I did real estate title work in that area for almost twenty years. It's true that mandatory flood coverage is a condition of most mortgages, but many people outside of the "bowl" (Flood Zone A) who don't *have* to buy the coverage were still smart enough to do so. There had been a slow drop-off in non-mandatory (mortgage related) policies before Katrina, mostly due to the city having gone some years since the last bad flood (1997, I think). Hurricane-related flooding was an even more distant memory (Betsy, 1965).
As for the 9th Ward, I know some of the houses were owned by the residents, but a heck of a lot of them were rental properties owned by slumlords. At one of the first "get back to business" meetings after Katrina, some guy managed to get the microphone and began whining about his misfortune. Seems he owned over 70 houses around the city, and although he had rental income flowing in from every last one, he didn't have flood insurance on any of them.
I also knew of an old (*really* old), retired attorney who bought up houses at foreclosure and tax sale auctions, then turned around and sold them to locals who could't qualify for loans with traditional lenders. An okay guy (he didn't gouge them on the interest rates) who wanted to help disadvantaged people feel like they had a stake in their neighborhoods. He died a year or two before Katrina, but I suspect that his succession was still an open matter. I'd wager that he didn't require flood coverage for his loans.
In my mind, those who chose not to buy it are SOL: they gambled...they lost. I fail to see why I should subsidize someone who didn't care enough for their own property to insure it.
As someone who has always had flood coverage, I strongly agree. Paying off those who chose not to purchase coverage is not only picking the taxpayers' pockets, it's a double-dip on the taxpayers who paid for the coverage all along.
I thought this was likely the case. Still, since there was no mortgage, they took a gamble on not insuring. When I had my own software company, I bought a building that was in a 100 year flood plain. Neither I nor the bank knew that at closing, however, and that fact didn't come to light until the next year. The bank said I had to buy insurance, but I pointed out that there was nothing in the loan documents that stated that requirement. It turns out that there was a flood in 1889 (as I recall) and none since. (The flood was caused by work done on a nearby canal that collapsed.) If the property goes 100 years without a flood, its removed from the flood plain list. I gambled that, with only a few years to go, there wouldn't be a flood. I won. It has since been removed from the flood plain list.