The National Flood Insurance Program (NFIP) must be reauthorized and funded before the October 1 start of the new fiscal year (FY).

If Congress does not reauthorize and fund the NFIP by October 1 (whether in a continuing resolution or in a FY 2024 appropriations bill), the agency would not be able to issue new flood insurance policies. Plus, funding would become even more of an issue than it already is. (FEMA, the Federal Emergency Management Agency, is already running low on funds with literally billions in claims from various natural disasters still outstanding.)

The Senate Banking, Housing, and Urban Affairs Committee held a hearing on September 7 to examine the impact of the natural disasters on NFIP and private insurance availability and pricing. Witnesses agreed that reforms are needed to address the three primary causes of insurance unavailability and/or unaffordability. Those three causes, the witnesses and the Senators at the hearing agreed, include the number and scope of natural disasters, state as well as federal regulations that prevent insurers (NFIP and private) from pricing coverage appropriately, and the disproportionate impact of less insurance availability and greater insurance expense on lower-income communities, including communities of color.

Prospects: While it is near certain that reauthorization/funding will be included in whatever year-end funding bill Congress can cobble together, if there is a government shutdown, it would adversely impact the NFIP and the people relying on NFIP for their insurance claims. The timing is bad considering the damage caused by a number of natural disasters—for example, the flooding in Vermont and New York, the wildfires on Maui in Hawaii, and the damage left by Hurricane Idalia in Florida, Georgia, and the Carolinas. However, despite widespread agreement that the NFIP—and the private homeowners/flood/wind damage insurance markets—need reform, it is unlikely that such reforms can be enacted before the start of the new fiscal year.

NAIFA Staff Contact: Michael Hedge – Senior Director – Government Relations, at mhedge@naifa.org.