Hurricane Harvey

[RedNeckGeek]

It's not gambling. If you had a 1/8 of 1% chance of winning a game of chance, would you take the risk? Conversely, if there was only a 1/8 of 1% chance of an event occurring, would you feel comfortable betting against that happening?

It is gambling. Unless my math is wonky, 1/8 of 1% is 1 in 8000, far from infinitesimal, and is still a recognition that a loss could occur. Given those odds, each person decides how comfortable they are with the risk, and acts accordingly. I don't buy lottery tickets, stand under big trees in thunderstorms, and I get out my tinfoil hat every time the Russians lose a space station.:laughing:

I take risks all the time. I ride motorcycles, use power equipment, chain saws, a tractor, hike and bike ride in mountain lion country, and even jaywalk once in a while. The difference is I try to understand the risk, do what I can to mitigate it, and don't expect the gummint to compensate me if I suffer a loss or accident. I wouldn't live in hurricane country because I don't like the odds. And if for some reason I was forced to, I'd do my due diligence and make sure I wasn't located in ANY kind of flood zone, and that the building could withstand hurricane force winds. How do you mitigate an 800 year flood? You buy flood insurance, you build on high ground, you heed the warnings and get out of the area when predictions call for flooding.

People should be free to make bad decisions, gamble even. But there should be no expectation that taxpayers should have to bail them out when they lose.

People should also be free to disagree. In this case it's apparent that we have fundamentally different viewpoints, and that's OK, too.

 

[sseelhoff]

See Hurricane Harvey Could Spur Congress to Act on Flood Insurance and this from the GAO:

"The National Flood Insurance Program (NFIP) is a key component of the federal government's efforts to limit the damage and financial effect of floods. However, it likely will not generate sufficient revenues to repay the billions of dollars borrowed from the Department of the Treasury (Treasury) to cover claims from the 2005 and 2012 hurricanes or potential claims related to future catastrophic losses. This lack of sufficient revenue highlights what have been structural weaknesses in how the program is funded. Since the program offers rates that do not fully reflect the risk of flooding, NFIP's overall rate-setting structure was not designed to be actuarially sound in the aggregate, nor was it intended to generate sufficient funds to fully cover all losses.

Instead, Congress authorized the Federal Emergency Management Agency (FEMA) -- th agency within the Department of Homeland Security (DHS) responsible for managing NFIP -- borrow from Treasury, within certain limits, when needed. Until the 2005 hurricanes, FEMA had used its authority to borrow intermittently and was able to repay the loans. As of March 2016, FEMA owed Treasury $23 billion, up from $20 billion as of November 2012. FEMA made a $1 billion principal repayment at the end of December 2014�ts first such payment since 2010.

The Biggert-Waters Flood Insurance Reform Act of 2012 (Biggert-Waters Act) contained provisions to help strengthen the financial solvency of the program, including phasing out almost all discounted insurance premiums (for example, subsidized premiums). However, the extent to which its changes would have reduced NFIP's financial exposure is unclear. In July 2013, we reported that FEMA was starting to implement some of the required changes. However, on March 21, 2014, the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA) was enacted. HFIAA reinstated certain premium subsidies and slowed down certain premium rate increases that had been included in the Biggert-Waters Act. Aspects of HFIAA were intended to address affordability concerns for certain property owners, but may also increase NFIP's long-term financial burden on taxpayers. Further, an outdated policy and claims management system has also placed the program at risk. As a result of its substantial financial exposure and management and operations challenges, the program has been on our High-Risk List since 2006."

U.S. GAO - High Risk: National Flood Insurance Program

Steve

This answers the question posted in my last post. The subsidy is in the form of poor underwriting practices, i.e. not charging a premium that reflects the risk. Why am I not surprised?

