Flood Insurance

Contact: Michael Mittelholzer
AVP, Environmental Policy
(202) 266-8660

Seeking a Lasting Flood Insurance Solution

The National Flood Insurance Program (NFIP) identifies flood-prone areas in the country, makes flood insurance available to property owners in participating communities and encourages efforts to mitigate flood hazards.

Hurricanes Harvey and Irma caused between $150 billion and $200 billion in damage to Texas and Florida in 2017, comparable to the costs from Hurricane Katrina in New Orleans in 2005, according to a preliminary estimate from Moody’s Analytics.

This comes following the devastation brought about by Hurricanes Katrina, Rita and Wilma 15 years ago that severely taxed and threatened the solvency of the NFIP. The claims alone from those natural disasters cost the federal government nearly $15.5 billion. It is still too early to tell the total cost of the claims that will be filed by NFIP insurance holders in the aftermath of Hurricanes Harvey and Irma.

Due to the major flooding events in 2018 and during the last decade, many have raised concerns about continuing to build in the floodplain. However, the properties that are most likely to be damaged or repetitively flooded are older housing stock. New construction is built to more stringent codes and standards and is more resilient than the older housing. Additionally, all new construction is required to pay full-risk unsubsidized rates which helps to support the financial stability of the flood insurance program.

In an effort to reduce taxpayer risk, Congress has discussed increasing access to private flood insurance. The program was initially created because the private market was unable and unwilling to cover flood damage. Now, insurance organizations have shown interest in entering the market as an option in addition to the NFIP. NAHB supports competition in the marketplace, but only if it does not negatively affect the affordability and availability of the NFIP.

Why It Matters

The NFIP has played a critical role in determining the use and development flood-prone areas and managing the risk of flooding for residential properties. A strong NFIP helps ensure that the housing industry can provide safe, decent and affordable housing to consumers under the direction of local jurisdictions. Congress requires all properties within the 100-year floodplain that are purchased with a federally backed mortgage to carry flood insurance,

The NFIP is currently funded through Sept. 30, 2021. Any lapses in the program would have severe effects on the ability to purchase homes or renew insurance for properties in the 100-year floodplain.

After numerous short-term extensions, it is essential that Congress pass a long-term authorization of the NFIP. NAHB has a long history of supporting the NFIP and is committed to ensuring that federally-backed flood insurance remains available, affordable, predictable and financially stable.

See the latest on the NFIP on NAHBNow.

Fact Sheet about Risk Rating 2.0 On April 1, 2021, FEMA outlined the implementation of an initiative to transform the National Flood Insurance Program to better reflect the actual risks properties face.