National Flood Insurance Program Set to Expire—Again

As if Congress does not have enough on its plate, the National Flood Insurance Program is set to expire once again on Sept. 30.

The expiration threat is nothing new for the NFIP. Since the end of FY17, the program has operated under 15 short-term extensions. Continuing Resolutions keeping the government funded often also contain an NFIP extension.

Congress is likely to enact another Continuing Resolution to keep much of the federal government funded past Sept. 30 this year, so that legislation might be a vehicle for yet another NFIP extension.

If the program is allowed to expire, it  will mean that the federal government will not be able to provide new flood insurance contracts, according to the Congressional Research Service. Flood insurance contracts entered into before the expiration would continue until their policy term of one year.

In addition, the authority for the NFIP to borrow funds from the Treasury will be reduced from $30.425 billion to $1 billion.

The Federal Emergency Management Agency would continue to adjust and pay claims as homeowners pay their premiums and money comes into the flood insurance fund. If funds to pay claims were to be depleted, claims would have to wait until sufficient premiums to cover the claims were paid or Congress reauthorized the NFIP, the CRS said.

CRS estimated that during a NFIP lapse in June 2010, more than 1,400 home sale closings were canceled or delayed each day, resulting in more than 40,000 sales a month.

Lawmakers have introduced several bills that would reauthorize the program and make changes they say are needed, but none have been enacted. Often, bickering between the House and Senate has doomed passage of such legislation.

There are arguments about problems with the program. For instance, the Department of Homeland Security’s Inspector General reported this week that the agency is not doing an effective job of dealing with areas that persistently are flooded, known as Severe Repetitive Loss properties.

The last time the program was reauthorized, Congress included provisions that allow homeowners to obtain flood insurance in the private market. However, CRS noted that most flood insurance policies are still issued by the federal government.

Policymakers occasionally have expressed their frustration with colleagues’ inability to enact changes they believe are needed to the program. For instance, Sen. John Kennedy (R-La.) last year implored his colleagues to enact comprehensive reauthorization legislation. “Do something,” he said. “Please, get off your ice cold, lazy butts.”


Congressional Research Service: What Happens If the National Flood Insurance Program (NFIP) Lapses?

Department of Homeland Security’s Inspector General Report: FEMA is Not Effectively Administering a Program to Reduce or Eliminate Damage to Severe Repetitive Loss Properties

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