The major federal flood-insurance program that covers millions of properties is set to expire by the end of this month. Experts expect Congress to reauthorize the program — but also question whether renewing what they call a flawed program will be enough to help homeowners.
“There’s still a lot of need for the program; a lot of people rely on it,” Schwarcz added. “So it would create a huge amount of problems if the government didn’t reauthorize it.” These properties are located near river channels, like the Mississippi River or the Ohio River, “that have a history of flooding, and where they’re relatively poor in terms of coverage, or are in areas that are impacted by precipitation flooding,” Porter explained.
The program was born out of necessity, as many private insurers over the years left the business of providing flood insurance, Schwarcz said. Floods affect many homeowners at once, he said, so insurers had to have enough funds to pay out in very extreme circumstances. The unpredictability of losses made it tough to offer coverage.
A bipartisan group of New Jersey and Louisiana lawmakers in June introduced efforts to reform the NFIP, such as by boosting funding to help FEMA better map, identify and reduce flood risks; create oversight measures for insurers and vendors; and provide FEMA with more authority to sever ties with contractors that abuse the system.
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