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Insurance Information Institute Senior V.P. Jeanne Salvatore on the potential costs of flood insurance claims from the hurricane.
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-- getting that picture that federal flood insurance claims will probably be sky high from hurricane -- last year during Hurricane -- the government's flood insurance program.
Reported it back insured losses of more than one point three billion dollars.
With me now is Jean sell the Tories senior vice president at the Insurance Information Institute.
Thank you so much for coming on the show do you think that this is going to be an event of the -- Magnatune.
Well it's hard to tell what there will be a lot of flooding I mean we're seeing this says basically a big flood event in a lot of areas yeah and so this and in their couple different people that -- the -- on something like this.
I mean -- backs a lot of insurance their private companies as well how does it all get divided up.
Well basically how it works is if you have a home insurance policy you're not covered for flooding seen need to get separate flood insurance and most people do buy flood insurance from the National Flood Insurance Program.
Some people can also choose to get it from a few private insurance companies but -- federal flood.
Insurance encourages people to buying luxury homes in spots that -- -- -- they wouldn't choose to live an otherwise.
And I wonder should the tax Payer be helping to make someone whole who has.
In an earthquake prone area in San Francisco and they paid a lot of money.
And -- the taxpayer who comes CNN and helps to make them.
-- well there are reforms and in place to basically over the next few years the National Flood Insurance Program will be more actuality sound.
But we see with a lot of these storms and a lot of that damage actually is inland.
That for instance with Hurricane Irene we -- a lot of flooding.
Upstate new York and places like that so.
Yes -- people have those beach homes but there's a lot of people who live further inland who really do need to get flood insurance absolutely.
I wonder at a certain price point does it make sense I mean I know there's a cap on the insurance it's 250000.
For the structure 150000.
For your personal items.
In the big government pays a portion of that the taxpayer does they pay about 40%.
Under that cap to -- He's on the year and in the year -- a lot of disasters lot of flood this ups is a little higher than a year with there's not.
But those people who live in very very high risk areas are also paying.
A larger premium.
But on average -- the big problem now is quite frankly people don't buy flood insurance this is the big problem that even with the subsidy people there are not buying it.
And that we find that less than 20% of people actually have flood insurance and a lot more people need it than that well but I.
Sort off the -- -- what we're talking about that because we're talking about this the federal program and I wonder people on the coast to buy homes -- in all these high risk areas.
If they get a -- of in this case that's 40% it's a 160000.
Dollars from taxpayers to make whole someone who lives at a very expensive home in a beautiful area.
Obviously they don't need that money from taxpayers should we reform the system so that you're not encouraging people to build very expensive homes.
On the clips of Malibu in a hurricane zone in Florida.
On the beach in some places in New Jersey where you have mansion in San Francisco on earthquake line -- Actually those are very good questions and -- and and it's beyond just the national flood insurance programs should we be building in these areas.
And those people also pay a lot more for homeowners and -- and they should not makes us as they should buy and I just don't run and taxpayers should be in on any part of it helping in these very expense of situation so those source just that's one part of it there's a lot of other people who are at risk sure flooding and unfortunately are not buying the flood insurance in a lot of ways that's that's the really big problem and will -- and it as a result of all of this.
Really probably push for even more flood insurance is people see what happens in the aftermath of this -- -- we're trying for -- Jeanne thanks so much for coming --
