With the Dec. 8 deadline approaching for Congress to reauthorize the National Flood Insurance Program (NFIP), the smart money says that at the least there will be a short-term extension deal done, but the hope is that Congress can reform and modernize the program to include more mitigation activities and create a better solution for repeatedly flooded properties.
Since the NFIP was created in 1968, the policies have become outdated and the costly floods of the last decade or so have led the federal government to pay more in recovery costs than it takes in for insurance. Much of that is for repeat offenders, properties that continue to flood at the expense of the program.
The House recently passed a bill that addresses the repeatedly flooded properties and seeks to limit government spending on those properties, but falls short in terms of providing for and encouraging mitigation, sources say.
The Senate Banking Committee introduced a draft bill over the summer but indicated recently that the process probably wouldn’t be finished by the deadline.
“I think at a minimum what we’ll get is a short-term extension,” said Caitlin Berni, vice president of policy and communications for Greater New Orleans. She said, however, that she was still hopeful that the Senate would get a longer-term reauthorization done with the reforms that “everyone agrees on regarding mitigation and mapping and some incremental reforms.”
The House bill includes language for FEMA to use more accurate science, such as lidar, and data when producing the flood maps. There is an increased authorization in the House bill for mapping for next year.
Berni said that dealing with the repetitive-loss properties is critical, but that overall, getting more people to buy into the program is the goal along with finding a better way of expanding properties covered with an opt-out program where everyone is automatically enrolled until they actively decline and opt out. At that point, should a flood damage that property, those that opted out would not be eligible for recovery program funding later.
She said most agree that there needs to be an increase in the Increased Cost of Compliance Coverage, which covers up to $30,000 of costs to elevate, flood proof, relocate or demolish flood-damaged properties. The House bill doubles that to $60,000 and Berni said it should be $100,000 or more.
There is discussion of the private sector moving into this space and that is a concern for some. Laura Lightbody, Pew NFIP project director, said, “We all know that insurers will likely take on the lowest-risk properties. That’s why we’re really focused on the issue of repetitive and repeatedly flooded properties, knowing that those are a lot of the highest risk, vulnerable properties and represent the largest financial drain on the program.”
Lightbody said Pew is supportive of some of the House language that would make communities accountable for those properties by doing some flood diagnosis and understanding what their risks are and putting mitigation strategies in place. That includes a provision for FEMA to deny coverage to owners of “extreme loss properties” who refuse mitigation offers.
“That’s another way of getting at trying to reduce the growth of these repeat loss properties,” she said. “We’d like to see more mitigation dollars available for acquisition because that’s one of the best ways to mitigate these properties, but there just aren’t enough dollars and we can’t buy out every single property that wants to be bought out.”
She said back in the '60s it was thought that those properties would just go away and people wouldn’t rebuild multiple times. “It’s a very sensitive issue, but it has to be addressed or it’s going to continue.”
There’s also a proposal in the Senate draft that would establish a state revolving loan fund for flood mitigation activities. The federal government would seed the fund and provide low-interest loans. The interest on the loans is paid back into the fund and it continues to grow and be available for future mitigation activities.