House Committee Says It's Time to Privatize Flood Insurance
The House Budget Committee report on March 23 has recommended privatizing flood insurance as part of its Fiscal Year 2017 budget proposal as a way to cut Federal Government costs. The report outlined that there was "little to no" private sector alternative to the National Flood Insurance Program (NFIP), which places the cost on taxpayers. According to the report, NFIP is currently $23 billion in debt and will not recover under its current structure given the likelihood of more natural disasters like Hurricanes Katrina and Sandy. Multifamily firms with federally regulated and insured mortgages on properties in high-risk areas are required by law to purchase flood insurance.
This report comes on the heels of the House Financial Services Committee's recent bipartisan 54-0 vote in support of the "Flood Insurance Market Parity and Modernization Act" on March 2. The bill would expand coverage options for at-risk property owners by clarifying that flood insurance offered by private carriers meets the mandatory purchase requirements. NAA/NMHC have long called for the bill's passage to help increase private market competition for flood insurance coverage outside NFIP. Companion legislation in the Senate also has significant bipartisan support and could see action soon.
In addition, we support increased private market solutions for flood insurance as a potential way to drive down premium costs for apartment companies and strongly believe the NFIP must be reauthorized by Congress before it expires in September 2017. That's because the program ensures that affordable flood insurance is available at all times, in all market conditions for every at-risk rental property.
NAA/NMHC continue to monitor this issue in Congress and support efforts by lawmakers to reform the NFIP in order to reduce taxpayer-funded disaster assistance. Our goal is also to ensure that valued and necessary risk management tools for apartment owners and managers continue to exist.
Provided by NMHC as part of the NAA/NMHC Joint Legislative Program