Miller’s Bill aims to dismantle National Flood Insurance Program

By: Julie Snyder | Mount Clemens - Clinton - Harrison Journal | Published April 25, 2013

HARRISON TOWNSHIP — A former Harrison Township supervisor is attempting to bring an end to the Federal Emergency Management Agency’s (FEMA) National Flood Insurance Program (NFIP) due to its growing debt and skyrocketing rates for those who will likely never experience a flood in their lifetime.

Representative Candice Miller, R-Harrison Township, has introduced legislation the NFIP Termination Act of 2013 (H.R. 1194), which would eliminate the federal program by December 31, 2015.

Miller argues that the NFIP currently has a deficit in the tens of billions, is not actuarially sound and just recently had its borrowing authority raised to $30.75 billion.

FEMA, which manages the NFIP program, estimates that, once the recent settlements are paid for the damage caused by Hurricane Sandy on the east coast, the NFIP will have accumulated more than $28 billion in debt.

“It is ridiculous that the federal government remains in the flood insurance business,” Miller said in a prepared statement. “With no end in sight for the NFIP in racking up new debt, continuing subsidized rates for those who live in flood-prone areas, skyrocketing rates for many who live in areas that never flood and 40 years of history showing clearly that the federal government is a very bad insurance company, it is time to take decisive action to wind down the NFIP instead of offering up more bailouts.”

A representative with NFIP last week said it is not common practice to comment on pending legislation, and therefore declined to do so.

The NFIP was established by Congress in 1968 to help provide a means for property owners to financially protect themselves in the event of floods associated with hurricanes, tropical storms or heavy rains. NFIP offers flood insurance to homeowners, renters and business owners if their community participates in the NFIP. Many Macomb County communities, such as Harrison Township and Clinton Township, participate in the program. Participating communities agree to adopt and enforce different ordinances, such as elevation requirements, that meet or exceed FEMA requirements to reduce the risk of flooding.

Miller said NFIP was created after some concluded that the private marketplace could not provide policies at an affordable level in some areas, and the program began writing policies in the early 1970s, with the federal government setting rates based on political considerations instead of actual risk.

“The Great Lakes are at historic low water levels, yet our property owners are being forced to pay higher flood insurance premiums than states like Florida or Louisiana,” she said “How else can one explain the fact that policy holders in places like Florida or Louisiana are paying lower rates than those in Michigan, who look out their back doors and see the lowest water levels in many generations and are under almost no risk of flooding? If any private insurance company set rates in such an arbitrary, capricious and unfair manner, they would be immediately shut down by every state insurance regulator, but the NFIP gets away with these practices because it is a federal government entity. It is time to shut down this terrible insurance company.”

Algonac resident Bob Holmes said he paid between $600 and $700 per year for his flood insurance when he lived in Clinton Township. He moved into St. Clair County seven years ago and spent many years trying to figure out why his property wasn’t showing up in the floodplain, yet the street he lived on did, which meant he still had to pay.

“I eventually had to pay the amount it cost for the insurance to have a surveyor come out and say I wasn’t in the flood zone,” said Holmes, who also had to pay a good chunk of money to fill out an elevation certificate to officially be taken out of the zone. “Water levels are so low right now and have been for some time. There will be no flooding anytime soon. The insurance is not necessary.”

Should Miller’s termination bill be approved — it was referred to committee on March 14 and is waiting for approval by the House, Senate and finally the president — it would allow states to form regional insurance compacts to spread risk, to partner with the private sector to accomplish this goal and continue to allow the FEMA to assist in those efforts where appropriate.

“Those who choose to live in floodplains or flood-prone areas should be required to purchase flood insurance if they wish to use a federally backed mortgage, but the rates charged must be based on actual risk instead of the current practice of subsidizing rates based on political considerations,” said Miller, who served as Harrison Township supervisor from 1980 to 1992.

“This is vital because, over the last several years, it has become clear that the NFIP is using those who live in states like Michigan and other Great Lakes states as ATM machines for the rest of the nation, particularly the parts of the country that are subject to hurricanes. The fact that, over the last 20 years, Michigan rate payers have received back only $1 for every $7 paid in premiums shows clearly that we are being over-charged, and yet NFIP continues to force more Michigan residents into the program and raises rates even further while continuing to subsidize rates in places with the highest risk of flooding.”