[Ibon]

the rich get nearly everything; the rest of us, squat.

A little perspective. From historical comparisons what we call the poor today are royalty compared to peasants and serfs and indentured servants of the past regardless of the inequity.

[Hawkcreek]

Cutting federal flood insurance doesn't just affect the relatively wealthy who tend to live on the coasts. Lots of poor communities are near inland waterways that are also more and more subject to flooding:

Insurance has always been a bet between two parties. One says that something will probably not happen, and the other says that it may, and if it does, I want you to pay me for my damages. BUT--- from Environment 360 newsletter---
"More than 2,100 properties across the U.S. enrolled in the National Flood Insurance Program have flooded and been rebuilt more than 10 times since 1978, according to a new analysis of insurance data by the Natural Resources Defense Council (NRDC). One home in Batchelor, Louisiana has flooded 40 times over the past four decades, receiving $428,379 in insurance payments. More than 30,000 properties in the program, run by the Federal Emergency Management Agency, have flooded multiple times over the years. Those homes, known as “severe repetitive loss properties,” make up just 0.6 percent of federal flood insurance policies. But they account for 10.6 percent of the program’s claims — totaling $5.5 billion in payments. "
Federal Flood Insurance is a scam, in my opinion.
It needs to be dissolved, and have real insurance companies, apply real risk standards to determine policy fees.

[Ibon]

If anyone has a mortgage on a soon-to-be-flooded house, the banks should take the fulll loss on the property. That would probably ensure that no more mortgages would be issued in coastal areas.
That alone would solve many problems.

Without the government backing over night the insurance companies would either cease to issue flood and wind insurance or the rates would be 10x what they are now. Banks wont issue mortgages without insurance. So this would instantly overnight crash the coastal property market.

We discussed once how ahead of the physical event of sea level rise comes the economic and financial consequences. A few more Sandy's and Katrina's will start the exodus of the coastal property market when insurance and property taxes rise to the point that together with the mortgage payment this will make it unaffordable for most.

Long before the sea level rises many coastal areas may have already been abandoned because of this......in the next 2-5 decades. maybe sooner.

[GHung]

Ibon said; "So this would instantly overnight crash the coastal property market."

Fine with me. I grew up going to fairly pristine southeastern beaches that only had a few shacks on them. All gone now, replaced by major developments with many detrimental consequences. It's my opinion that these newer developments should not only be held fully responsible for their own insurance, but should be required to post bonds for the inevitable deconstruction and clean-up costs as they are forced to move.

Again, I'm tired of paying for clean-up and reconstruction every time another storm hits the Carolina coast. These were for-profit enterprises that I didn't benefit from, and shouldn't be required to subsidise in any way. Just another reason I work to minimise my tax liability in a legal manner, primarily by minimising my taxable income.

[SeaGypsy]

I used to work with several Inuit, when I worked in Prudhoe Bay. From what I have seen, their knowledge and abilities in the wild would make them one of the more mobile peoples of any I have seen.
People have always set up camp at the best fishing and hunting spots on the coast. I understand that they may spend generations there, but to me, that doesn't make it a requirement that they have to stay forever.
I know it isn't their fault that the ocean is rising, and I think some start-over help may be warranted. But since the tribes already own most of Alaska, a new town site should not be hard to find. Most of them have been receiving a rather large check each year for oil revenue, and that alone would make me hesitant about spending too much on relocation.
The anglo culture is already responsible for creating a welfare mentality in many of the natives of Alaska. I would support spending on education and counselling for anyone, but I am uncertain about too much more.
This may be a case where we have already done too much damage.

Much the same with Oz Aborigines, they were far healthier & lived 30 years longer before they got stuck into permanent welfare settlements, which are by any objective measure, a social disaster.

The point I made earlier seems to have gone over without notice. Aboriginal people living in a nomadic state don't constitute an occupation, at least that's how history has always played out. Permanent settlements connected by State services do constitute occupation by the State. If these social disaster towns stop being supported, the occupants will almost all move to the nearest city, not revert to nomadic hunter gathering, leaving these lands more empty than ever, ripe for claiming by overcrowded neighbours. This is the real & only answer to the OP.

[Plantagenet]

It's my opinion that these newer developments should not only be held fully responsible for their own insurance, but should be required to post bonds for the inevitable deconstruction and clean-up costs as they are forced to move.

Yes, that would be best.

But under current federal law flood insurance is required in flood prone areas.

