Big Trouble With the NFIP

From the Washington Post: The country’s flood insurance program is sinking. Rescuing it won’t be easy.  Some excerpts:

The extreme cases are only a fraction of the NFIP’s 5 million active policies, but they historically have accounted for about 30 percent of its claims. And while they’re a financial albatross for taxpayers, the claims are hardly the program’s only challenge.

The NFIP, which must be reauthorized by the end of September, is nearly $25 billion in the red — a debt that administrator Roy Wright says he sees no way to pay back.

“Only Congress can deal with that past loss,” Wright said last week . “What we’re focused on today is ensuring that going forward, we’re putting ourselves on a sound financial footing.”

Be sure to read the comments on this posting.

Update:  Another big problem for the NFIP is the Deluge of Repeat Claims. See this article on 7/25

1 thought on “Big Trouble With the NFIP

  1. As the National flood Insurance Program is considered for reauthorization in the Congress in 2017, enormous amount of attention, like this Washington Post article, has been paid to the NFIP in both the popular press and the halls of Congress. This attention will likely be coupled with the current increased attention to the idea of “Resilience”; discussion concerning the President’s Executive Order on Climate Change; the Executive orders on Floodplain and Earthquake Standards; huge interest in the misery plus mounting economic and environmental cost following disasters including fires in the United States and throughout the world; Hurricanes Sandy, Katrina, Gustav etc.; and the huge numbers of tornadoes in the past few years. All these events give us a unique opportunity to raise awareness about preventing disasters through climate adaptation and hazard mitigation.

    A better understanding of the entire topic is much needed. More complete solutions can only come from making a holistic examination of the issues with the systems we have both for development and the system we have for providing disaster relief in our Nation. We need to devise a multidisciplinary “Whole Community” approaches to a series of solutions.

    Focusing only on the NFIP, a small symptom of a much larger problem, as opposed to taking a clear view of the systems which are producing undesirable results cannot produce good public policy

    As someone who has worked on about 200 disasters, I feel confident in saying Disaster Survivors are enormously better off with insurance, as opposed to our extremely well-intentioned but extraordinarily complex and even Byzantine system of post disaster relief.

    Society is also better off if they have actuarially sound insurance too. We discuss a more complete explanation of that concept, in the new NHMA Disaster Risk Reduction curriculum.

    Making Flood Insurance unaffordable and pushing folks into foreclosure or towards more expensive forms of disaster assistance like HUD gifts (a/k/a HUD CDBG Grants) is really bad policy, especially if the taxpayer does not even get a safely designed and well constructed home out of that gift.

    Simply put, the Problem is Much Larger Than Flood Insurance Issues

    a) We Need to Look at Systems not just Symptoms

    Any issues with the NFIP in general and NFIP rates in particular are a symptom of a vastly larger problem. [Our thinking about systems vs. symptoms is much influenced by discussions with Don Watson, and Wendell Curole; as well as reading the excellent book, The Fifth Discipline: The Art and Practice of the Learning Organization, by Peter Senge.]

    The focus on the NFIP & its rating structure, to the exclusion of discussion of the huge number of private, federal state and local programs, both appropriated and un-appropriated, which support development both before and following disasters totally misses the point, and can produce neither real solutions nor proper understanding of the problem.

    b) The Development System

    The larger problem is the enormous subsidies provided by society for development, even when that development is in areas subject to really horrific & foreseeable damages from Natural Events. For a more complete view of those programs see, e.g., Building Your Roadmap to a Disaster Resilient Future
    Located at:


    The Natural Hazard Mitigation Association, with welcome financial support from a FEMA Grant which helped fund excellent support from a contractor, Wightman Associates, coupled with literally thousands of hours of volunteer time, has continued to develop a Disaster Risk Reduction Curriculum. We had a successful Pilot at the Pennsylvania State Emergency Management Agency Operations Center in Harrisburg on April 17-18.

    We have a considerable amount of materials developed including 16 Modules as well as a revised and updated reworking of the venerable Patchwork Quilt White Paper which has been used around the nation for over 20 years. The updated paper is called Building Your Roadmap to a Disaster Resilient Future

    The DRR Curriculum Plan as well as the new Roadmap White Paper are available on the NHMA website:

    Note that the Curriculum includes considerable legal as well as Architectural, Engineering, Planning, Policy and other materials designed to inform, inspire and motivate grassroots action to build a safer, more just and resilient nation.

    We would very much like to work with all the folks who read Claire Rubin’s excellent blog to make the widest and most synergistic possible use of the DRR Curriculum & the Roadmap
    Ed Thomas

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