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Good morning Chairman Brown, Ranking Member Toomey, and Members of the Committee. My name is
The NFIP is administered by
NFIP Milestones and Challenges
The NFIP is a voluntary program that enables property owners in participating communities to purchase insurance protection against losses resulting from physical damage to or loss of building property and personal property from flooding. To participate in the NFIP, a community must adopt and enforce sound land use ordinances in the floodplain that meet or exceed minimum NFIP floodplain management standards.
The NFIP holds an impressive 52-year history that includes servicing more than 5 million policyholders currently and
Furthermore, the Flood Mitigation Assistance, Repetitive Flood Claims, and Severe Repetitive Loss grant programs have distributed nearly
The nation's flood loss experience over the past 17 years, however, highlights the failures of our current flood policy. As a nation we need to break the cycle of limited investment in resilience, "unprecedented" flooding, and repeated disaster suffering by the same impacted communities and populations. Inaction will result in continued risky development in floodplains, low take-up of flood insurance coverage, mounting NFIP debt to the
The frequency and impact of disasters is rising nation-wide and disaster suffering continues. Flooding and coastal storms account for roughly 70 percent of all Presidential Disaster Declarations over the past decade./1
In 2020, the nation saw 47 major disaster declarations across all natural hazards and 22 separate weather and disaster events with losses that exceeded
Hurricane Laura became one of 10 hurricanes on record to make landfall in the
The NFIP needs to transform to adapt to the changing climate and to meaningfully increase flood mitigation investment.
Disasters have a disparate impact on socially vulnerable or marginalized communities - making their road to recovery longer and more difficult, exacerbating existing issues, exposing resource constraints, and revealing inequities in land use and development patterns.
Recent NFIP Improvements
Over the past few years,
Risk Rating 2.0
Risk Rating 2.0 builds on years of investment in flood hazard information by incorporating private sector data sets, catastrophe models, and evolving actuarial science.
magnitudes. The improved rating methodology incorporates existing
By incorporating technological and mapping advances, we can identify individual policyholder risk. We now know that within current rating classes, policyholders with lower-value homes are paying more than they should based on their actual risk profile, and policyholders with higher-value homes are paying less than they should. Risk Rating 2.0 will address this inequity. Under the new methodology, rate increases will not continue indefinitely as it does now. Once a policy reaches its full-risk rate, the increases stop.
Risk Rating 2.0 will change the landscape of flood insurance, enhance risk communication, and enable better floodplain management - ultimately resulting in greater resilience. Risk Rating 2.0 will help put the NFIP on a financially sound path; and will help disaster survivors recover more quickly after floods.
* In recent years,
* The NFIP developed and provided guidance to stakeholders on the use of services provided by subject-matter experts, to ensure transparent and consistent claims handling for all policyholders.
* In 2018,
* Starting in the COVID-19 pandemic, the NFIP encouraged adjusters to remotely adjust claims for the first time in program history, adapting to the environment and giving customers the option to have their claim adjusted without coming into contact with adjusters.
NFIP Forms Redesign
The NFIP must provide a range of insurance products that customers value and agents can easily sell. To comply with the National Flood Insurance Act of 1968,
Financial and Individual Resilience
In 2017, for the first time,
The National Flood Mapping Program is modernizing flood hazard identification from one focused on probabilistic floods - like the 1-percent-annual-chance-event - to a conversation about structure-specific risk based on a more comprehensive risk profile and that accounts for other types of flood hazards.
Additional FEMA Improvements Impacting Flooding
* The National Mitigation Investment Strategy provides a single strategy for the nation to more effectively and efficiently advance mitigation investment.
* The Disaster Recovery Reform Act of 2018 (DRRA), enacted in
Affordability - Closing the Insurance Gap and Means-Tested Assistance
Flood insurance affordability is complex, touching on the intricate challenges of equity and risk management.
In the Homeowner Flood Insurance Affordability Act,
A forthcoming legislative proposal will address the need to provide affordability assistance to some homeowners as
This legislative proposal would establish a targeted means-tested affordability program for 1-4 family primary residences where the household income is such that federal flood insurance under the National Flood Insurance Program is unattainable or difficult to maintain. The HUD defines households earning 80 percent or less than area median income as "low income" and households earning 120 percent or less than area median income as "moderate income." This targeted affordability program would serve to offer low-and moderate-income households a graduated risk premium discount benefit. The discount received would vary by household income. As household income increases, the discount benefit received decreases.
Sound Financial Framework
The sustainability of the NFIP is often called into question, noting the Program's
To the critics of the NFIP's debt, it is important to understand the historical context. The lack of severe storms between 1986 and 2003 allowed the NFIP to rely on premium payments to pay claims without substantial borrowing. After flood losses began escalating in 2004,
After the 2017 hurricanes,
Long term and sustainable fiscal soundness will require additional program advances to sustain the NFIP's capabilities to manage a large flooding event
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2 https://www.tallahassee.com/story/news/2020/08/29/hurricane-laura-shatters-records-more-storms-tapweathertigerforecast/5634246002/#:~:text=Laura%20was%20the%20strongest%20hurricane%20to%20strike%20between,Island %20hurricane%20for%20strongest%20landfall%20in%20the%20state.
4 GAO, "High-Risk Series: Dedicated Leadership Needed to Address Limited Progress in Most High-Risk Areas", GAO-21-119SP,