The growing federal focus on climate change and the Democratic takeover of the Senate are building momentum for an overhaul of the federal government’s struggling flood insurance program and an upgrade of the nation’s flood protection, experts say.
With Sen. Sherrod Brown (D-Ohio) leading the Senate committee overseeing flood insurance and President Biden prioritizing climate change, Washington has its best opportunity in years to strengthen the government’s debt-ridden National Flood Insurance Program.
“I am far more hopeful this year, and I do think the conversation around climate is helpful to NFIP legislation,” said Chris Brown, executive director of SmarterSafer, a coalition of environmental, taxpayer and insurance groups that promotes disaster resilience.
“The appetite to consider the climate realities, and the progress that could be made through an NFIP reauthorization bill, are being really seriously contemplated for the first time,” added Brown, who worked on flood insurance legislation as a staffer on the House Financial Services Committee.
NFIP sells most of the nation’s flood insurance and is supposed to be self-sustaining. But it has been forced to borrow tens of billions of dollars from the U.S. Treasury in recent years as climate-intensified flooding has generated unprecedented claims. The insurance program owes federal taxpayers $21 billion.
Meredith Inderfurth, Washington liaison for the Association of State Floodplain Managers, told a conference call Thursday that with Sherrod Brown leading the Senate Banking, Housing and Urban Affairs Committee, “We have a little more hope this time there would be movement on flood insurance reform legislation.”
Brown, a strong climate advocate, has “a lot more interest in flood issues” than Sen. Mike Crapo (R-Idaho), who led the Senate Banking Committee the past four years, Inderfurth said.
In a statement yesterday to E&E News, Brown said that he’ll seek an NFIP reauthorization bill “to help keep people and property out of harm’s way and help them bounce back when disaster does strike.”
“I will also push Congress to make smart investments in infrastructure and mitigation to make our communities more resilient and save taxpayer dollars today and in the future,” Brown added.
Crapo’s office did not reply to an email seeking comment.
Experts say an insurance program overhaul that increases premiums on a large number of policyholders is less likely than incremental legislation that adds incentives for community flood protection and promotes “natural” flood protection such as wetlands.
Some lawmakers have tried for years to raise insurance premiums so that they reflect a property’s current flood risk, discourage people from rebuilding homes that have been flooded repeatedly and make the insurance program financially stable.
But those efforts have been defeated by a bipartisan coalition of lawmakers from states on the Atlantic and Gulf coasts where residents would see steep insurance hikes.
A leading opponent to insurance rate hikes has been Sen. Chuck Schumer (D-N.Y.), who became Senate majority leader when Democrats gained control of the Senate.
“There are certain things that were possible before that are not possible now in the Senate, such as anything around pricing,” said flood insurance expert R.J. Lehmann, a senior fellow at the International Center for Law and Economics.
A reauthorization of NFIP “will probably include a lot more mitigation money,” Lehmann said. “But fixing structural problems — I don’t think there’s very much appetite for that.”
Natural Resources Defense Council climate attorney Joel Scata said the NFIP’s structural weakness “must be addressed. The problem is not going away. It’s only getting worse as the climate changes.”
Scata added that there “needs to be greater emphasis on mitigation” of flood damage and that the Democratic-led Congress “could use the NFIP to get at the problem of increased flooding from climate change.”
Chris Brown of the SmarterSafer coalition said Congress could require the 22,000 localities that participate in the flood insurance program to improve their assessments of local flood risk “so that communities and property owners have a better sense of the risks that are posed to them. I think there’s broad appetite for that.”
The flood insurance program has been one of the most difficult climate-related topics for Congress.
Lawmakers have been forced to enact 16 short-term renewals of the program since September 2017 because they were unable to agree on a long-term overhaul that would remove subsidies and discounts for premiums without making policies unaffordable to hundreds of thousands of people.
The program, run by the Federal Emergency Management Agency, insures 5 million homes and commercial properties.
The House Financial Services Committee approved a sweeping flood insurance overhaul in May 2019 on a 50-0 vote. But the bill never went to the floor for a vote.
In the Senate, a group of six Democrats and four Republicans introduced a broad insurance bill in July 2019, but that measure never received a hearing in the Senate Banking Committee. The House and Senate bills had substantial differences.
Inderfurth of the floodplain managers’ association said in a recent conference call that House Financial Services Chairwoman Maxine Waters (D-Calif.) intends to use the bill that passed her committee “as a starting point” for legislation this year.
But such a measure could run into opposition again from lawmakers from the Atlantic and Gulf coasts, who opposed its premium increases.
One question for Congress is whether it will forgive the flood insurance program’s $21 billion debt to federal taxpayers, which it accumulated largely after the major floods of 2017 led to an unprecedented number of insurance claims.
Waters’ original flood insurance bill in 2019 erased the debt, but that provision was removed from the legislation that passed her committee.
“I would expect they’re going to try to zero out the debt again,” said Lehmann, the insurance expert. “That might be able to pass in a Democratic-controlled Congress.”