NFIP is now fifty years old but the program has not undergone a healthy aging process.
The subsidized federal flood insurance program is half a century old and is in dire need of fixes – or potentially a complete overhaul – that will, unfortunately, be unavoidably expensive.
The National Flood Insurance Program (NFIP) has become increasingly costly and unsustainable.
Federal flood insurance faced its second highest ever claim year in 2017. Hurricanes Florence, Harvey ad Michael placed the spotlight back onto the NFIP’s fundamental flaws.
Insurance industry models show a shift in flood zones and predict an increased frequency and severity of severe storms. Combined with rising sea levels, massive areas in the United States risk flooding – and the damage and expense associated with flooding – beyond what has been seen in the past.
The NFIP has already racked up a reported $20.525 billion in debt to the U.S. Treasury for the flood program’s costs up to 2017. Its borrowing authority has fallen by $9.9 billion. Moreover, that does not yet include the expenses and additional debt accumulated in 2018.
The federal flood insurance program has borrowed $39.4 billion from the federal government since 2004.
Recent predictions suggest that the National Flood Insurance Program’s debt will only continue increasing by an average of $1.4 billion every year.
The reason the NFIP was created in 1968 was to form a viable flood insurance market supported by the premiums policyholders were paying. Private insurance companies weren’t very interested in the market at the time, so the subsidies were meant to make the market more appealing. The program’s goals continue to be to improve floodplain management, to provide affordable coverage to shrink the financial impact of flooding, and to create and maintain flood zone maps to identify at risk areas, explained a recent South Florida Sun-Sentinel report.
That said, despite efforts to use complex flood event modeling, many covered properties remain in locations that make coverage through the federal flood insurance program very expensive to provide. Properties find themselves making multiple costly claims as they are regularly affected by severe storms. As a result, the rates paid into the 
program by policyholders is not enough to pay for the losses they generate. Moreover, only 28 percent of high risk area property holders purchase NFIP coverage.
