Industry Pushes Back On Effort to Kill NFIP

While the National Flood Insurance Program has never enjoyed an abundance of popularity on Capitol Hill, it has rarely faced unmitigated hostility.

That is changing light of an amendment offered to H.R. 1309, the Flood Insurance Reform Act of 2011. Filed by Rep. Candice Miller, (R-Mich.), the amendment calls for the program to be shut down as of January 2012 and would instead allow states to form regional insurance compacts to spread risk.

In floor statements introducing the amendment last week, Miller indicated that her opposition to NFIP was largely ideological.  “Mr. Speaker, I rise to support this rule, but I am strongly, strongly opposed to the underlining bill – the National Flood Insurance Program,” Miller said. “And I would start with this basic premise – Why in the world is the federal government even involved in the flood insurance business?” 

Miller also took aim at the program’s blood-red balance sheet. “This program is currently over $19 billion in debt, and we now need to raise the debt ceiling on this program to about $25 billion,” she said. “And recently the Federal Emergency Management Agency Administrator testified to Congress that the flood insurance program, no great surprise, is likely to stay in debt, massive debt, forever. And it is easy to understand why because this program is not actuarially sound.”

In response to Miller’s amendment, Jimi Grande, SVP of federal and political affairs for the National Association of Mutual Insurance Companies, noted that the underlying reform bill already contained measures that would improve the program’s finances by modernizing flood maps and charging rates that were more actuarially sound.  “HR 1309 would enact exactly the sort of reform the NFIP needs to better serve the American people, which is why it passed out of committee unopposed,” Grande said. “Rep. Miller’s amendment, if adopted, would be a disaster for all involved.”

Grande noted that the NFIP was started in 1969 because the unique nature of flood risk makes it difficult for private insurers to offer a viable and affordable insurance product in flood prone areas. “The NFIP, while not without its flaws, is the only mechanism we have to ensure that those facing a flood risk are helping to cover the costs of flooding,” he said. “If you take that away, you’re putting more of the expense of any major flood on the shoulders of the taxpayers. Eliminating the National Flood Insurance Program is the worst policy option out there.”