Congresswoman Maxine Waters (D-CA), Ranking Member of the Committee on Financial Services, today introduced a bill, H.R. 5953, to forgive the $23 billion in debt at the National Flood Insurance Program (NFIP) and place the program on a path toward solvency and affordability ahead of its reauthorization in fiscal 2017.
The NFIP provides flood insurance to more than 5 million households and businesses in the United States, providing more than $1 trillion in coverage. The program is also an integral part of protecting our nation from flood risks, including by maintaining flood maps, overseeing mitigation programs and supporting preventive measures.
“The devastating flooding in Baton Rouge last month underscores the urgent need to help protect homeowners and businesses from flood damages, and it is critical that the National Flood Insurance Program remains solvent in order to do so,” Ranking Member Waters said. “The current level of debt is wholly unsustainable. Not only is the NFIP spending billions of dollars just to pay off this debt, but it is increasing fees on policyholders that are already struggling with rising premiums. Congress must forgive this debt so that we can begin to approach broader reauthorization efforts with a clean slate and provide residents in flood-prone areas with a stable, affordable program in the wake of unexpected disasters.”
The program’s enormous debt is a direct result of Congressional design. The NFIP is typically funded by insurance premiums and fees paid by policyholders, but it is designed to draw from the Treasury to help fund catastrophic events. Following hurricanes Katrina, Rita, and Wilma in 2005 and Superstorm Sandy in 2012, the NFIP incurred substantial debt to help affected homeowners who had responsibly maintained flood insurance coverage.
That has led to the NFIP’s $23 billion debt, for which the Federal Emergency Management Agency (FEMA) has already spent $2.9 billion on interest payments alone. Additionally, the NFIP has increased fees to recoup these losses, putting an added burden on homeowners. As a result, the NFIP is losing policies, which has led to more lost revenue and more homeowners going unprotected.
The text of the legislation can be found here.
Waters has been pursuing all approaches to dealing with this problem. In March, she led 32 colleagues in a letter to Congressional appropriators to forgive the NFIP debt through the fiscal year 2017 appropriations process. She is also a leading voice on efforts to reauthorize and reform the NFIP so that it works better for policyholders, particularly in the wake of the historic flooding in Louisiana. Along with her Democratic colleagues, she has urged Committee Chairman Hensarling to hold a field hearing in Baton Rouge so that Committee Members can better understand these issues ahead of reauthorization. She has also pushed FEMA to address data concerns that reports have shown are preventing Congress from being able to make informed decisions on affordability assistance.
The stability and the affordability of flood insurance premiums have been a long standing concern for Ranking Member Waters. 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.