The National Flood Insurance Program provides critical flood insurance to more than 5 million properties nationwide. Unfortunately, the outdated NFIP has borrowed nearly $40 billion from taxpayers, making it unsustainable in its current form. Continuing the status quo in the flood program is not only a risky proposition for communities who rely on the program to pay their claims, but it is a terrible practice from a longer-term planning perspective.
Though Congress has passed 10 short-term extensions and is slated to pass another one at the end of the month, it’s clear that meaningful changes must be made to reform the indebted program. Premiums should be allowed to continue the move to real risk-based rates and only provide premium assistance to those who need it on a means-tested basis. Funding mitigation efforts is a sound financial investment with proven results to reduce future disaster costs and reduce policyholders’ rates by reducing their risk. In fact, proactive, preventative mitigation is the most cost-effective investment the NFIP can make.
In particular, FEMA must work to identify “flood hotspots,” which are communities with significant numbers of severe repetitive-loss properties and areas with a significant number of properties at high flood risk. To further prioritize communities for initial investment, FEMA should steer significant funding to vulnerable and poorer communities that are disproportionately impacted by disaster and flooding.
With the state of New York and states across the country at risk of extreme flooding, Congress has no time to waste. The imminent expiration of the NFIP on May 31 is an opportunity to make the necessary reforms to better prepare the nation for the storms to come and save taxpayers from costly losses in the future.