tv Washington Journal Stephen Ellis Discusses the National Flood Insurance... CSPAN June 19, 2017 9:04am-9:37am EDT
companies are gunning for. announcer: watch "the communicators" on c-span2. c-span, where history unfolds daily. in 1979, c-span was created as a public service by america's cable television companies. it is brought to you today by your cable or satellite provider. "washington journal" continues. host: each week in this segment we look at how your money is at work in a different federal program. this week we are focusing on a program that is $25 million in debt. ,e are joined by stephen ellis to help understand why an effort to reform that program, the national flood insurance program. stephen ellis, who administers the program and who is it for? guest: in 1968, congress
determined there was not enough affordable, of private flood insurance. there was a perceived market failure, so they created this program that the taxpayer would provide this insurance to people, and also if you lived in a high risk area, what they floodplain,00-year there was a 1% chance in a given year it would flood, then you had a federally backed mortgage. you were required to purchase flood insurance. 5.1 millionhey were policies in the flood insurance program. it brings in about $3 billion in premium, but it is $24.6 billion in the hole. ands quite a bit in debt has significant problems in being underwritten by the taxpayer. host: this program is currently up for reauthorization during what does that mean? guest: congress with federal programs often authorized it for
a certain period of time and then reauthorize them and change them. this is true for farm programs, with transportation, with aviation. there is a five-year reauthorization. it happened in 2012, and here we are in 2017. host: can it carry the debt over? guest: it will carry that debt over. congress will have to specifically forgive that debt, and they can cap what they borrow. the cap is around $30 billion. host: who does the government oh that debt that who does the government -- who does that government owe that debt to? guest: ourselves. with social security, we borrow from the social security program and then we pay the debt back with interest. it is the same thing here. the program has borrowed the
money from taxpayers, and it is paying it back with interest. host: special lines in the segment -- if you are in the eastern or central time zone, it 748-8000. we are talking with stephen ellis of taxpayers for common sense. we have talked about this before, but you have been part of the process trying to reform the flood insurance program. what is the group you are working with on the reform side? we have worked on this issue in out 21 years of existence, but in the past 10 years we worked with a broad coalition called smarter safer. it is not just a bunch of watchdogs like taxpayers for common sense, and also with environmental and conservation groups, and insurance interests. that is the other thing that has dramatically changed since 1968.
flood insurance is written by the private sector across the world, and so the private sector wants to get more involved in this process. it is being priced out in some cases because of federal subsidies. host: why not pull the federal government out and turned it over to the private sector? guest: we are hoping to move in that direction, but i do not think you can just rip the band-aid off. that would not be responsible. as you allow flood insurance rates to become less subsidized and move into the market, you will find more companies writing flood insurance. it will trend that way. in florida today, there are 19 companies that are writing first-dollar flood insurance, and they are writing flood insurance with all the risk. one concern that people have is so-called cherry picking. we are not as concerned about that because you have the room risky- we have the most
policies in flood insurance programs. the only people who buy it are the most likely to use it. there is an appetite for risk in all the risk zones. the private flood market would -- ining in close to coastal areas as well. host: you talk about policies written into the flood insurance program. this map shows the states that dominate where those policies are written. florida was 1.8 million of those policies. 605,000, close to 600-6000. the $25 billion that this program is in debt, is that , that a few big storms the program would be pretty much a float? was it katrina and sandy that caused the debt. storms --er the 2005
and you are not just talking about katrina, you're talking about rita and wilma. the program was about 18 billion dollars in debt. then you had sandy come along and add a huge amount of debt. when really the only storm you could think of was hurricane matthew, it was $3.6 billion, one of the largest lost years in the program's history. -- it was aears little bit in deficit, a little bit in surplus. but in reality there were going to be these huge storm events, these black swan effects -- these black swan events. host: we want to hear from our viewers. do you have national flood insurance? tell us about your part of the country. we opened our phone lines eastern or based on
central time zones. is with taxpayers for common sense. we were talking about some of the recent dig storms. here is how much the national flood insurance program has paid out from some of the biggest storms. i can see hurricane katrina at $2.63ttom there, is 2005, billion. getting your calls -- but first from holly ridge, north carolina. you are on with steve ellis. caller: thank you. i live on the coast in north carolina, and i will tell you, the last bad storm hit more inland and did more damage than it did along the coast. but guess what, our insurance did not go down, and there's did not go up.
