From: FSC Majority Staff
Additional witnesses may be added.
Prior to 1950, flood insurance was a peril often included in standard homeowners' insurance policies. However, in response to an increasing frequency and severity in flood- related losses in the 1950s, insurance companies began excluding flood insurance coverage and selling it separately. By the 1960s, widespread flooding along the
In direct response to this private market failure, the National Flood Insurance Program (NFIP) was created in 1968 with the passage of the National Flood Insurance Act (NFIA). In doing so,
The last long-term reauthorization of the NFIP occurred when
Several Members of
Overview of the NFIP
The NFIP is administered by the
Today, the NFIP is the principal provider of primary flood insurance in the
The NFIP offers a Standard Flood Insurance Policy (SFIP) for properties in participating communities within a Special
The NFIP also offers coverage for properties that are not within a SFHA, usually as a Preferred Risk Policy (PRP). PRPs include similar coverage but at discounted rates in accordance with their lower risk profile. If a property has a significant loss history, that policyholder may become ineligible for a PRP and would need to purchase a SFIP that is commensurate with the flood risk.
The NFIP's Financial Status
The NFIP is largely self-funded through insurance premiums collected from policy holders. Policyholders are also assessed a number of surcharges and other fees. In FY 2018, policyholders paid
Taxpayers are not on the hook for this debt and receive millions of dollars in interest payments every year (currently approximately
* Waters_009 is a discussion draft that would reauthorize the NFIP through
* Maj_Mitigation is a discussion draft that would make several improvements to floodplain management and mitigation such as: 1) raising the amount of funds available under Increased Cost of Compliance program and expanding the eligible mitigation activities to include the cost of acquisitions, among others; 2) granting the Administrator discretion to consider the extent to which communities are working to remedy problems with repeatedly flooded areas when administering mitigation assistance; 3) granting credits for alternative forms of mitigation, allowing coverage for coops and community-based policies; and 5) authorizing and flood plain management activities.
* Maj_Mapping is a discussion draft that would reauthorize the flood mapping program and provide funding to support flood mapping. It would also make several improvements to the mapping program such as: 1) requiring the most up-to-date technology, and more advanced and granular flood maps; 2) improving the process for policyholders and communities to appeal
* Velazq_035 is a bill that would make numerous improvements to the claims process drawing on the lessons learned from Superstorm Sandy. The bill would ensure that policyholders better understand the terms of their flood insurance policies and improve the appeals and litigation process for consumers
1 See Testimony of
2 See 42 U.S.C. *4001(a).
3 For example, the mandatory purchase requirement only extends to the structure, although policyholders can purchase contents coverage if they choose. The requirement also only reaches those with a federally backed mortgage, so property owners who have paid off their mortgage or who have obtained a mortgage without federal backing are not affected.
4 See 42 U.S.C. *4001 et seq.
6 See Policy Statistics, National Flood Insurance Program, current as of
7 See Facts and Statistics,
8 National Flood Insurance Program Dwelling Form, Standard Flood Insurance Policy,
9 FEMA Insurance Manual, effective
12 Katrina Report Blames Levees,
13Letter from the
14 An Affordability Framework for the National Flood Insurance Program,