Federal flood insurance program in limbo on Capitol Hill as Harvey’s toll mounts – Washington Post
The program is set to expire Sept. 30, and no new policies can be written after that date unless Congress acts to extend it. Claims on existing policies, which can see payouts up to $350,000, are also at risk as the program approaches a $30 billion borrowing limit that experts say Harvey’s toll could quickly breach.
All but a tiny portion of U.S. flood policies are underwritten by the National Flood Insurance Program, or NFIP, which was established in 1968 after private insurers left the flood insurance market because of large and unpredictable losses.
Even before stormwaters swept across metropolitan Houston, debate on how to restructure the NFIP exposed fissures in Congress that crossed traditional partisan lines, pitting conservatives who want to scale back the government costs for the program against lawmakers from flood-prone regions wary of jacking up their constituents’ premiums.
“We need a sustainable program, and today we don’t have it,” House Financial Services Committee Chairman Jeb Hensarling (R-Tex.), a staunch conservative who has pushed for privatization and other changes to provide for a self-sufficient program, said Tuesday. “I’ve been telling people for four years that we are one major storm away from another taxpayer bailout, and that day has come. So if anything, it creates more momentum and a greater onus on getting our bill into law.”
The effort has had backing from the Trump administration, whose budget proposed eliminating the NFIP’s Flood Hazard Mapping Program, saving $190 million in fiscal 2018, as well as another $8.9 billion in other savings over the coming decade achieved in part by “encouraging private competition in the flood insurance market.”
But Hensarling’s plan to extend the program, which passed his committee in June, has yet to come to the House floor amid frustration from Republican leaders who wanted the committee to draft a more broadly palatable NFIP extension that could pass quickly on a bipartisan basis. Notably skeptical of Hensarling’s efforts is House Majority Whip Steve Scalise (R-La.), who represents a hurricane-prone district and has closely monitored the debate as he recovers from a serious gunshot wound he suffered in June.
“Are we really going to have a philosophical debate about what role the federal government should play in flood insurance when people’s homes are underwater?” said a House Republican leadership aide who spoke on the condition of anonymity to candidly describe internal discussions. “It’s just an absolute political loser at this point.”
The leaders of the Senate Banking Committee last month proposed a bipartisan bill that would extend the program through 2023 but does not include the most controversial provisions in the House bill. That bill has yet to emerge from the panel, although it could serve as a blueprint for a compromise.
The debate over the future of the NFIP stands apart from the larger question of how Congress will offer relief to Harvey’s victims, most of whom do not have flood insurance coverage. That price tag could rise into the tens of billions of dollars beyond insurance payouts, based on the costs of similar recent storms and early estimates from the financial industry.
But Harvey is certain to affect the flood insurance debate, as well. “Forgive the pun, but it certainly roils the water, that’s for sure,” said Steve Ellis, vice president of Taxpayers for Common Sense, a nonpartisan group that advocates changes to the NFIP.
The program owes more than $24 billion to the U.S. treasury, and most observers see little hope that the debt can be recovered from policyholders. Neither the House nor Senate reauthorization bills propose raising the program’s borrowing cap, so another congressional battle could develop after Harvey claims start to be paid out.
Restructuring advocates say the hurricane represents a crisis that should not go to waste. “Storms like Harvey help concentrate the mind that this is a program that is broken, and the response to a broken program is not simply to continue and expect a different outcome,” Ellis said.