Private Insurers Can Help Save Faltering Federal Flood Program


In one of the most partisan election years this country has seen in recent decades, members from the House of Representatives came together on a bipartisan basis to pass a non-ideological piece of legislation that will make it easier for people to access flood insurance. Now the Senate must follow suit.

The National Flood Insurance Program (NFIP), which provides flood coverage for property owners in more than 20,000 communities nationwide, has rung up $23 billion in debt and is not sustainable for the long term. The House has taken an important first step toward solving this problem and improving the NFIP’s long-term outlook.

The Flood Insurance Market Parity and Modernization Act, which passed the House with unanimous support (419-0), will allow states to regulate private flood insurers to bolster the development of a private flood insurance marketplace and lessen dependence on the NFIP. This legislation also clarifies that private insurance can be used to meet mandatory purchase requirements for federally backed mortgages. Senators Dean Heller (R-NV) and Jon Tester (D-MT) have introduced similar bipartisan legislation as well.

In contrast to the NFIP, private flood insurers can react quickly to changes in weather conditions or flooding patterns, resulting in more accurately priced rates that convey the full risk confronting a home or business owner. With private insurers in the flood insurance marketplace, consumers would be able to price shop among more policies, potentially gaining access to higher coverage limits, varying deductibles and greater insurance protection.

In fact, a study by the Wharton School found the introduction of private insurance providers would reduce rates for some policyholders. Private insurers would also introduce new methods of calculating risks, lower administration costs and innovative ways to account for mitigation to benefit homeowners and relieve the NFIP of high-risk policies.

In addition to fostering a more robust private marketplace for flood insurance, there are other changes that Congress can make to the NFIP that will increase its viability for the long run.

Ensuring that modern technology and the most accurate risk assessment tools are being used to update flood maps is critical for the future success of the program. This will keep property owners from having to shoulder the burden of determining risk and help private insurers offer rates that accurately reflect the danger of flooding that a property faces.

Congress should also look to shift resources from subsidizing rates to mitigation efforts that can help blunt the impact of future storms and reduce post-disaster costs. Instead of continuing to provide subsidies regardless of need in the federal program, financial assistance should be targeted to lower-income policyholders to help them take proactive measures that will reduce rates by reducing risk. Actions such as strengthening infrastructure and updating building codes would go a long way toward ensuring communities are better prepared for the next storm.

In order to successfully carry out these reforms, lawmakers from both parties will need to work together and pass the necessary legislation. While the House recently took a small but significant step down this path, there is still much more to do to ensure millions of NFIP policyholders will not be left out in the rain.  It is time for the Senate to follow the House’s lead and take action.

Steve Ellis is vice president of Taxpayers for Common Sense and Joshua Saks is the legislative director of the National Wildlife Federation. Both are members of the SmarterSafer coalition. For more information, visit

Morning Consult