National Flood Insurance Program is now $20 billion in debt
The U.S. National Flood Insurance Program is $20 billion in debt and the provisions of a law that would seek to resolve this issue have been delayed for four years due to concerns regarding its financial impact on consumers. While premiums for the flood insurance coverage offered by the program have been increasing, these increases have not been enough to make the program financially stable. Because this represents a serious risk for homeowners, some states are beginning to take matters into their own hands and turn away from the federal program.
New York and New Jersey take steps to acquire high-risk properties
In New York and New Jersey, state officials are working to purchase what they see as “distressed” properties. These properties were either damaged or at high risk of being damaged by Hurricane Sandy. Because the federal flood insurance program has been relatively slow in processing claims associated with the damage caused by natural disasters, some properties are still in a state of disarray. There are also properties that do not have flood protection, which these states are also looking to acquire.
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Massachusetts begins looking for ways to mitigate risks for the federal insurance program
Massachusetts is the latest state to consider acquiring distressed properties. The state notes that purchasing these properties represents a certain financial blow, but officials believe that this initiative will reduce the burden on taxpayers that subsidize the federal flood insurance program. Massachusetts lawmakers are currently discussing the use of state funds to purchase high-risk properties. This money would be used to buy these properties instead of spending money on the federal program, emergency response, and seawall repair.
Powerful storms topple the financial stability of the federal insurance program
The National Flood Insurance Program has been in a state of distress since 2004. During the 2004 hurricane season, the U.S. was struck by powerful storms that caused significant damage to homes in many states. Another disastrous season was seen in 2005. Recent natural disasters have placed the federal program under more pressure, chipping away at its financial resolve.