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Dec 17, 2005

Consumer Advocate Blasts Flood Maps In Wake Of Katrina

The director of insurance for the Consumer Federation of America blasted the Flood Insurance Rate Maps published by the Federal Emergency Management Agency at a conference in New York this week. J. Robert Hunter, was quoted by station WBRZ-TV as saying about the agency, "Not only didn't it do very well in recovery and response, but it didn't do very well in running the National Flood Insurance Program."

Mr. Hunter, who is a former director of the National Flood Insurance Program voiced two primary complaints about FEMA flood insurance program:

Outdated Maps
Outdated flood maps result in at least three potential problems:
  • Required building elevations the communities are too low.
  • Taxpayers subsidizing unwise construction in flood-prone areas.
  • Not taking into account recent development and its impact on potential flooding.
An Incentive To Shift The Damage To Flooding
Mr. Hunter explained that the insurers that sell flood insurance policies through the federal program also sell wind insurance. He says that this situation gives the insurance adjusters to assign most of the damage in a storm to flooding, since the federal agency picks up the tab for flood damage. "What do you do if you're an adjuster and you're not really sure, is it flood or is it wind? If there's a policy in place, put it in flood," the station quoted him as saying.

Mr. Hunter offered three ways to improve the program:
  1. Eliminating the federal flood insurance subsidy for areas that have experienced over the 100-year storm levels.
  2. Eliminating the federal flood insurance subsidy for second homes and those worth more than $500,000.
  3. Making private insurers assume a greater role in writing flood policies. At present, insurance companies make more money for writing flood-insurance policies than homeowners policies.

When contacted by the station, a FEMA spokesman agreed that many of the flood maps were outdated (New Orleans had last be updated in 1984) but pointed out that the agency's is attempting to address the situation with its flood map modernization program.