so i would like to hear this gentleman's interpretation of their assessment. guest: thanks, tina. the federal flood insurance program creates risk maps, so they do these maps of various zones. if you're in the x zone, you're not as risky. zone, you aree b more risky. that thet does mean areas that did flood, they are going to be a higher risk. it is something fema should take into account. the maps are a huge fight off and between communities and fema , which administers the program, the federal emergency management agency, because it can determine whether you have to buy flood insurance or not and what the cost of your flood insurance is. -- you mentioned
louisiana flooding in 2016 -- a lot of that was in baton rouge. it was not coastal. it was a huge rainfall event that occurred there. if you had flood insurance, you in a payment.000 if you did not have flood insurance, you got about $9,000 in disaster assistance. you could maybe get a low interest, small business administration loan, but you are in a bad spot if you do not have flood insurance. and you get flooded. host: you are on with stephen ellis. caller: my question is on the floodplain areas. can a person get bailed out by this insurance? do they ever say that is enough, it is too dangerous a place? guest: thanks for calling in. they are moving in that
direction to say ok, enough is enough. but there are stories were houses have been flooded many times over and have gotten payments that exceed the cost of the house. but in the house of representatives proposal, they have a provision wary if you have been flooded and gotten payments in excess of two times the replacement value of the home -- so replacing the value twice over -- you are out of the program and you would have to get private flood insurance. it is trying to move in that direction. there is a policy in about five with to four years time, new construction, in the flood hazard area, you would have to go out into the private marketplace get flood insurance. host: john is in north carolina. -- where"where is the is it in the constitution that you should have to pay for flood insurance on beaches -- for beach houses?"
guest: one thing that is kind of interesting about the flood insurance program, and you recognize this the way you did the caller distribution. it cuts across regional rather than partisan lines. if you are most likely to benefit or if your constituents are most likely to benefit, you will be more supportive of the program. weis one of the reasons why are concerned about the federal government getting involved in industry.nce whether it is crop insurance, or flood insurance or terrorism insurance, it is never a popular move to increase rates. there is an inherent's sense of providing these subsidies. the caller is absolutely right, there is no provision in the constitution, but we are what we are you you have to deal with that problem and how we are, and the fact that we have 5 million people in this program and will have to deal with that as we go. host: those lines that you
202-748-8000 if you are in the eastern time zones. 202-748-8001 if you're in the central time zones. caller: we are surrounded by a creek, and these folks who lived $400 tor 50 years spent $500 a year to $3000, and it never flooded. but they are forced to pay for insurance. no one is ever going to buy their house to start with. if it does flood, the requirements are that it has to housethe threshold of the , so you can fill your basement up to the top step and not be considered a flood.
's house has to have the same effect before you can get the money for a flood. so these people are taking it on the chin here, and it is not a coastal -- there is nothing coastal about this area. these people are paying for whothing that other people decided to live on the water in a volatile area. i do not think that is fair. that thethink gentleman is talking about -- these are all issues that as far as what is the actual geography, elevation of land, and what is the likelihood of flooding? just because you have not flooded in decades does not mean you are not going to flood. certainly communities can challenge the maps. a community has to agree to the from the flood
insurance program through fema, so they can say we think we are not at this risk profile at a certain elevation. for, part of our argument the private flood insurance market is, right now you can only get flood insurance up to $250,000. $100,000 for content. you do not cover basement, other structures like a garage. all of that can be dealt with in the private flood insurance program, and that is where we think things should be moving. host: have those maps ever shrunk over time, or do they keep expanding? guest: according to fema, in in late -- in any given year, they map certain properties out of the high risk pled -- the high risk floodplain into the high risk floodplain. you have issues with sealevel rise in some places. you will not necessarily have that here in this town.
