The Federal Emergency Management Agency has decided to take NFIP tweaks into its own hands.
The Federal Emergency Management Agency revealed its intentions to make a number of flood insurance changes. The National Flood Insurance Program (NFIP) is facing massive and rising debt levels. There are many flaws in the program causing it to become unnecessarily expensive.
Therefore, FEMA decided to help make changes to bring significant funding back to NFIP.
The idea behind the latest flood insurance changes is to draw more private funds into the government-led coverage market. FEMA officials expressed their intentions to ease certain regulations applicable to private insurance companies. This would allow them to sell their own flood insurance policies.
Furthermore, FEMA has purchased almost $1.5 billion in reinsurance from among over two dozen reinsurance companies. This added coverage is meant to help offset the cost of potential losses occurring in the future.
These flood insurance changes have bypassed Congress, which has failed to make its own NFIP progress.
FEMA decided to sidestep Congress when choosing the changes it wanted to make to NFIP. It has been waiting on Congressional processes for months. However, lawmakers remain deadlocked throughout all that time regarding the flood insurance program’s overhaul. At the moment, there are tremendous changes that need to be made, but an agreement on which changes and how has yet to be set.
The NFIP changes from FEMA arrive at a time when the program has already accumulated about $30 billion in debt. Moreover, flood insurance policyholders continue to receive their payouts from the many destructive hurricanes last year. Furthermore, FEMA knows that its flood insurance may also face whole new waves of claims as the 2018 hurricane season has yet to begin.
Forecasters are cautioning that 2018 may bring a whole new range of powerful storms. These new flood insurance changes will at least have reinsurance coverage in place. NFIP had already purchased reinsurance coverage in 2017 to pay for expenses exceeding a certain threshold. They covered the costs of about $1 billion claims from Hurricane Harvey, which struck the Houston area last August. This year, the program has even more coverage than it did in 2017.