Flood Insurance Program Reforms Critical to Long-term Solvency


The Honorable Jeb HensarlingThe Honorable Maxine Waters
United States House of RepresentativesUnited States House of Representatives
2228 Rayburn House Office Building2221 Rayburn House Office Building
Washington, DC 20515Washington, DC 20515

 Chairman Hensarling, Ranking Member Waters and members of the committee,

On behalf of National Taxpayers Union (NTU) and our members across the country, I write in support of the following pieces of legislation, which would reform and reauthorize the National Flood Insurance Program (NFIP): H.R. 1422, H.R. 1558, H.R. 2246, H.R. 2565, H.R. 2868, H.R. 2875 and H.R. 2874. I am confident that this legislative package would bring meaningful change to a program that has severely mismanaged funds and would move the NFIP onto sound actuarial footing.

The legislative proposal that the Committee will consider includes many reforms NTU has advocated for. Specifically, this legislation continues to incorporate risk-based insurance rates; increased mitigation, mapping, and preventative measures; stimulation of private-sector competition; and requirements on the NFIP to purchase reinsurance and examine additional measures of risk mitigation to improve protections for taxpayers. Additionally, it ensures the benefits of each taxpayer dollar is maximized through an annual independent actuarial study of the program.

It is essential for the NFIP to be on sound financial standing in order to reverse years of persistent deficits. Years of ultra-subsidized policies and natural disasters have left NFIP with a debt of $25 billion and no clear way of managing its financial obligations in the long-run. Keeping the NFIP fiscally solvent with annual surpluses is key for gradual repayment to ensure the program does not receive a taxpayer-funded bailout.  

In order for the NFIP to become self-sufficient, the NFIP must share risk with the private flood insurance market. Utilization of a private market reduces taxpayer exposure to risk and allows the government to focus on preventative flood measures. Not only will taxpayer exposure be mitigated, consumers will also benefit from competition through greater market access and consumer choice. However, the flood insurance market would be disrupted if there is a price-ceiling on premium coverage for high-risk properties. NTU encourages the Committee to remove this language from the legislative proposal.

The improvements in this legislative package would go a long way to providing stability to millions of homeowners in the NFIP. Without these proposed changes, the NFIP will continue to balloon its debt, leaving the taxpayer to shoulder the burden of a future bailout of the program. I urge all members of the Committee and the House of Representatives to support this legislative package.

Brandon Arnold
Executive Vice President