National Flood Insurance Program could be in bad position to deal with Hurricane Sandy
The National Flood Insurance Program is being put to the test in the wake of Hurricane Sandy. The federal program is responsible for the majority of flood insurance policies in the U.S., but has been facing extreme financial problems that could threaten its ability to pay claims. The program is currently crippled by massive debt and federal lawmakers have been unable to solve the problems facing the program. 
Now, the impact of Hurricane Sandy is finally drawing attention to the program that has been sorely needed for years.
Major debt could derail claims
Massive debt cripples the National Flood Insurance Program , a fact that has caused concern amongst lawmakers for some time. The program is the largest provider of flood insurance in the U.S. and is often the only place homeowners can find the flood insurance they need for their properties. The program offers policies that are typically much more affordable than those offered by private companies. Lower premiums also means lower revenues. Since Hurricane Katrina struck in 2005, The National Flood Insurance Program has struggled to recover backed by the low premiums associated with its policies.
Program has $3.7 billion claims ceiling
Currently, the National Flood Insurance Program has a benefits ceiling of $3.7 billion. Insurers are suggesting that Hurricane Sandy will be the second worst flood disaster the country has ever seen, only slightly behind the impact of Katrina. Katrina brought in $17 billion in claims, a bill that officials with the flood program claim will never be repaid through premiums alone. If Hurricane Sandy can pass the $3.7 billion claims mark, the program will require additional funding from Congress.
Reform plan now put to the test
Earlier this year, Congress approved of a new five-year plan for the National Flood Insurance Program. This plan ensures that the program will be operational for another five years, but a powerful natural disaster like Hurricane Sandy can derail that scheme easily. The plan passed by Congress was meant to address many of the issues that are crippling the federal program. Now, the plan will be put to the test.