This is another liberal program gone berserk. In the past flood insurance may have helped rural famers or poor fisherman, but today the Federal flood insurance program is basically just another subsidy to the rich as they build McMansions on every inch of coastline. Hillary and her wealthy backers are highly unlikely to change the law and put their own coastal mansions at risk. Even Bernie Sanders just bought a beach house which is no doubt also is federally insured.

www.floodsmart.gov_insurance_is_required

[Hawkcreek]

Ibon said; "So this would instantly overnight crash the coastal property market."

Fine with me. I grew up going to fairly pristine southeastern beaches that only had a few shacks on them. All gone now, replaced by major developments with many detrimental consequences. It's my opinion that these newer developments should not only be held fully responsible for their own insurance, but should be required to post bonds for the inevitable deconstruction and clean-up costs as they are forced to move.

Again, I'm tired of paying for clean-up and reconstruction every time another storm hits the Carolina coast. These were for-profit enterprises that I didn't benefit from, and shouldn't be required to subsidise in any way. Just another reason I work to minimise my tax liability in a legal manner, primarily by minimising my taxable income.

Total agreement with you on this.

[diemos]

I can't think of a better example of "moral hazard" than federally funded flood insurance.

If you can't afford free market flood insurance that's the free market's way of telling you, "Don't build here."

https://www.youtube.com/watch?v=_516ml5ImGU

[dohboi]

Plant is almost getting as bad as KJ for trollishly always mis-directing every thread toward his anti-liberal biases.

The fact is that this insanity has had strong support from both parties:

http://www.reuters.com/article/us-usa-i ... WK20140130

In a rare act of bipartisanship, the U.S. Senate overwhelmingly approved a bill on Thursday to delay dramatic increases in federal flood insurance premiums for millions of Americans...

Republican Senator Johnny Isakson of Georgia joined Democratic Senator Robert Menendez of New Jersey as chief sponsors of the legislation, the Homeowner Flood Insurance Affordability Act.

It would delay rate hikes for four years...

And this was going against concerns by plants bugbear Obama.

So can we drop the pretense that all the blame for this fiasco is all on one side and move the conversation on.

[ROCKMAN]

I think Ghung makes the point on how we need to split this issue. Those that choose to build and live in such high risk areas and those that are damaged by relatively unpredictable events. Obviously CA is easy to pick on. Maybe 60 or 80 years ago it wasn't obvious that much of the southern portion of the state would eventually destroyed by a major earth quake. But that has been known for decades. So if it happens should others pay for the loses of those that didn't buy enough insurance? Same for someone who builds a $2 million McMansion in brushland knowing that an investable wildfire destroy the home have their loses covered by someone else? Same for folks who build homes on the coast of our southern Hurricane Alley or in the Midwest in our Tornado alley?

Now the other side of the coin: what about those affected by changes that weren't widely predicted 20 years or so ago? A somewharpt different situation but even they had the option to insure. A more difficult call IMHO.

And if interested how this is really playing out in DC this is a must-read report from 2.5 yeasrs ago:

http://www.nytimes.com/2014/01/29/us/po ... .html?_r=0

[dohboi]

I think I saw that most of the beneficiaries of the federal flood insurance program were in Texas as well as some in Florida.

So maybe our TX folks could shed some light on who all these folks are and what kinds of risks they are putting themselves in at our expense?

[KaiserJeep]

I would just point out that there are more in play here than market forces. For the first nine years in California, I had earthquake insurance, and it was affordable, even after the nearby 7.0 Loma Prieta earthquake of 1989. Many Californians did not choose to pay for this coverage, which varied in cost both by the seismic risk you were in at your location, and the vintage of your home with the mandated earthquake resistant features required by then-current building codes. The State Legislature decided that everybody should have affordable earthquake insurance as an option, and specified the coverage details.

My original policy had 100% replacement cost for the structure after a 10% deductible, no cap, and was a $300 annual cost rider on my homeowner's policy. Me and about a third of the state residents had similar insurance. After the legislature messed with the insurance companies to offer everybody earthquake coverage, my earthquake rider was $2800 annually and the deductible was 15% and coverage capped at $85,000 per incident - and an aftershock that happened on a different calendar day was a new deductible. As a result of the government interference the earthquake insurance participation rate went from 33+% to less than 9%. So I have lived here for 27 additional years with no earthquake insurance, because it would more than triple my home insurance cost.

