Today, Congresswoman Maxine Waters (D-CA), Ranking Member of the House Financial Services Committee led 32 colleagues in a letter calling on Congress to forgive $23 billion in debt at the National Flood Insurance Program (NFIP) during the fiscal year 2017 appropriations process.
“The NFIP’s current debt is the direct result of Congressional design and it is time that Congress takes responsibility for it,” the Members wrote.
The NFIP is funded by insurance premiums and fees paid by policyholders. It is designed to be self-sustaining, but it is not set up to fund large catastrophic events through policy premiums and fees alone. The program took on substantial debt following hurricanes Katrina, Rita, and Wilma in 2005 and Superstorm Sandy in 2012. The current debt represents funds that were expended to pay claims to homeowners who responsibly maintained flood insurance coverage when their homes were hit by these catastrophic storms.
“The NFIP has introduced several increases in fees in recent years to build back from these losses.” However, the letter continues, “recent increases in NFIP premiums have caused premiums to become unaffordable for many policyholders. The longer that Congress ignores this issue, the longer that FEMA will be stuck paying substantial interest on debt that it will likely never be able to repay, which thwarts its ability to meet other Congressional objectives for the NFIP,” the letter stated.
NFIP’s stability and the affordability of flood insurance premiums have been a long standing concern for the Ranking Member. In 2014, she led the enactment of bipartisan legislation to provide homeowners with flood insurance rate relief. The law struck an important balance between addressing affordability concerns, bringing accountability to FEMA, and protecting the financial stability of the NFIP.