any handouts after the disaster.


  7. There are several things that need to be done. Peter is correct to point out the foolishness of providing "insurance" for something on other than a actuarial basis. If you want to live in a regularly flooded area, you should assume the risk, or pay actual prices to mitigate that risk.

    As far as building codes. Into the 1940s, most houses built in that part of Texas were pier and beam construction, with 3-5 steps to enter the house. That ground clearance had the side effect of greatly reducing flood risk. Alas, it also makes access difficult when medical problems make stairs difficult. Which is the greater problem, access, or flood prevention? That is a political and not an engineering problem.

    What can be done? Transfer most of the financial risk to the homeowner. Get rid of ADA guideline to allow a return of the building of houses built above grade. Develop and *require* wall coverings and insulation that need only to be rinsed and air dried. Smaller things: prohibit ground mounting of
    AC compressors (move them to roof or elevated platforms). Consider encouraging home appliances that are more resistant to water damage.

    If you transfer risk to the homeowner, you *must* beware of zoning, code and accommodation requirements that limit the homeowners ability to reduce that risk. Car size pontoon barge on a monopod piling (floating car port) could have saved many of the cars that are now a total loss..but that sort of thing is banned by HOA and zoning rules. Let folks put electric plugs at head height rather than knee height.

    These things all require changes in local laws and rules-and changes in how people think.

  8. Same issue along the Mississippi, some homes rebuilt 10-11 times… Sigh… I'd say twice, and no more, anything inside the 50 year flood plain, nope… You're on your own.

  9. Orwell implies the point of government is to prevent the most competent of the upper-middle class from competing with the ruling class. To that end, any system of loss which can destroy the savings of the taxpayers is good. War is the biggest government program of wealth destruction, where stuff is manufactured merely to blow it up. Welfare for people who will never produce as much as they consume, including retirees, is second. Fake medical insurance to pay 5X into a fake medical marketplace is third.

    Technological growth of robot-y things is about to tip the balance, where for the first time in human history the capacity of individuals to build exceeds the capacity of groups to destroy. One of the first things they will build is dual-use military defense. "I'm not building a castle, I'm building a hurricane shelter because of AGW and wildfires. Modern reinforced concrete construction is inexpensive for the strength. The windows aren't bulletproof, they are proof against flying pieces of lumber"

    The productive capacity wasted by government is enormous, and when it stops being wasted we will have flying cars and Mars colonies.

  10. Paying out on that claim is subsidizing fraud, just as surely as paying the claim for an automobile of a guy who had staged 22 accidents with the car.

    Prosecute the claimant, and seize the house under RICO.

    One claim per century should be the ironclad rule, and zero claims on any land ever claimed before.

    Either build an impervious castle on your nickel, insured on your nickel, or re-zone it as open space in perpetuity, and deed it back to the states under those irrevocable terms.

    The same thing happens to idiots in Malibu near the ocean in SoCal, and clowns in the burn-zone hills all over the Western US.

    One-and-done: one claim, ever, period. (more would just encourage house-flipping between neighbors.)
    After that, commercial insurance, with no subsidy.

  11. Why is the government in the insurance business to begin with? I've read through my copy of the Constitution several times and nowhere within do I find the power granted to dispense such largess.

    The federal government should not be involved with insurance anywhere – not health insurance and definitely not this useless boondoggle of flood insurance.

    Harsh? Yes. I feel for the residents of Houston and Florida and have donated to those recovery efforts. I should not, however, have my income taken to subsidize someone's decision (good or bad).

  12. Why is the government in the insurance business to begin with?

    Because you and millions of taxpayers like you obey this government when it says it is collecting taxes for that purpose. Governments are not human beings, and do not have a brain which empathizes with humans. Thus government is the perfect sociopath, and will do anything it can get away with. If the current politicians are not horrible enough to do it, nastier ones will shove them aside. If government thought it could get away with putting conservatives into ovens, it would be setting the dial to 350 right now.

  13. Under this plan, Manhattan, New Orleans, Miami, the Keys, Chicago, most of California, St Louis, and many other cities would have to be razed.

    The US post office costs the taxpayer more each year than the flood insurance program. Maybe we could start where the savings are largest- shut down the post office.

  14. Once in a lifetime and once for any location, period. And absolutely NO NEW CONSTRUCTION in flood or tornado zones unless built to standards guaranteed to survive the elements.

  15. After the Mississippi floods of 93 there were lots of homes who various government entities ordered to either move or raise their houses multiple feet even when they hadn't flooded in decades if ever before or since. Most of those people were middle class or poor though-and predominantly white. Funny how that works. Nobody ever seems to demand that rich people pull up stakes or that diverse vibrant urban areas should move out of flood zones.

