US senator urges long-term reauthorization of NFIP

US senator urges long-term reauthorization of NFIP | Insurance Business America

US senator urges long-term reauthorization of NFIP

Believing that the federal insurance program’s problems can be fixed if given more time, US senator Pat Toomey (R-PA) is requesting Congress consider long-term reauthorization for the National Flood Insurance Program (NFIP).

Toomey called for long-term reauthorization of the NFIP during a recent Senate Banking Committee hearing, where he also commended the Federal Emergency Management Agency (FEMA) for recognizing that the insurance program needs to be financial stable for it to be sustainable. He also pointed out that such financial stability would not exist if the NFIP would have to constantly seek legislators’ approval.

“Congress has repeatedly reauthorized the program on a short-term basis—21 times to be exact—that’s no way to run a railroad,” the senator said. “So, I’m ready to work with my colleagues on a long-term NFIP reauthorization that reforms this program.”

The senator also explained that a long-term reauthorization should help push NFIP in a positive direction to protect taxpayers.

Financial Regulation News reported that since 2000, the NFIP has borrowed from the federal Treasury for 11 out of 22 years.

“Today, NFIP’s current debt to the Treasury stands at $20.5 billion,” Toomey explained. “The interest payments alone are between $300 million and $400 million a year. And the $20.5 billion in debt excludes the $16 billion that was arbitrarily forgiven in 2017. This broken subsidization program systemically under prices flood insurance. And it is the policies of Congress—not FEMA—that are the root causes of NFIP challenges.”

Toomey also praised FEMA for implementing the new insurance premium calculation approach dubbed “Risk Rating 2.0,” which he says, “better aligns policyholders’ premiums with their actual flood risk.”

Read more: NAMIC calls for reform to National Flood Insurance Program

The senator is not the only one pushing for the NFIP’s long-term reauthorization. In May, the National Association of Mutual Insurance Companies (NAMIC) issued a statement saying that it was in favor of longer terms for the federal flood insurance program, additionally suggesting that there should also be a reduction in subsidies and price coverages based on the actual risk of flooding for a property.