Candice Miller for Congress, Michigan

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Michigan residents shouldn’t pay to cover flood losses elsewhere

by Candice Miller on February 17, 2011

I will do everythign I can to correct this outrage.

-Candice S. Miller

WASHINGTON – U.S. Rep. Candice Miller wants to get rid of the National Flood Insurance Program, saying Michigan residents who pay under the program are being forced to cover losses in other parts of the country. And she says the program’s $19 billion deficit means property owners across the country will be asked to pay higher and higher rates.

Miller, a Harrison Township Republican who has railed against the flood insurance program in the past, said she was introducing legislation to eliminate the program, which would need to be reauthorized later this year.

“The National Flood Insurance Program is a typical Washington boondoggle with an endless bureaucracy overseeing out-of-control spending,” Miller said. “The federal government is a bad insurance company, and the example of the flood insurance program proves that fact.”

She went onto say that Michigan “has been turned into an ATM machine – forced to pay for the flood risks that our state does not actually face.”

“This program is so actuarially unsound that if it were to be presented to any state insurance commissioner it would be put out of business,” Miller added. “For far too long, rates in this program have been set due to political considerations and not actual risk. Some who live in high flood propensity areas have their rates subsidized by others who live in low risk areas, like Michigan, who are forced to pay higher rates that do not accurately reflect risk.

The Flood Insurance Program was hit by a massive burden in 2005, when hurricanes – including Katrina – ravaged the south and caused billions of dollars in damage and claims. While the program was forced to borrow from the government to pay those claims, it did not result in a dollar-for-dollar increase in rates, because rate hikes are capped. But the program has come under increasing scrutiny because it was never designed to raise enough money through rates to pay all its claims – in part because some areas are allowed to pay the same rates over time, regardless of flood risk, to encourage development.

Citing information from the Congressional Research Service, Miller said that from January through November of last year, Michigan residents paid over $20 million into the program – compared to $45 million in total coverage state residents have received in claim reimbursement under the program dating back to 1978.

Miller wants to leave flood coverage to the private sector and believes states could form compact to spread risks. Her bill would end the program by the end of 2013, allowing states enough time to come up with their own plans.

“The only way to reduce the massive federal budget deficit is to end programs that don’t work and waste taxpayer money. The NFIP would be an ideal place to start,” Miller concluded

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