 

[houstonscott]

See Hurricane Harvey Could Spur Congress to Act on Flood Insurance and this from the GAO: "The National Flood Insurance Program (NFIP) is a key component of the federal government's efforts to limit the damage and financial effect of floods. However, it likely will not generate sufficient revenues to repay the billions of dollars borrowed from the Department of the Treasury (Treasury) to cover claims from the 2005 and 2012 hurricanes or potential claims related to future catastrophic losses. This lack of sufficient revenue highlights what have been structural weaknesses in how the program is funded. Since the program offers rates that do not fully reflect the risk of flooding, NFIP's overall rate-setting structure was not designed to be actuarially sound in the aggregate, nor was it intended to generate sufficient funds to fully cover all losses. Instead, Congress authorized the Federal Emergency Management Agency (FEMA) -- th agency within the Department of Homeland Security (DHS) responsible for managing NFIP -- borrow from Treasury, within certain limits, when needed. Until the 2005 hurricanes, FEMA had used its authority to borrow intermittently and was able to repay the loans. As of March 2016, FEMA owed Treasury $23 billion, up from $20 billion as of November 2012. FEMA made a $1 billion principal repayment at the end of December 2014擁ts first such payment since 2010. The Biggert-Waters Flood Insurance Reform Act of 2012 (Biggert-Waters Act) contained provisions to help strengthen the financial solvency of the program, including phasing out almost all discounted insurance premiums (for example, subsidized premiums). However, the extent to which its changes would have reduced NFIP's financial exposure is unclear. In July 2013, we reported that FEMA was starting to implement some of the required changes. However, on March 21, 2014, the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA) was enacted. HFIAA reinstated certain premium subsidies and slowed down certain premium rate increases that had been included in the Biggert-Waters Act. Aspects of HFIAA were intended to address affordability concerns for certain property owners, but may also increase NFIP's long-term financial burden on taxpayers. Further, an outdated policy and claims management system has also placed the program at risk. As a result of its substantial financial exposure and management and operations challenges, the program has been on our High-Risk List since 2006." U.S. GAO - High Risk: National Flood Insurance Program Steve

Nothing there about $$ collected in premiums and payouts.

 

[sseelhoff]

It is gambling. Unless my math is wonky, 1/8 of 1% is 1 in 8000, far from infinitesimal, and is still a recognition that a loss could occur. Given those odds, each person decides how comfortable they are with the risk, and acts accordingly. I don't buy lottery tickets, stand under big trees in thunderstorms, and I get out my tinfoil hat every time the Russians lose a space station.:laughing:

I take risks all the time. I ride motorcycles, use power equipment, chain saws, a tractor, hike and bike ride in mountain lion country, and even jaywalk once in a while. The difference is I try to understand the risk, do what I can to mitigate it, and don't expect the gummint to compensate me if I suffer a loss or accident. I wouldn't live in hurricane country because I don't like the odds. And if for some reason I was forced to, I'd do my due diligence and make sure I wasn't located in ANY kind of flood zone, and that the building could withstand hurricane force winds. How do you mitigate an 800 year flood? You buy flood insurance, you build on high ground, you heed the warnings and get out of the area when predictions call for flooding.

People should be free to make bad decisions, gamble even. But there should be no expectation that taxpayers should have to bail them out then they lose.

People should also be free to disagree. In this case it's apparent that we have fundamentally different viewpoints, and that's OK, too.

I would consider a 1 in 8000 risk year over year as infinitesimal.

Your example of "known risks" include activities you knowingly undertake. That is far different than the weather, which you cannot control.

As for the taxpayer part, I agree completely. That is not the point you were earlier making (or at least as I understand your post) Choosing to live in this area is not the gamble you make it out to be, when taken in context of the risk. Most of the areas have never flooded before in the known history, and will not again in our lifetimes. But where ever you live, you should assume responsibility to protect your own interests, be it through proper site selection, or insuring against all perils. If an individual fails to do that, the individual alone should assume the responsibility for failing to do so. (We had difficulty purchasing flood insurance where we live-not because it his high risk, but because the risk is so low, no one offered it and and several brokers wouldn't even try to place it. Our property does not qualify for the NFIP program because it is not in a defined hazard zone. Our flood insurance premium is basically a donation. Just because you want to insure something does not guarantee you will be able to do so.)

 

[RedNeckGeek]

This answers the question posted in my last post. The subsidy is in the form of poor underwriting practices, i.e. not charging a premium that reflects the risk. Why am I not surprised?