but you do have, somebody builds a shopping mall or there is a parking lot or there is a flood damage reduction structure. that will change the flood profile for various communities. host: kimberly is in philly. good morning. caller: i have a question related to what you just said. how often are those flood zone maps updated, and what determines whether properties are moved out of the flood zone? the reason i am asking is because similar to the other caller, i have two properties that are considered in the flood zone, and i lived there bank for over 20 years and never experienced a flood. caller: thanks for your call. as i said before, just because you have not flooded before does not mean you are not at risk for flooding and may not have future floods.
also, we would like to see fema up date these maps even more frequently. the state of north carolina took the mapping dollars from fema and actually had flown a , with radar plane to figure out the riskiest counties, did it for about 25 bucks a property. we would like to see that done on a five-year cycle to update that. host: so fema does farm this out to individual states? guest: in this case, north carolina said we will take care of this ourselves. fema allows you to do that. they did a good job of it, and information is available online's for people to see what their risk is. people'ssubsidize
premiums, you are failing to do a fundamental job of the government, which is to protect citizens. factor.a key risk my premium is too expensive, $3000. what can i do to reduce my rate by reducing my risk? what can the community do to mitigate the risk and drive down the rate by driving down the risk? host: yvonne is in st. paul, minnesota. i was looking at the map and i noticed these areas. i am from florida, but i bought my first house, and my dad chided me into getting a flood policy even though i am in a preferred risk area. it is not cheap, about $400 a year. but i read when i got a letter in the mail recently that 25% of claimed -- 25% of claims actually come in from places in preferred risk areas.
that was kind of shocking to me. , insuranceney companies do not always clearly define what flood is or what water damage is. i think they do need to do a better job of kind of need, risks, and losses that they will cover in the event of a flood. host: thanks for the call. guest: thank you very much, yvonne. i could not say it much better myself. it is a significant percentage, 25% and even higher figures, of flooding occurs outside of the 100-year floodplain. those are the people, in the case of baton rouge, who are getting only $9,000 rather than the $86,000. if she ever does flood, yvonne will be happy that she has that flood insurance policy. --re has been this fight
famously in my circle -- senator his homeowner's insurance company because they were saying it was actually flood, which will have a lower amount that they will pay out, causedthan wind that damage during katrina. one of the other things that is important as you move to private sector, you will remove some of that discussion, whether it is wind or rain. there will be one insurer, and it will be a rider on your policy. host: what happened with the lott case? guest: there was some agreement with state farm over what the agreement would be. caller: this is in response to the tweet. i was getting ready to call before i saw it, and your guest stephen ellis says we have 5 million insured and we have to deal with it.
chaos on multiple fronts. health care, the budget, and flood insurance is another example. the way we deal with it is we hold our elected representatives to their oath's of office to protect and defend the constitution. there is nowhere in the constitution where flood insurance, health care is delegated. theirre going to follow constitutional oath. thank you very much. guest: thank you, bob. i am just trying to deal with the reality of the situation that we have with $1 trillion worth of coverage out there bank. we will have to deal that -- we will have to deal with that in a responsible manner. we would like to see the movement toward -- all moving toward the private sector, and that will take the evolutionary process. i am completely aware. i work for a budget watchdog. host: i was going to say, you
can explain what national common sense is. guest: we are certainly concerned that we are about to federal debtion in to try to do with those issues, but we are coming up with responsible solutions that can get through congress, particularly on the flood insurance program. we work on national security spending, entitlements, and taxes. in 2012 there was an aggressive reform bill that was adopted called bigger waters. host: that is the last time it was authorized. guest: exactly. that started the fight-year process that expires september 30. repealing parts of your waters was passed in 2014. essentially what i think people like chairman hensarling, chairman of the financial services committee, realizes
that we will have to do -- we have done basically for 40 years, almost 50 years we have had the grant. host: the parts that were 1214,ed -- repealed in where they moved off the books? guest: we were trying to move toward people paying the full risk-based premium. we are still seeing rate increases because it has changed the rate by a certain percentage every year, but it has made it so that the movement forward would not go as quickly for primary homes, and we would still do that for second homes, for business companies, and for severe competitive loss properties. also it was not going to change your premium basically on home sales. -- he new homeowner was or she would still be paying the subsidized premium. host: a couple more calls.
