Thursday, February 17, 2011

Are Some STATES wishing for disasters?

AT FEMA we (me and others) used to laugh at how successful many STATES and their local governments were in having timely disasters in the sense that their budget coffers needed renewal badly. Some of the Key states were California, Louisiana,Pennsylvania, Puerto Rico, and West Virginia. Alabama does okay also. Of course FEMA is horrible at statistics and it would be interesting to see a table of total federal disaster outlays since passage of Public Law 875 of the 81st Congress, specifically the Disaster Relief Act of 1970. Those outlays should be by STATE, COUNTY, and CITY. But of course FEMA does not have those numbers. I guess FEMA in its efforts to not comply with the statutory mitigation mandate in the statute since Public Law 93-288 does not want to be inflicted with discussion of repetitive disasters for some of its favorite clients. And of course since 1969 and the issuance of the first NFIP policies any statistics on disaster outlays should also include NFIP claims paid and maybe also STATE PREMIUM TAXES paid (not illegal but not required to be paid either) and other costs of administration buried in the disaster programs, functions, and activities and NFIP ops. After all think of all those localized disaster ops and adjusting ranks showing up just like the "storm troopers" often discussed by the MSM.

Now that the STATES with the most disasters know more about FEMA policy and procedures than FEMA and in cases like California have records on individual damage surveys that allow them to argue FEMA has paid similar claims in the past or issued similar grants it is easy for FEMA to be essentially outwitted by the more competent disaster bureacracies at the STATE level for states almost constantly playing the disaster game. The same of course goes for the insureds with repetitive losses under the NFIP. Shockingly since both programs by statute were designed to be meshed in administration this never has happened either in HUD from 1973-1979 or FEMA from 1979 to the present. And perhaps more shockingly few appointees, employees etc understand both programs and exactly how they are gamed and operated in conjuction either with the STATES and their local governments or the private insurance sector.
By the way just one example! The NFIP policies look like they benefit the homeowner in the main. But because there is no federal definition of property or interests in property and certainly not in the NFIP these concepts when push comes to shove are determined under STATE law, usually found in the appellate court system of the STATE or in rulings of the various STATE AG offices. So let's take an example of the 25-35% of policies residential or commercial that have a NFIP policy in place based on ownership but in fact on structures that are underwater (not literally) just meaning those whose mortgage totals exceed the value of the property. So in those cases many states treat property insurance and in particular where mandated as being in fact two policies even though only one exists. And guess what the holder of the mortgage gets first priority draw on any paid claim. Thus in many cases the "owner" meaning he or she who is the mortgage debtor pays the policy premiums but in fact has no insurance on the property unless it is insured to full value and even if not cannot cash the claims check which the NFIP makes out to both the insured and the mortgagee without getting the latter to approve it. And in many cases the mortgage hold insists that the owner sign first to ensure they then get their money before the insured does so. And of course since it is a federal program few STATE Insurance Departments take much interest in NFIP adjustment issues or claims issues or even who benefits.
Well my point is simple. Both the disaster programs and and the NFIP are administered with inidivuals and property owners last in line. The STATES even rake off huge administrative fees as the primary grantees for disaster outlays with their cities subgrantees.
You get the picture! No one in a very long time has actually examined disaster and NFIP ops to see how their administration benefits certain parties and in fact may be in derogation of STATUTORY mandates. But of course you have to understand program ops in detail in order to document this and reach the correct conclusions.
So if you wanted to really promote mitigation reduce disaster and NFIP outlays so no more than one payout for any structure in any 5 year period. Suddenly there would be an incentive to mitigate between claims and payments. Anyhow my guess is Governor Jerry Brown knows and has alerted his administration to take every advantage of FEMA should disaster strike. Maybe even the "big one"!