  16. Towns are built near water sources. Because water sources are essential for towns.
    Water sources flood. It's what they do.

    On the face of it, flood insurance is close to the platonic ideal of the company good.
    I grant that it's poorly administered and of questionable constitutionality, but if you're looking to cut government in size or scope, this is not the place to start. There is plenty of low hanging fruit. The Import-Export Bank, for instance. (Which the Republicans in Congress went into special session to save.)

  17. "I should not, however, have my income taken to subsidize someone's decision (good or bad). "

    And yet you do. Over and over again.

    I don't like paying for programs like Head Start. Proven again and again to be a complete waste of tax money.

    Or any of the various feeding programs that result in OBESITY and diabetes being diseases of the poor. ~60% of my local school district is eligible for Federal free breakfast and lunch, and the same percentage doesn't have english as a fluent language, and lives below the poverty line. I'd bet anything that it's the same 60% for all three. YET my money feeds them, houses them, clothes them, wipes their noses when they're sick, provides legal representation when they get caught in criminal acts, and caters to their every whim.

    What about EBT cards? Welfare? How about we say 'once and done' to welfare recipients, and we don't give a damn if their kids starve or sell themselves in the street?

    I'm tired of paying 'cash for clunkers,' for obamaphones, obamacare, solar energy "rebates", welfare, earned 'income' credits, and a whole metric crapton of other programs that ameliorate other people's bad luck or bad choice.

    I posted a link to the map of where FEMA has handed out flood insurance money, and outside of the desert, it's pretty much everywhere in the whole country.

    I pay it, and I haven't used it, but your proposal just made 90% of the existing housing stock in the US un-mortgage-able. That means you'd wipe out the only capital accumulation most people ever manage to get.

    Can't happen, won't happen, is a waste of time and energy even thinking about.


    And yes, FEMA is doing buyouts, the code was changed to require more resilient buildings, Houston does spend money on flood control and mitigation, they will spend boat loads more too. They are doing all the things people bitch about, and more. I'd like to see (by way of comparison) what NY has done since Sandy? Or NJ?

  18. I don't like paying for

    The power transfer from citizens to government occurs via obedience, not happiness. As long as you obey, it doesn't matter to government if you are happy. While you continue to obey there is no upper limit to government power. If you're known to be willing to do it, some nutcase will appear to order you into a boxcar.

    your proposal just made 90% of the existing housing stock in the US un-mortgage-able. That means you'd wipe out the only capital accumulation most people ever manage to get.

    The maintenance costs paid by taxpayers to repair the flood damage in those houses is so high the houses are not assets, they are liabilities. Government obscures this accounting conclusion, but hiding it doesn't make it untrue.

  19. There's a disconnect between flood insurance and FEDERAL flood insurance. There's no question that altering the federal flood insurance scheme would have drastic impact- and there's also no question that in many cases, such as in Manhattan, it wouldn't.

    I grew up in a New England coastal community. My introduction to FEMA was at age 4, when a massive storm leveled the houses along our beach. Being an Irish Catholic neighborhood, the 4 houses affected meant there were 20 or so kids that got farmed out to the neighboring families while the parents and the youngest kids lived in FEMA trailers while they rebuilt houses 12 feet higher on pilings and raised basement walls.

    When the equally powerful No-Name (The Perfect Storm from the movie) hit in '91, it resulted in flooded basements only.

    People are innovative. If they want to live somewhere without subsidies, it's still doable. There's absolutely no justification for keeping a tax-subsidized repair scheme just so people can live where they want for free.

  20. I know this is falling down the timeline, but to add some perspective…

    According to FEMA the National Flood Insurance program averages annual payouts of ~$2billion

    " from 2006 to 2015, federal flood insurance claims averaged $1.9 billion annually."

    According the the USDA, the school lunch and breakfast program pay out —

    NSLP Annual Cost:
    13.6 billion in federal dollars, including:

    (Source: USDA FY 2016 preliminary data)

    School Breakfast Program (SBP)
    SBP Annual Cost:

    4.2 billion in federal reimbursements

    So flood insurance costs taxpayers ~$2B/yr, but feeding other peoples' kids costs ~$17B/yr JUST THRU SCHOOLS.

    You are worried about the wrong thing.


  21. Sadly some homes that are subject to repeated flooding isn't necessarily the homeowners fault. There are areas in FL were individual cities' zoning boards have approved construction without proper drainage or consideration to how that affects the flood plains in the surrounding areas, creating areas where homes built decades before and had no previous issues with flooding are now suject to flooding. After the 2004 storm season a few such cities purchased many such properties, but only because the homeowners had to file suit against the cities. Many of those properties were turned into retention areas to help address water runnoff issues. Unfortunately there are still many such areas around the state and no one seems in any rush to do anything about it.

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