in the eastern or central time zone, 202-748-8000. mountain and pacific time zones, 202-748-8001. from texas, good morning. caller: the southeast side of houston is where the johnson space center and all the chemical plants and or -- and oil refineries are located. homeowners insurance due to the risk of hurricanes is tremendously expensive. we would be unable to sell our houses if the flood insurance keeps going up. part of the risk around this , houston is notorious for flooding because basically houston is built on bios and swaps, so it does not drain very well.
concrete all over everything, so there is not a lot of land left to absorb the water. on the southeast side of houston, where the space center and the chemical plants and refineries are located, you know, we are not too far from the gulf coast. a big worry for my husband and i insurance the flood program is canceled or goes up, we will not be able to sell our home. most people in this area, their home was the biggest asset that they are looking to be able to sell when they retire. .t is a tremendous worry in 2012, when they talked about ending a lot of the subsidies with the flood insurance program, there was a neighborhood right behind the johnson space center where they looked at what it would do to their premiums. it would push the flood insurance premiums up to between
$3000 and $6,000 or $7,000 per year, depending on how close the people live. the mayor of this community was because there is a bunch of space center retirees in that area. it is a big worry to my husband and i. we are living on this side of town because he is a chemical engineer who works at one of the chemical plants. there is a difference between somebody's home that is their they havesidence that been at for years, and somebody who has a second home on the beach somewhere. host: thanks for sharing that and the story of clear lake city. stephen ellis? guest: cheryl brings up an important point. there is a distinction between primary homes and secondary homes.
i think the thing to keep in mind -- and a lot of people talk about the previous -- subsidizing the premium and reducing the cost is not reduce that person's risk. if you double the premium, the higher the level of risk that you have. we think it is critically important to actually have that. if there is people that need assistance, need assistance, that can be provided. that can be done outside the rate structure so people see the level of risk but then have some sort of means-tested assistance for some people. host: from massachusetts, rosemary. good morning. caller: good morning. to give this young man some information, we have ocean water. i am right on the ocean, five miles, and your boston. ocean water going into freshwater lakes. it floods about 20 communities.
have the diesel locks. one of the things you have to do is get flood insurance if you go to fema. i am not even in a floodplain. they closed the storm drain and 25 communities flooded here it they have never flooded since then. nobody was on duty. they went by the 11:00 weather report. they were 40 miles away. i called and they said nobody was there. the only cities that never flooded -- burlington, revere was right on the ocean and it floods every storm, but they were working. host: thank you for sharing the story. anything you want to pick on with that? guest: just the fact that she called me "young man." i have min -- i have not been called that in a while. host: mary in kentucky.
caller: thank you for having this program. i get up just to watch you. i wanted to comment about -- i want to get this out to other people. if you want to get your government to work for you, call your congressman and communicate with him. i have been communicating with seenand i have actually some things happen or seen them say things that i actually wrote about the last thing i have been writing about is flood control and things like that because i thought it was great that trump pulled out of the paris accords because we need to take that money and spend it on infrastructure here. we need to do a better job with the corps of engineers cleaning out streams and gutters and drainage pipes to make sure that these things do not back up. and just better infrastructure and better planning, and better
engineering when they build places. i did like what that woman set about the second homes. that they ridiculous want to build that close to the ocean and not expect it to be flooded. host: thanks for bringing that up. part ofof these issues what your coalition is working on? guest: some of the issues like disaster funding -- i like to is ahat every disaster tragic opportunity, but nonetheless an opportunity to make communities and individuals less vulnerable. and also, mary talked about the corps of engineers and the infrastructure. from our concern -- from our point of view, we want to make sure that this is done in a responsible manner. if there is infrastructure
investment, we want to prioritize that. flood damage reduction, storm damage reduction project, we should go for repairing existing infrastructure first, and then we should look at taking the infrastructure off the federal books. are there dams that are no longer functioning, waterways that we should be maintaining with several resources? eyedeed to be very clear- about investment rather than just dumping cash into infrastructure willy-nilly. taxpayer.net.t guest: thanks for this program. host: up next, it is open phones on "the washington journal." lines for republicans, democrats, an independents on your screen. you can start calling right now.
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