he goal of the National Flood
Insurance Program (NFIP) is to reduce rising emergency disaster-relief payouts, map the flood risk of the entire
country and cut down the risk of floods by
working with communities on proactive
Until 2005, the NFIP was largely self-sustaining, but Hurricane Katrina and a series
of other hurricanes and storms have left the
program nearly $20.5 billion in debt, and that’s
before Hurricane Florence hit the Carolinas.
Last fall, Congress forgave $16 billion in NFIP
debt. NFIP’s fiscal lifeline has been extended
by its overseers more than 75 times during
its existence, including 41 times in the past 20
years. It’s due up for another congressional
reauthorization later this year, on Nov. 30.
The program needs a long-term reauthorization to protect the vulnerable, improve
the program’s financial soundness and promote private-market competition in the
flood insurance market. Following are some
common-sense reforms that Congress
Flood insurance doesn’t prevent flooding.
The mandate to buy flood insurance and
the price of the premium demonstrates and
quantifies a property’s flood risk.
Claims payments can help homeowners
rebuild after a flood, but only mitigation and
floodplain management can help prevent
flooding. The NFIP should provide premium
discounts for private- and community-based
mitigation efforts and require some level of
mitigation on every property that receives a
It’s important to consider the rebuilding
process as a whole in order to achieve a
different result the next time a flood occurs.
This may mean instituting new elevations,
improving building codes, fortifying homes
and relocating people out of harm’s way.
Of the nearly 5.1 million NFIP policies in
force, 88 percent have never had a claim
payment and 2.87 percent (or almost 145,000)
have had two or more claims. Less than
0.3 percent of all policies (or about 13,000) are
deemed “severe repetitive-loss” properties,
according to the U. S. House of Representatives Financial Services Committee.
While they are a small percentage of all
flood-insurance policies, repetitive-loss
properties should be a top priority in NFIP
reform. That’s not just because 1 percent of
the policies make 25 to 30 percent of flood
claims, but also because the residents of
these properties are in danger.
More than 115 people perished from
flooding-related events last year, and more
than 550 have been killed since the Biggert-Waters Flood Insurance Reform Act passed
Congress in 2012. According to a 2017 study
by the Natural Resources Defense Council,
only 5,961 of 30,000 severe repetitive-loss
properties received some form of federal
assistance to mitigate against future flood
damage (usually elevating the structure),
and only 2,601 of those received buyouts.
Congress should expand grant programs
for individual and community-level mitigation. In addition, the Federal Emergency
Management Agency (FEMA) should work
with mortgage lenders to help severe
repetitive-loss property owners pay off
their loans and relocate to higher ground.
Opening the flood-insurance market
to private insurers also makes good business sense. If homeowners can obtain better, cheaper flood insurance from a private
insurance company, then the government
shouldn’t stand in their way.
If the product or service isn’t better, consumers should be allowed to return to the
NFIP and have their coverage considered
continuous without penalty. The Flood Insurance Market Parity and Modernization Act,
introduced in both the U.S. House and Senate, addresses this issue by allowing flood
insurance from the private market to satisfy
the mandatory purchase requirement.
This is bipartisan, common-sense, pro-consumer legislation that clarifies the intent
of the 2012 Biggert-Waters Act, which says
private flood-insurance policies should
be allowed to satisfy mandatory-purchase
requirements for federally mandated flood
insurance. This bill also would ease administrative burdens for homeowners and business owners who need coverage above the
NFIP policy limits and currently need to get a
base layer of coverage through the NFIP and
additional coverage from private carriers.
Mortgage lenders are often the ones who
have to explain to borrowers that their
property is in a flood zone and why flood
insurance is mandated by the federal government — to protect the homeowner and
the lender because the property serves
as collateral on the loan. Enforcing this
mandatory-purchase requirement can be
like trying to hit a moving target, however,
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Amy Forester Roberti is vice president of congressional relations for the Independent Community Bankers of America,
where she works to advance ICBA’s policy positions with key
legislators and regulators. Her areas of responsibility include
regulatory relief, flood insurance, housing finance and government-sponsored
enterprise (GSE) reform, and data and cyber-security. Roberti can be reached at