Press Releases

Yesterday, the House Financial Services Subcommittee on Housing and Insurance, led by Chairman Mike Flood (NE-01), examined how targeted mitigation investments can reduce flood damage, strengthen community preparedness, and lower long-term costs for taxpayers.

On Insurance Structure and Risk Exposure:

Subcommittee Chairman Flood said, "Flood damage is a unique kind of peril. It is not covered by homeowners insurance the way wind, hail or other damage would be. Instead, the National Flood Insurance Program is the primary source of flood insurance coverage for residential properties across the country.”

Rep. Troy Downing (MT-02) said, “The National Flood Insurance Program and the coverage over multiple lost properties has been of particular interest to me as the former Insurance Commissioner of the state of Montana and one of my main concerns has been making sure that Montana taxpayers are not subsidizing the risky and costly policies issued in these flood prone areas.”

On Reducing Risk Through Mitigation:

Rep. Scott Fitzgerald (WI-05) questioned witnesses on what policies would reduce taxpayer liability, to which Mr. Steve Ellis, President, Taxpayers for Common Sense replied, "Well, certainly I think you can tackle it from both [limiting coverage for SRL properties or expanding buyouts]. And by doing a smart buyout system that buys out whole neighborhoods that are at risk, you're going to have a significant reduction in the risk to taxpayers. I mean, there's no doubt about it. And then obviously, if you are able to tackle severe repetitive losses properties to mitigate them so that they're not in that category anymore or conduct buyouts for those, it is going to have a beneficial impact."

Rep. Andrew Garbarino (NY-02) said, “By aligning mitigation with risk transfer and encouraging public private collaboration, this approach helps communities recover more quickly and build long term resilience.”

Witnesses Echoed the Work of the Committee:

Ms. Alicia Puente Cackley, Director, Financial Markets and Community Investment, U.S. Government Accountability Office said, “However, NFIP faces multiple serious and longstanding challenges, primarily because NFIP has two competing goals: keep flood insurance affordable and keep the program fiscally solvent. Major flood events since 2005 and an emphasis on affordability have left the program with insufficient premium revenue to pay claims. As a result, some of the financial burden of flood risk has shifted from property owners to taxpayers. FEMA administers several mitigation grant programs that can reduce flood risk for NFIP-insured properties. A relatively small share of these properties, known as repetitive loss properties, have flooded and received payment for claims multiple times. These properties contribute to the program’s fiscal challenges.”

Ms. Diane Horn Specialist in Flood Insurance and Emergency Management, Congressional Research Service said, “A particular challenge for the NFIP is that the premiums collected have been insufficient to cover claims payments from catastrophic flooding events. The NFIP was not designed to retain funding to cover claims from extreme events; there was a recognition by Congress from the beginning of the program that there might be truly exceptional events for which the NFIP would have to borrow from the Treasury and pay it back with interest. Currently, Congress has authorized FEMA to borrow no more than $30.425 billion from the Treasury to operate the NFIP.”

Mr. Steve Ellis said, “Mitigation should not just be about rebuilding stronger while keeping properties and communities exposed to future risk—it should be about reducing exposure to risk. Yet, fewer than one in four of the highest-risk properties have been mitigated. Instead, we continue to spend taxpayer dollars rebuilding the same properties again and again. We are choosing to pay repeatedly rather than reduce risk permanently. Every dollar spent rebuilding a property that will flood again is a dollar not spent preventing the next disaster.” 

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