Committee on Banking, Housing, and Urban Affairs
United States Senate
534 Dirksen Senate Office Building
Washington, D.C. 20515
As the committee continues their negotiations on the National Flood Insurance Program reauthorization, it is crucial that any legislative proposal include provisions that reduce risk to taxpayers. It is crucial for NFIP to be on sound financial standing to reverse years of persistent deficits that have skyrocketed the program’s debt to $25 billion. Implementing changes like accurate risk-based pricing, increased private market competition, and smarter mitigation policies will help the program move toward fiscal solvency to avoid a taxpayer-funded bailout.
Providing a legal foundation for a functioning private flood market will reduce taxpayer exposure to risk and allows the government to focus on preventative flood measures. Inclusion of so-called “Heller-Tester” private flood insurance language in S.563, the Flood Insurance Market Parity and Modernization Act, is crucial to clearing up regulatory confusion that is holding back the creation of new, innovative policy options for homeowners. Consumers will benefit from competition through greater market access and consumer choice. For example, research conducted by Milliman, Inc. found that roughly 69% of Louisianian and 92% of Texan homeowners could see lower premiums from private insurers.
Any flood insurance proposal must also include reforms that reduce taxpayer exposure for repeatedly flooded properties. FEMA estimates that these properties comprise just one percent of those insured by the NFIP, but represent 25 to 30 percent of all flood claims. Between 1978 and 2011, these properties have cost taxpayers more than $12 billion, roughly half of the NFIP’s debt. Additionally, NTU urges the committee to aggressively pursue stronger mapping, mitigation, and preventative measures since the best way to reduce rates for homeowners is to reduce the risk they face.
To protect the taxpayer and lower-income Americans, I implore you to include the aforementioned reforms in a final legislative package. Without these reforms, the NFIP will continue to balloon its debt and leave the taxpayer on the hook for bill.
Policy and Government Affairs Associate