Like most government meddling, the actual impact was the exact opposite of what they said they were doing. They did add another 300 state employees (the California Earthquake Authority) to the existing California Department of insurance - and even though the earthquake insurance participation rate is down to about a quarter of what it used to be, the new state department grows its budget and number of employees every year. That is also typical of government meddling.

[diemos]

From historical comparisons what we call the poor today are royalty compared to peasants and serfs and indentured servants of the past regardless of the inequity.

And the poor in the developed world still lead lives of great wealth compared to billions on the planet today. There are still people living in mud huts and practicing hand agriculture with machetes with no access to clean water or medical care. Although these days they usually have a cell phone or at least access to one.

[GHung]

KJ said; "Like most government meddling, the actual impact was the exact opposite of what they said they were doing."

Right, KJ, is it government meddling in the insurance system, or is it powerful insurance companies meddling in government? Hint: the insurance industry is second only to big pharma/healthcare products in terms of money spent lobbying in the US. Third would be the electric utilities.

https://www.opensecrets.org/lobby/top.p ... ndexType=i

[Simon_R]

(Sum(P * Y) * N) - R

P = Property Tax
Y = Years Left before property is remodelled (max 100)
N = Number of Properties
R = Cost of Saving property within Y

Whichever Community scores more ... wins

[Ibon]

Ibon said; "So this would instantly overnight crash the coastal property market."

Fine with me. I grew up going to fairly pristine southeastern beaches that only had a few shacks on them. All gone now, replaced by major developments with many detrimental consequences. It's my opinion that these newer developments should not only be held fully responsible for their own insurance, but should be required to post bonds for the inevitable deconstruction and clean-up costs as they are forced to move.

Again, I'm tired of paying for clean-up and reconstruction every time another storm hits the Carolina coast. These were for-profit enterprises that I didn't benefit from, and shouldn't be required to subsidise in any way. Just another reason I work to minimise my tax liability in a legal manner, primarily by minimising my taxable income.

Total agreement with you on this.

I think we are all totally in agreement with this. But that is not the point of this line of inquiry, it is not about what we disagree or agree with, it is about trying to prognosticate the macro shifts that will happen in the economy, culture and physical environment. It not about what any of us wish for.

We need to improve on cultivating a more clinical and detached objectivity when anticipating the future. Model yourself a bit more like mother nature, the ultimate objective arbiter of our fate!

In reference to this topic it is not hard to imagine that at some point the government will no longer be able to back up the insurance industry, the rates will skyrocket, the banks wont issue mortgages without insurance. These pressures elevate to the point where the market abandons coastal properties. This will happen with intense storms of more frequency as sea levels slowly rise.

[dohboi]

Good points diemos, but note that your quote box makes it look as if those are my words, but they are not.

I'd just point out that we are setting the bar pretty low when we take Medieval serfs, who were essentially slaves, as our benchmark. And yes, of course, globally many people are doing even worse, even if they may occasionally have access to some hightech toy.

[Newfie]

I on,
I watched a World Economic Forum round table where MunichRE and others participated, a few years ago.

The take away was they recognize that CC related insurance costs are FAR in excess of the insurance industry to cover. That federal governments need to accept their position as "insurer of last resort" and adjust the federal economy accordingly. Some governments accept this, quietly, and the WEF is working with them to make changes. No names named.

[Newfie]

Ibon,
A point of disagreement. I for one do not expect market forces to act in advance of climate change to reduce property costs. I think denial will rule, at least for the early stages, until some significant disasters occur.

2¢

[GHung]

Ibon said; "We need to improve on cultivating a more clinical and detached objectivity when anticipating the future."

As time moves on, "we" are seeing our choices being culled by circumstances, and will become more reactionary rather than proactive about most everything. Getting ahead of these things, whether it's climate change, sea level rise, energy, economics,,,, increasingly involves stepping on some very entrenched and powerful toes, and turning 'haves' into 'have-nots' (or 'have-lessers'). Today's have-nots will be pushed out the back of the bus. It's the nature of overshoot, and few of our responses will be rational or pro-active. Rather than "cultivating a more clinical and detached objectivity", forcing will result in our choices being more brutally unavoidable; not choices at all, really.

Relocating a small village or town pales in significance to relocating billions of people, and moving $trillions in infrastructure, out of the flood zones. In the end, humans will be scrambling to cope with a long list of predicaments, few of which are solvable. Too many people on a shrinking Planet; kicking cans down crumbling roads.