(Bloomberg) -- The National Flood Insurance Program is overdue for reform, according to Daniel Kaniewski, a former deputy administrator at the Federal Emergency Management Agency.
Legislative changes are required to help reduce the cost of flood insurance for American homeowners and renters, Kaniewski, who’s now a managing director at Marsh McLennan, said Friday in a Bloomberg Television interview. While FEMA, which administers the program, has laid out proposals to amend it, no action has been taken yet, he said.
“Until there are reforms made to the NFIP, we’re going to be dealing with this situation again and again in the future,” Kaniewski said, days after Hurricane Milton lashed Florida and about two weeks following Hurricane Helene, which caused catastrophic flooding far inland.
The program, created in 1968 to respond to a lack of private flood insurance, has been in debt since 2005, when Hurricane Katrina devastated the US Gulf Coast. As of 2022, the NFIP was still facing more than $20 billion of debt.
Flood insurance is typically excluded from standard homeowners’ policies, leaving many Americans uninsured even as disasters are becoming more frequent. Only about 4% of American households have flood insurance, a figure that drops below 1% in North Carolina, where Helene wreaked devastation last month, Kaniewski said.
Relief may be found in programs such as community based catastrophe insurance, though those are still not widely adopted.
“Very few communities are taking up these innovative flood programs because either they don’t realize the risk exists, or they’ve grown dependent on the government programs,” Kaniewski said.
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