Reforming the National Flood Insurance Program : Toward Private Flood Insurance

Authorization for the National Flood Insurance Program (NFIP) expires on September 30, 2017, offering policymakers an opportunity to rethink the scheme and bring forward reforms that would allow a private flood insurance market to develop in its place. Congress tried to fix the NFIP's flawed premium structure in 2012. However, most of the changes made were repealed or put on hold two years later. This time around, Congress should focus on measures that would enable the growth of the private flood insurance market. Advances in catastrophic modeling, as well as financial instruments used to hedge risk, make widespread private coverage more commercially viable than ever. Privatization would not disproportionately hurt the working class. A fully private flood insurance market coupled with a targeted, means-tested subsidy would be much less regressive than the status quo. Short of full privatization, Congress should ensure that private insurers can compete on an even playing field with the NFIP