America’s Broken Disaster Policies Require Urgent Reform

By Bradley Kading and Franklin Nutter

Millions of Americans will be unable to fully collect insurance claims to rebuild and recover following a natural disaster if Congress fails to start reforming the nation’s disaster policies.  While this issue may not be generating front-page headlines today, Congress must address this growing concern now before the next disaster strikes.

This problem has been building for years as severe storms have buried the National Flood Insurance Program (NFIP) in more than $23 billion in debt.  If the NFIP continues down this path, the program will eventually be unable to pay out claims in full to policyholders as the risk of more frequent and catastrophic flooding grows in the future.

It is time for Congress to tackle this problem by updating the NFIP and ensuring its long-term viability.  Without action now, millions of Americans may be unable to rebuild and recover following the next natural disaster.

As the NFIP heads for reauthorization in 2017, there are a number of policy reforms Congress should begin considering this year to shore up the NFIP’s finances and ensure Americans can rely on their flood coverage when they need it the most.

For instance, lawmakers should incentivize more private insurers throughout the country to offer flood insurance, which will give consumers more choices and better rates.  Several states, including Florida, West Virginia and Pennsylvania, have already begun encouraging more private companies to enter the market, resulting in lower rates for some property owners.

Creating a more robust private flood insurance market would also shift the NFIP into a residual program for policies in high-risk areas that the private sector cannot take.  At the same time, the program’s rates should be gradually shifted to accurately reflect risks for policyholders based on up-to-date flood maps.

Disaster policies must also place a greater emphasis on storm preparation rather than storm response, which Congress can encourage by targeting federal subsidies for mitigation efforts to low- and middle-income property owners who need them the most.  By helping Americans in flood-prone areas prepare for storms before they strike, we can better protect lives and property while reducing post-disaster recovery costs.

As the NFIP sinks deeper into debt, it is clear we can no longer rely on outdated policies developed when severe storms struck with less frequency.  Mounting evidence shows severe storms are becoming more prolific, and lawmakers must prioritize reforms that reflect these growing risks and bring these critical policies into the 21st century.

Absent reform, millions of Americans may be unable to fully recover after the next disaster strikes.   Congress must act now to ensure we do not continue toward a future our country cannot afford to become a reality.


Bradley Kading is president and executive director of the Association of Bermuda Insurers and Reinsurers.  Franklin Nutter is the president of the Reinsurance Association of America.