A council appointed by President Donald Trump approved a report outlining changes to FEMA that would shift more disaster preparedness, response and recovery responsibility to states, tribes and territories, with notable implications for the US flood insurance market.
The recommendations stop short of dismantling FEMA but could narrow the scope of disasters eligible for federal support and reduce aid disbursed. The proposals will be sent to Trump, though many require congressional action.
The council proposed replacing the per-capita cost formula with pre-defined metrics to determine when a disaster qualifies for federal assistance, and recommended direct payments to states within 30 days, replacing the existing reimbursement model.
Survivor aid would also be restructured. Housing assistance would be limited to households whose homes are uninhabitable, and survivors would receive a single payment rather than separate streams for rental, repair and replacement.
"These recommendations are all about accelerating federal dollars, streamlining the process, making it less bureaucratic so that Americans can get the help they need on the worst day of their lives," former Virginia Gov. Glenn Youngkin (pictured above), a council member, said during a public meeting attended by close to 6,000 virtual participants.
Homeland Security Secretary Markwayne Mullin, who co-chairs the 12-member panel with Defense Secretary Pete Hegseth, said the report gave him "a clear direction and an oversight of an agency that is in need of reform, but is still mission capable."
A previous draft floated a 50% workforce reduction, which did not appear in the final version.
The council also recommended moving most flood insurance policies out of the National Flood Insurance Program (NFIP) and into the private market, while aligning premiums with risk.
Figures from the Congressional Research Service put NFIP debt at US$22.525 billion across more than 4.7 million policies, with the program kept alive through 33 short-term extensions since its last long-term reauthorization in 2012.
A 2023 GAO assessment previously concluded full repayment is unlikely under the program's current structure, with the bulk of the debt tracing to Hurricanes Katrina, Sandy and Harvey.
Some specialists raised concerns that state and local governments may struggle to absorb the responsibilities. Noah Patton of the National Low-Income Housing Coalition said tightening eligibility for survivor aid could worsen displacement for lower-income households, adding that the proposals are "suggestions — they aren't set in stone."
Neptune Insurance said it supports a larger private-sector role in the national flood framework. The company estimates more than 15 million flood-exposed US properties remain uninsured.
Chairman and CEO Trevor Burgess called the expansion of private flood capacity "a critical step toward a more sustainable national flood insurance system," noting that the NFIP would continue serving properties not yet insurable privately.
Neptune said roughly half of current NFIP policyholders would pay less by switching to private coverage, and nearly two-thirds of new buyers would secure lower premiums privately.
The insurer serves over 300,000 policyholders through its Triton platform, with capacity from 42 global insurers and reinsurers and more than 45,000 participating agents.
