The Federal Emergency Management Agency (FEMA) said it will need Congress to increase funding for the National Flood Insurance Program (NFIP) to cover costs associated with the damage from Hurricane Harvey in South Texas.
FEMA estimated that it will need as much as $11 billion as there have been some 84,000 claims related to Harvey. NFIP only has about $5.8 billion left of the $30 billion it borrows. This is just to cover Harvey as no estimates have come out yet for Hurricane Irma.
The NFIP is administered by FEMA, which works with nearly 90 private insurance companies to provide flood insurance to property owners and renters in NFIP-participating communities.
Rep. Jeb Hensarling (R-TX) said Congress must get serious about fixing the NFIP. The program was set to expire on Sept. 30. There have been several bills in Congress to reform the NFIP as part of reauthorization. Due to the storms, the NFIP was extended until Dec. 8 to give Congress more time to come up with reforms before it’s reauthorized.
“Four years ago, after Hurricane Sandy, I warned my colleagues in Congress that the National Flood Insurance Program needed serious reform because it was not sustainable and was just one major storm away from needing another bailout. That sadly appears to be where we are today,” said Hensarling, who was one of 180 members of Congress who voted against Hurricane Sandy relief.
“Because Congress failed to enact reforms over the past four years, the program can’t meet the needs of flood victims without another bailout. To continue as is, with no reforms, is a slap in the face to both homeowners who depend upon it and hardworking taxpayers who have to bail it out once again,” Hensarling added.
Hensarling said the NFIP in its current form is unsustainable and subsidizes people to live in harm’s way.
“With pricing structures that do not reflect the reality of risk, it actually encourages the building and re-building – and re-building again – of homes and businesses in flood-prone areas. That is neither smart nor compassionate,” Hensarling said. “After Harvey and Irma, it would be insane for the federal government to simply rebuild repetitive loss homes in the same fashion, in the same place.”
Hensarling said the Financial Services Committee has produced legislation that seeks to stabilize the flood insurance program more stable and affordable.