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Future of the National Flood Insurance Program


As private insurance companies have realized that providing flood damage insurance is unprofitable, the federal National Flood Insurance Plan (NFIP) is virtually the only insurer left standing against flood damage. That may all change in the coming years, or even sooner, now that the program is set to expire September 2017, according to the Insurance Journal. The House is reviewing seven proposals that would both renew and reform the flood insurance program, which is currently $24 billion in debt.

House Committee to Choose Between Seven Proposals

Recently, this June, House Financial Services Committee met to discuss options. Committee chair Representative Jeb Hensarling (R-Texas), said that, “There are so many important voices in our debate today . . . but as far as I’m concerned, perhaps the single-most important voice is the voice that remains underrepresented in the debate and that is the voice of the American taxpayer.” On the opposing side of the argument was Representative Maxine Waters (D-Calif), who said that the bills could “make matters worse by restricting coverage, increasing costs, and opening the door to cherry-picking by the private sector.” She went on to say that the bills were filled with technical errors and asked the question, “When all of these bills are put together, what will be the cumulative impact on cost for policyholders? What is this going to cost these communities? Mr. Chairman, when you add up all the premium increases, surcharges, assessments, cross-subsidies, and rate-changes, how will affordability be affected?”

Among the issues of the seven proposals include:

  • Increasing the financial footing of the program;
  • Encouraging private insurers to participate in the flood damage market;
  • Limiting payments to properties that regularly flood;
  • Reducing taxpayer subsidies (which would either cut the program’s budget or significantly raise the premiums of the policy holders);
  • Improving flood mapping;
  • Offering financial aid for those not able to afford coverage; and
  • Improving mitigation and claims handling.

An Overwhelming Risk

A 2014 report by the Union of Concerned Scientists, entitled an Overwhelming Risk, discusses the future of flood insurance in the long-term as sea level rise races ever upwards along the Gulf and East coasts. It may be that the federal flood insurance program, which is taxpayer-backed, is done away with completely. The report claims that the “artificially low insurance rates that result” from the federal program have “allowed—indeed, reinforced—risky patterns of land development. They have also created perverse incentives for repetitive insurance claims and an unsustainable level of financial exposure for all taxpayers, who ultimately help pay for insurance claims and disaster relief in the event of a major storm.” Sea level rise is expected to be within eight inches and six and a half feet between 1992 and the end of the 21st century, with faster rates predicted, and already being observed, along the East coast.

Call a Lawyer Today

Whether you have questions about flood insurance or your claim has been denied for any reason, whether you have flood insurance or not, it is in your best interest to contact a lawyer as soon as possible. Contact the Celeste Law Firm in West Palm Beach today at 561-478-2447.




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