What’s Going On With National Flood Insurance?

The United States is home to a wide variety of natural disasters including earthquakes, tornadoes and even volcanoes. Many of these threats occur only in certain regional areas, but flooding, the most common and most destructive type of natural disaster, can affect any area of the country. Ninety percent of all natural disaster events involve flooding, and all 50 states have experienced floods or flash floods in just the past five years. Because flood damage is so common, it’s not automatically covered by any standard home or commercial insurance policy.

In response to a lack of availability of private insurance and continued increases in federal disaster assistance due to flooding, the National Flood Insurance Act of 1968 was passed and the National Flood Insurance Program (NFIP) was created. At the time, flood damage was viewed as an uninsurable risk and coverage was virtually unavailable from private insurance markets. Over the years, additional legislation has been passed in an attempt to strengthen the NFIP, and legislators have also made attempts to strengthen the private flood insurance market to take some of the burden off of the federal program.

The NFIP is managed by the Federal Emergency Management Administration (FEMA), and has three components: to provide accessible flood insurance, to improve floodplain management and to develop maps of flood hazard zones. It was designed to be funded through taxpayer money as well as through collected premiums. As the cost of flood damage has continued to increase over the years, the NFIP is no longer as self serving as it used to be. In other words, the premiums from the 5.1 million NFIP policies that are currently in effect nationwide are not generating enough money to allow the NFIP to properly serve its intended purposes.

While the NFIP itself doesn’t have an expiration date, multiple different legal provisions within the program are tied to the expiration of key components of the program. As such, lawmakers have been trying to find a long-term reauthorization solution for the program in order to avoid program lapses that could create uncertainty in both the insurance and housing markets. On May 30th, Congress extended the National Flood Insurance Program through June 14, only adding two more weeks to the program while lawmakers continued to argue over long-term solutions. Then, on June 3rd, the House approved H.R. 2157, which provides for aid to address the consequences of various natural disasters and also includes an extension of the NFIP until September 30, 2019.

As the Atlantic hurricane season is just getting started, homeowners, business owners and renters may be concerned that their NFIP coverage could potentially expire with two months still left in the season. This uncertainty might lead them to look for a more reliable flood insurance policy to help them better protect their financial livelihood. Insurance agents should make their clients and potential clients aware of some of the benefits of private flood insurance in order to ease their concerns.

About AmSuisse

Formed in 2013, AmSuisse, Inc. has quickly distinguished itself as a wholesale operation that specializes in working very closely with our agents and broker partners to develop responsive, individualized service for each client. Our unparalleled writing support, industry-specific expertise, marketing support, responsive proposals and quotes, strong customer service, and strong relationships with our carrier partners have all helped us to provide the best possible coverage for our clients. To learn more about our available coverage, contact us today at (800) 485-0229 to speak with one of our representatives.