Congress Let NFIP Off Hook for $16B Debt, Despite Less Than $10B in Claims


The Nationwide Flood Insurance coverage Program has paid about $eight.6 billion in claims from Hurricane Harvey and initiatives all claims from the three 2017 hurricanes to whole about $9.7 billion, in accordance with a brand new report compiled by the Congressional Analysis Service. That whole is almost 40 p.c lower than the estimate offered final fall that spurred Congress to erase $16 billion of this system’s debt to taxpayers.

The CRS authors attributed the present claims estimates to e mail correspondence with congressional affairs employees of the Federal Emergency Administration Company, which oversees the flood program. The officers famous that the $9.7 billion whole doesn’t embrace loss adjustment bills, which might add one other 5.three p.c, nor does it embrace supplemental claims funds or expenditures for elevated value of compliance.

An April replace from CRS famous that FEMA now initiatives the NFIP will see between $eight.7 and $eight.84 billion of whole claims from Hurricane Harvey and between $1.003 and $1.04 billion of claims from Hurricane Irma. Hurricane Maria is barely projected to supply between $25 and $34 million in claims, because of extraordinarily low flood-insurance penetration in Puerto Rico. Thus, even on the excessive finish of the estimates, the 2017 storms would produce simply $10.22 billion of NFIP claims, or 36 p.c lower than the debt Congress voted to forgive.

And it’s now clear that Congress’ debt forgiveness plan was completely for naught. The proposal to forgive the $16 billion, primarily based on FEMA’s then-current projections of whole 2017 hurricane claims, got here in October from White Home Price range Director Mick Mulvaney. In a letter to Vice President Mike Pence, Mulvaney proposed paring that forgiveness with a sequence of reforms that largely mirrored, and in some circumstances went past, these included in H.R. 2874, the 21st Century Flood Reform Act, which handed the U.S. Home in November by a 237-189 vote.

However whereas Congress moved inside weeks to forgive the debt, the reforms by no means got here. Although the NFIP’s statutory authority was scheduled to run out Sept. 30, 2017, the Senate Banking Committee has but to take any motion in any respect on flood insurance coverage this session. As an alternative, this system has been continued via a sequence of six short-term reauthorizations, with the present one set to run out July 31.

One other six-month extension of this system was included within the Senate model of the farm invoice, handed June 28, though it’s not sure whether or not it should stay within the bicameral model that emerges from convention committee. A stand-alone six-month reauthorization additionally has been launched by Sen. John Kennedy, R-La., as S. 3128. Whichever path it takes, a six-month extension would push long-term reauthorization, and any hope for basic reform, into the 116th Congress, whose partisan management stays very a lot unsure.

As we transfer into the center of the 2018 Atlantic Hurricane Season, with Beryl having just lately been named the season’s first hurricane, FEMA experiences the NFIP has about $15.7 billion of claims-paying capability, together with $9.9 billion of borrowing authority from the U.S. Treasury.

This system had beforehand capped out its borrowing authority of $30.425 billion in September 2017, borrowing the remaining $5.825 billion on Sept. 22. Congress voted to cancel the $16 billion of debt in late October, however the NFIP subsequently borrowed a further $6.1 billion in November 2017. As the next graph illustrates, this system stays about $20.5 billion in debt to taxpayers.


All advised, since 2004, when this system’s debt was $zero, the NFIP has borrowed $39.four billion from taxpayers. It has repaid simply $2.82 billion of that precept. In a report final September, the Congressional Price range Workplace projected that, as at present structured, this system needs to be anticipated to lose $1.four billion on an annual foundation.

With crimson ink so far as the attention can see, the time for reform is now, not in six months. This could is simply too costly to kick any additional down the street.


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