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Group calls for U.S. flood insurance revamp as program deadline nears

Flood waters filled the streets in St. Marks, Fla. on Sept. 2 after hurricane Hermine passed through. Joe Rondone/Tallahassee Democrat via USA TODAY NETWORK

A U.S. flood insurance program that is drowning in billions of dollars in debt can be modernized to bolster its finances while curbing the public's exposure to flood risks, a national coalition said in a reform proposal unveiled on Wednesday, Feb. 1.

The plan by Washington-based SmarterSafer.org calls for the National Flood Insurance Program, to use cutting-edge technology that would more precisely determine flood-prone areas, and to price flood insurance premiums in accordance with those specific risks.

Other measures would include greater involvement by private insurers in the flood insurance market and offering incentives for communities to enhance and restore natural buffers against floods, such as wetlands and forests.

The proposal is among the first in a year that could usher in sweeping changes to the flood insurance program, whose authorization is set to expire in September. The program, operated by the Federal Emergency Management Agency (FEMA), is $24.6 billion in debt to the U.S. Treasury Department, a FEMA spokeswoman said. Most of the debt covered claims from Hurricane Katrina in 2005 and Superstorm Sandy in 2012.

It is unclear which lawmakers may take up the issue as Washington adjusts to a new presidential administration, or how much of the SmarterSafer.org plan would be adopted. However, there is bipartisan support to modernize the insurance program and U.S. Senate and House lawmakers held several hearings last year about possible ways to do it.

The flood insurance program has been a political football in Washington for years, mainly because of the debt, which the government has said is impossible for the program to repay.

The program was temporarily extended 17 times between 2008 and 2012 and lapsed four times during the same period, a pattern that can create uncertainty in real estate markets, some U.S. lawmakers have said.

Federal law requires that homes in flood-risk areas have flood insurance before a mortgage can be completed. The federal program remains the only flood insurance available to the vast majority of Americans, although a small market for private flood insurance is now sprouting in some flood-prone states, such as Florida.

A 2012 law ultimately extended the program to September.

Another law in 2014 allowed FEMA to buy private reinsurance to cover the program if claims surge, among other measures. Last September, FEMA obtained more than $1 billion in reinsurance for 2017 from 25 reinsurers.

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