Not much different than Social Security, Medicaid/care, the Post Office, and any number of other government run programs. But this topic is rapidly verging into politics, so perhaps we should just leave it at that?

 

[sseelhoff]

Nothing there about $$ collected in premiums and payouts.

It is addressed generically in the first paragraph.

However, it likely will not generate sufficient revenues to repay the billions of dollars borrowed from the Department of the Treasury (Treasury) to cover claims from the 2005 and 2012 hurricanes or potential claims related to future catastrophic losses. This lack of sufficient revenue highlights what have been structural weaknesses in how the program is funded. Since the program offers rates that do not fully reflect the risk of flooding, NFIP's overall rate-setting structure was not designed to be actuarially sound in the aggregate, nor was it intended to generate sufficient funds to fully cover all losses.

 

[smstonypoint]

Nothing there about $$ collected in premiums and payouts.

Did you read the first link?

"The National Flood Insurance Program (NFIP) owes $24.6 billion to the Treasury. Most of it covered claims from Hurricane Katrina in 2005, Superstorm Sandy in 2012, and floods in 2016, the program’s third most severe loss-year on record with losses exceeding $4 billion, according to the Federal Emergency Management Agency (FEMA), which manages it."

If payouts equaled premiums over time, the program would not owe the Treasury $24.6B.

Steve

 

[void777]

Larry Caldwell
You know not of which you speak but allow me to enlighten you Aug 29 2005 Katrina struck my home town ground zero every thing gone and I mean every thing to make a long story short my family and i went to Houston the people did and gave every thing to help encouragement sympathy house hold items and most of all kindness I feel their pain recovery for some will take 3 to 10 years Larry your hurt full words do nothing but show a mean spirited person Larry you might want get on your knees and thank god it not your family suffering this hardship and maybe say a prayer for Houston and surrounding area.

 

[txdon]

Got in touch with a ex coworker who had moved Huston. His family and house was ok because they were a bit north of the worst flooding but they said that some areas of Huston had 50 inches of rain with another 15 on the way!!! :shocked::shocked::shocked:

With Brandi's post that shows rainfall in different areas of Harris County it looks like most areas received mid 20's inches of rain. None over 33". Is that 50" a tall Texas tale or is he counting tonights rain in advance?

It looks like SE Houston is getting pounded right now.

 

[RedNeckGeek]

I would consider a 1 in 8000 risk year over year as infinitesimal.

Your example of "known risks" include activities you knowingly undertake. That is far different than the weather, which you cannot control.

If I told you that there was a poison candy in a machine with eight thousand candies in it, would you put a candy from that machine in your mouth and swallow it? That one candy is a known risk, just like the unpredictability of the weather is a known risk. The fact that we can't control something has implications on risk mitigation, severe implications, but I don't understand how the difference between something being "knowingly undertaken" and something you cannot control matters. If you know you can't control the weather, you could choose to mitigate the associated risk by not moving into hurricane or tornado country. All we're really talking about here is risk and risk management, but then you've already concluded that I don't understand that.

As for the taxpayer part, I agree completely. That is not the point you were earlier making (or at least as I understand your post) Choosing to live in this area is not the gamble you make it out to be, when taken in context of the risk. Most of the areas have never flooded before in the known history, and will not again in our lifetimes. But where ever you live, you should assume responsibility to protect your own interests, be it through proper site selection, or insuring against all perils. If an individual fails to do that, the individual alone should assume the responsibility for failing to do so.

No one foresaw the building of the Berlin wall, or its subsequent tear down. Our ancestors never thought man would walk on the moon, or that there were such things as ice ages and glaciers. Just because something hasn't happened in the past is no indication that it will not happen in the future. With regard to the weather, and hurricanes in particular, climatologists have predicted that our current warmer conditions will lead to more frequent and violent storms. Harvey may be something of a freak, but not so much that it couldn't be imagined or anticipated.

I see from your sig that you live in the affected area, and I hope you're weathering this storm well. If you are, it is in no small part because you recognized the risks associated with hurricanes and took steps to mitigate them; you are to be congratulated! With regard to an individual's responsibility for loss, we are in complete agreement!