WASHINGTON (March 2, 2016) — The R Street Institute today commended the House Financial Services Committee for its markup of H.R.2901, the Flood Insurance Market Parity and Modernization Act, which seeks to encourage a more robust private market of flood-insurance products to compete with the taxpayer-subsidized National Flood Insurance Program.

R Street Senior Fellow R.J. Lehmann noted that the expansion of the flood-insurance market has only become more necessary following a series of major catastrophes, including Hurricane Katrina and Superstorm Sandy. According to Lehmann, “The NFIP remains more than $20 billion in debt to U.S. taxpayers and has been on the nonpartisan Government Accountability Office’s list of high-risk federal programs since 2006. Prospects to shrink the program’s $1.1 trillion of total property exposure rely on the emergence of private-sector solutions.”

While many private insurers have expressed an interest in taking on flood risk and many states are taking encouraging steps towards licensing insurers to do so, the current legislative framework is insufficient.

Although Congress’ 2012 flood insurance reform bill expressly stated that private flood insurance could be used to satisfy federal lending requirements, the statutory language was limited in scope, applying only to a select number of policies. H.R.2901 would serve to broaden the scope of the legislation, while also giving additional power back to the states to determine the appropriate guidelines for qualifying policies.

Lehmann added, “The NFIP is not only an unnecessarily burdensome program for taxpayers, it is also an unsustainable one. These vital steps toward common-sense reform will ensure a vibrant market of private capital exists to handle this risk in the years ahead.”

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