WASHINGTON D.C. – SmarterSafer.org – a coalition of taxpayer watchdogs, environmental groups, insurers, and housing organizations – today urged FEMA Administrator Craig Fugate to keep pushing measures to preserve the National Flood Insurance Program’s solvency as he goes before a Senate hearing on flood insurance Wednesday.
In a letter, SmarterSafer.org said, “The National Flood Insurance Program’s already perilous fiscal state was made worse earlier this year when some of the Biggert-Waters flood insurance reforms were rolled back. As a result, the program remains in the danger zone, withering under a $24 billion debt. Fortunately, there are a number of ways to set the program on a more solvent path while keeping rates affordable for those who otherwise cannot afford risk-based rates.”
In their letter, the coalition recommended a number of measures that strike a balance between keeping NFIP afloat and keeping it affordable for the most vulnerable. The group recommended Congress redouble efforts to create a national mitigation strategy and embrace the role of the private sector in the provision of flood insurance, as states like Florida and West Virginia have done.
“By pushing for more mitigation and supporting private sector involvement, as well as putting NFIP on the path to risk-based rates,” the group said, “we can balance the needs of homeowners who depend on the National Flood Insurance Program, the environment that protects from storms, and taxpayers.”
SmarterSafer.org has long promoted measures that would make the National Flood Insurance Program more fiscally and environmentally sustainable. For more information on the coalition’s recommendations, please go to SmarterSafer.org.
The full letter is below.
Dear Administrator Fugate:
As you prepare for Wednesday’s hearing on the flood insurance claims process by the Senate Banking Subcommittee on Housing, Transportation, and Community Development, we urge you to continue to support putting the National Flood Insurance Program (NFIP) on sounder financial footing. As you well understand, there is a need to maintain a balance between keeping the program affordable and moving it to risk-based rates to ensure the program is sustainable and can continue to provide needed insurance coverage.
We are sensitive to the concerns that have been raised about increasing premiums to reflect real risk. However, equal attention needs to be paid to providing real protection to those in harm’s way, protecting taxpayers, and protecting the environment. The National Flood Insurance Program’s already perilous fiscal state was made worse earlier this year when some of the Biggert-Waters flood insurance reforms were rolled back.
As a result, the program remains in the danger zone, withering under a $24 billion debt. Fortunately, there are a number of ways to set the program on a more solvent path while keeping rates affordable for those who otherwise cannot afford risk-based rates. As we have recommended in the past, SmarterSafer urges Congress to remove subsidies from the flood insurance program so that rates reflect real risk. This will provide people an understanding of the real risks of where they live, as well as the proper incentives to people and their communities to undertake mitigation and resiliency to reduce risk. To address concerns with affordability, Congress could provide targeted, means-tested assistance for those who truly cannot afford their risk-based flood insurance rates. However, Congress must do more.
First, Congress must create a national mitigation strategy by making homes and businesses more resilient. The White House recently announced new measures to fortify infrastructure and improve the coordination of planning between cities and states. Members of Congress have also proposed measures to incentivize individual mitigation measures and improve building codes. Better resiliency will help protect people in harm’s way while lowering insurance rates.
The country must also embrace the role of the private sector in flood insurance to alleviate the burden on taxpayers. Giving private companies the chance to step in makes good financial sense. In some instances, These companies flexibility to adjust their rates to changing conditions, as well as the capability to reflect local community standards and can better underwrite to manage rapidly growing risks. In some cases, their policies can be cheaper than those offered by the federal government. It is why flood-prone states from Florida to West Virginia have begun giving them a greater role in the market, and why legislators at the national level have begun calling for a relaxation in the rules governing their provision.
By pushing for more mitigation and supporting private sector involvement, as well as putting NFIP on the path to risk-based rates, we can balance the needs of homeowners who depend on the National Flood Insurance Program, the environment that protects from storms, and taxpayers. In your testimony Wednesday, we hope you will encourage Congress to embrace a strategy that can meet all of these important needs.