John Oliver on America’s Flawed Flood Insurance Program

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Floods have dominated the U.S. news cycle in 2017 after the devastation of hurricanes in Florida, Puerto Rico and Houston. “Think of them as the ‘Despacito’ of natural disasters,” John Oliver cracked on Sunday’s Last Week Tonight. “Persistent, ubiquitous and absolutely no fault of the Puerto Rican government.” The host also argued that the ensuing damage is often preventable, as “we have made certain decisions that put and keep people and property in the path of flooding.”

Both the government and individual homeowners are at fault, Oliver argues, and significant blame can be traced back to the National Flood Insurance Program (NFIP), which Congress created in 1968 to offer affordable, federally subsidized flood insurance. The program was intended as a temporary fix, with the government assuming at-risk homeowners would gradually move away from flood-prone regions. They didn’t.

“That’s not how people work,” Oliver said. “We will gladly accept huge risks to our personal safety for the sake of a discount. That was the entire premise behind the McDonald’s dollar menu.”

The host argued that the entire program needs to be revamped – starting with how the federal government administers the NFIP. “Typically, the government doesn’t directly insurance. Instead, it pays private insurance companies a fee for every policy they sell. But not just that: The federal government is then responsible for covering any losses, which is a pretty fucking sweet deal for the insurance companies … The bigger the disaster, the more they stand to profit. And that is a business model not usually seen outside of Nicolas Cage’s career.”

Some areas of the country receive a “shockingly big chunk” of the NFIP’s funding, as particular clusters of homes are pummeled over and over again by floods. For example, The New York Times reported in 2012 that homeowners in beach vacation spot Dauphin Island, Alabama have received $72.2 million payments for damaged homes over the past two decades, despite having paid only $9.3 million in premiums into the NFIP.

As a result, the government is faced with repairing these “repetitive loss properties” over and over. And since many of these are second homes, much of the funding benefits wealthy people. “If you chose to build something in a risky place … you should absolutely be allowed to do that,” Oliver noted. “But you shouldn’t expect the government to repeatedly help you rebuild when things inevitably go wrong.”

However, Oliver emphasized that the vast majority of at-risk homeowners are in a different financial situation and have trouble selling their properties themselves due to flood concerns.

“Unfortunately our buy-out programs are hugely underfunded and prohibitively slow,” he said. “It can take years for buy-outs to get approved, by which point homeowners have probably had to rebuild their house at the government’s expense, and it may have already flooded again. So essentially a government program that was supposed to help people in flooded homes is sometimes trapping them inside them indefinitely.”



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