Congress extends flood insurance program for 14th time since 2017

Congress granted another short-term extension of the National Flood Insurance Program (NFIP) on Thursday, marking the 14th temporary renewal since September 2017.

The NFIP, which provides flood insurance to more than 5 million households, was extended through Dec. 20 as part of a continuing resolution passed by the Senate.

The extension gives lawmakers more time to decide which of the multiple bills in Congress they want to reform NFIP and reauthorize the federal program through September 2024.

Measures under consideration include S. 2187 sponsored by Sen. Bob Menendez (D-N.J.), and its companion measure, H.R. 3872, sponsored by Rep. Frank Pallone Jr. (D-N.J.), the chairman of the Energy and Commerce Committee. The legislation would authorize a long-term extension of the NFIP, lower premium rates for policyholders, tackle insurance fraud and implement other reforms such as modernize flood maps and develop strategies to target severe loss properties.  

Rep. Maxine Waters (D-Calif.), head of the Financial Services Committee, has sponsored a similar bill, H.R. 3167, that would fund grants for flood mitigation strategies, improve flood maps and adjust premiums or change the number of policies purchased.

Some lawmakers have raised concerns about Waters’s bill, saying premiums could rise too quickly.

Rep. Debbie Mucarsel-Powell (D-Fla.) said that with more than 30,000 NFIP policies in her district that cover “around $7.5 billion in property values,” and because of the “threat” of climate change, Waters’s bill could hurt constituents who may not be able to pay higher premiums on their flood insurance.

“I think that the way the bill currently stands causes a lot of problems for Floridians that are living here in my district are responsible homeowners that have been paying into the system,” Mucarsel-Powell said. “If they won’t be able to afford an insurance program because the caps are raised up to 18 percent then people are going to start leaving their homes, and that is the last thing we want. So, I do think that we need to put policyholders and homeowners first.” 

Waters’s office did not respond to a request for comment.

The Menendez and Pallone measures would cap NFIP’s premiums at 9 percent. Premiums currently can be increased by as much as 25 percent annually.

Increasing the premiums has been one response to NFIP’s struggle to pay billions of dollars in claims following Hurricanes Katrina, Harvey, Irma, Maria and Sandy. The NFIP is allowed to borrow $30 billion from the U.S. Treasury. As of October, the NFIP had borrowed $20 billion to pay claims to its policyholders, according to the most recent report filed by the Congressional Research Service.

More than 60 Democratic lawmakers have asked House leadership to consider long-term reauthorization until 2024.

Republicans, however, are pushing for the private market to play a bigger role in flood insurance.

A spokesperson for Sen. Rick Scott (R-Fla.) said the senator “continues to work with his colleagues on a permanent fix to the NFIP that will keep rates stable and remove the unfair burden on Floridians, as well as reforms to the private market that would strengthen the overall flood insurance market and give consumers more choice.”

The office of Rep. Matt Gaetz said the Florida Republican “supports NFIP’s reauthorization, though he hopes that we will eventually be able to end the government monopoly on flood insurance and allow private-sector competition.”

“This crucial development will drive down prices and increase the quality of coverage for Americans in flood-prone areas,” his office added.

Menendez’s office said the senator “supports private sector involvement in flood insurance but only if it’s on a level playing field and guardrails are put in place to prevent cherry-picking and ensure proper consumer protections.”

Private insurers do not cover any NFIP-subsidized policies, Menendez’s office said, citing the Congressional Budget Office, adding that insurers would likely “cherry-pick heavily.”

Updated on Dec. 2 at 9:58 p.m.