Congresswoman Maxine Waters (D-Calif.), ranking member of the committee on financial services, just introduced bill H.R. 5953 that would forgive $23 billion in debt for the National Flood Insurance Program.
The bill would place the NFIP program on a path toward solvency and affordability ahead of its reauthorization in fiscal 2017, according to Waters.
The NFIP provides flood insurance to over 5 million households and businesses in the U.S. It provides over $1 trillion in coverage. The program works to protect Americans from flood risks by maintaining flood maps, overseeing mitigation programs and supporting preventive measures.
“The devastating flooding in Baton Rouge last month underscores the urgent need to help protect homeowners and businesses from flood damages, and it is critical that the National Flood Insurance Program remains solvent in order to do so,” Waters said.
“The current level of debt is wholly unsustainable,” she said. “Not only is the NFIP spending billions of dollars just to pay off this debt, but it is increasing fees on policyholders that are already struggling with rising premiums.”
“Congress must forgive this debt so that we can begin to approach broader reauthorization efforts with a clean slate and provide residents in flood-prone areas with a stable, affordable program in the wake of unexpected disasters,” Waters concluded.
Waters claims that the NFIP’s debt is the result of Congressional design. It is typically funded by insurance premiums and fees paid by policyholders, however in catastrophic events the NFIP draws funds from the Treasury.
The NFIP built up debt from hurricanes Katrina, Rita, and Wilma in 2005 and Superstorm Sandy in 2012. The NFIP incurred substantial debt to help affected homeowners who maintained flood insurance coverage.
Because of these natural disasters, the NFIP is now $23 billion in debt, for which the Federal Emergency Management Agency already spent $2.9 billion in just interest payments.
As a result of these losses, the NFIP increased fees for homeowners in order to recoup.