Severe flooding has placed more focus on the federal flood insurance program
Devastating floods in Missouri and Texas have highlighted, yet again, the problems that exist with the National Flood Insurance Program. In December, floods throughout the Midwest and Southwest caused several millions of dollars in property damage, as well as claiming more than 40 lives. The damage caused by these disasters has added to the financial strain that the National Flood Insurance Program is facing. The federal program is currently $23 billion in debt, with lawmakers failing to resolve the financial issue in the past.
Private sector may need to become more involved in the flood insurance market
Texas Representative Roger Williams suggests that the private sector should become more involved in flood insurance. This may help resolve the issue, but insurers have relatively little incentive to involve themselves in the flood insurance market. In 1968, Congress created the National Flood Insurance Program in order to provide homeowners and businesses with flood protection. The program had functioned relatively well for several years, but 2005’s Hurricane Katrina and 2012’s Hurricane Sandy placed the federal program under crippling financial pressure.
Lawmakers seek to make changes to federal insurance program for the benefit of consumers
Some lawmakers have introduced new legislation to make major changes to the way flood insurance works in the United States. Called the Flood Insurance Market Parity and Modernization Act, the legislation aims to allow more insurers to provide flood protection through the National Flood Insurance Program. This will ensure that the private sector will have a larger role to play in the flood insurance market, mitigating the risks that the federal government faces.
Fixing the National Flood Insurance Program has proven to be a difficult task
In the past, lawmakers had tried to fix the problems of the National Flood Insurance Program, but these efforts were ultimately ineffective. Some changes that federal lawmakers have made lead to higher premiums, which ignited backlash from homeowners. Indeed, resolving the federal program’s financial problems has proven quite difficult, but lawmakers have high hopes that the program can be redeemed in the near future.