Senators Clash Over FEMA Proposal To Block Flood Insurance In Risky Areas
More broadly, Toomey said the NFIP is “fundamentally broken” and asserted that “we should be protecting the transition to actuarially sound premiums” — meaning ensuring premiums reflect the risk of flooding of a given property. This in contrast to the current “heavily subsidized” program, which has requested funds from the treasury in 11 of the last 22 years. The program currently carries a $20.5 billion debt to the treasury, even after $16 billion was forgiven in 2017, he added.
“The NFIP is bad for taxpayers who have to bail it out year after year,” he argued.
Jerry Theodorou, the R Street Institute’s finance and insurance program, agreed with Toomey at the hearing. He explained that properties that repeatedly flood make up 1% of policyholders, but nearly 40% of flood loss dollars — which Congress should address by further discouraging development in those areas.
Theodorou argued that the original purpose of the NFIP was not just to provide flood insurance but also to “encourage state and local governments to constrict development of flood-exposed land.”