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September 21, 2018

NFIP Participation – More is Better

Our hearts and hands are extended to those in the Carolinas as they recover from the devastation of Hurricane Florence. With floods increasing in frequency, severity and geographic range, ever more Americans are experiencing the financial and personal upheaval caused by waterborne disaster. With each flood, the question is asked, How can communities be better prepared going forward? The simple answer is for more people to have flood insurance.

The Carolinas were underinsured for flood risk, with only about 10% of affected homes covered by the National Flood Insurance Program (NFIP). Last year, only 20% of all homes that flooded in Houston during Hurricane Harvey had flood insurance, either.

Whether homeowners don’t have an accurate picture of their true flood risk, or they expect disaster aid to fully cover their losses, the lack of flood insurance coverage in areas at risk is unwise. According to FEMA, just one inch of water can cause $25,000 of damage to a home; but, the average disaster aid award individuals is just $8,000. The lack of flood insurance is also problematic for American taxpayers, as it creates an underfunded NFIP, which is forced to borrow from Treasury to cover large losses, like they did after Harvey.

Increasing NFIP participation will ensure that homeowners and communities are better prepared to recover from floods. Increasing participation will also create a more sustainable NFIP. The NFIP, like any insurance program, needs a large and diverse risk pool to be healthy.

There are multiple ways Congress can increase participation, as it considers reforms to the NFIP. One way would be to expand the mandatory purchase requirement to require any home with a federally backed mortgage – rather than just those in the Special Flood Hazard Areas – to carry a flood insurance policy. Another option would be to require all homeowners in “X” and other voluntary zones to carry flood insurance. Either of these two options would increase participation substantially.

Flood risk is not going away; flood from seas, rivers or rain can occur anywhere, even the desert. The government’s commitment to protecting homeowners is not going away either; that would be un-American. The best way to resolve these two facts is to increase participation in the National Flood Insurance Program.

To quote NOLA.com columnist Tim Morris, “If it rains where you live, it could flood there.” For this reason, GNO, Inc., along with our national Coalition for Sustainable Flood Insurance, will continue to advocate for increased flood insurance participation.