The National Flood Insurance Program has been renewed for another five years, after a vote from the House on Tuesday. The program has been struggling financially for several years, unable to withstand the burden of past disasters and new clients. It has long been the last place people could find affordable flood insurance, especially after Hurricane Katrina drove many insurers away from coastal states. The program’s fate now lies in the hands of Congress, who must determine the final course of action before September 30th, when the program will expire outright.
Supporters of the program say that it will help reinvigorate the housing market by placating some of the misgivings people may have over purchasing new homes without access to flood protection. While flood insurance is required by most mortgage agreements for properties in areas prone to flooding, the options available to consumers are relatively slim. In the absence of a robust, private insurance market, the National Flood Insurance Program has been offering coverage to property owners at rates well below the market average, a practice that has driven the program into crippling debt.
Lawmakers are seeking to restructure the program in its entirety. Part of the restructuring effort comes in the form of higher rates on coverage. Current proposals in this regard suggest that rates should be raised by an average of 20%. Legislators also want to encourage more private insurers to return to the coastal market and may seek to privatize the program.
The issue now lies with Congress, which has a little over two months to find a solution.