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Congress must allow private sector protection of post-disaster flooding

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Recent hurricane and flood destruction has left Americans in dire need of outside assistance to restore their lives. The National Flood Insurance Program (NFIP), designed more than a half-century ago, was meant to protect home and property owners, but it has become severely outdated, inefficient and is completely insolvent.

The current federal policies that protect those at risk, the environment and taxpayers are misguided and fail to protect vulnerable Americans from severe storms. We must reform the NFIP to protect taxpayers and vulnerable property owners while expanding private coverage before another hurricane or flood severely damages another American town.

Congress can improve this program by supporting the expansion of the role of private insurers in the flood insurance market. In July, new federal lending rules went into effect requiring regulated lenders to accept certain private flood insurance policies in addition to NFIP policies to satisfy most mortgage requirements. This new rule would expand consumer choice and assist in increasing coverage across the country.

The current federal program, which owes taxpayers over $20 billion – not including the $16 billion in loans that were forgiven in 2018 – and is losing $600 million annually, has clearly been a financial liability for more than a decade. In just the past two years, Congress has postponed NFIP reform through 12 short-term extensions, none of which include any of the reforms the program requires.

This failure to fix and extend the program has resulted in worsening the program’s poor fiscal health. In a bipartisan effort in June, the House Committee on Financial Services passed two bills that would reform and reauthorize the NFIP. The bills would extend the program for the next five years and make needed improvements, such as requiring more accurate mapping and risk assessment, full transparency of risk and better planning for known risks.

Policymakers should support these reforms and take bipartisan action to pass them through the House and the Senate, as well as work to get the private sector to take on this risk.

Additional efforts are also required to protect taxpayers and citizens from the destruction of future weather events. The current bill in the House of Representatives contains improved mapping and risk mitigation provisions that would make information available to all homeowners, renters and home buyers. Policymakers must also look to provide affordable mitigation assistance and require FEMA to work the Federal Housing Authority to provide low-interest loans for mitigation.

While not all disasters are preventable, the country has been hit with damaging hurricanes and increased rainfall, resulting in billions of dollars in damage. Congress must focus on implementing policies that will reduce vulnerabilities and costs – and limit the damage. For the protection of every property owner and the good of every taxpayer in the United States, Congress must reform the NFIP, rather than keep the status quo, placing communities at risk of more flood damage.

Homeowners, taxpayers and citizens deserve better.

Steve Pociask is President and CEO of the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit or follow us on Twitter @ConsumerPal.


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