The National Flood Insurance Program (NFIP) has had a troubled history. The program is meant to provide affordable home insurance coverage to those that live in areas prone to flooding either from hurricanes or other storms.
Thousands take advantage of the program, but it has suffered shortfalls in funding, putting NFIP $18 billion in debt. Congress has been debating solutions to this problem. Legislators have until September 30th to figure it out or the program will be abolished. FEMA administrator Craig Fugate may have a plan that could offset NFIP’s debt problems.
Fugate spoke before Senators on Thursday and warned that the federal government would not be able to reduce the $18 billion debt alone. Citing risk that natural catastrophes, particularly those predicted in this year’s hurricane season, could weigh heavily on the government. Fugate believes that the solution lies in involving the private sector.
The FEMA administrator proposed a plan that would invite private insurance companies to take part in the program by purchasing policies from the government. This would help lower the administrative costs handled by the government and prevent another program lapse while lawmakers figure out additional solutions.
Fugate’s proposal has already garnered support from several legislators, including Senator Roger Wicker of Mississippi. Wicker is well versed on the subject of flood risk, especially after the disastrous overflow of the Mississippi River last month. Wicker is urging his colleagues to consider opening the program to participation from private insurance companies.