WASHINGTON, DC – U.S. Senator Jack Reed (D-RI) says that reauthorizing the National Flood Insurance Program (NFIP) is critical to the stability of the real estate market and Rhode Island’s economy and must be a top priority for Congress this year. 

Today, the Senate Banking, Housing, and Urban Affairs Committee held the first in a series of hearings on NFIP, which is scheduled to expire on September 30 and currently carries a debt of $24.6 billion, largely due to major storms such as Sandy and Katrina.  Interest on that debt is drawing about $400 million from premiums each year.

“The National Flood Insurance Program is vital to protecting Rhode Island homeowners, businesses, and property values throughout the state.  Congress must work together to provide policyholders with a comprehensive, long-term reauthorization that will ensure that property owners know their flood risk and have an appropriately priced but affordable way to insure against it, as well as options and incentives to mitigate their risk,” said Reed, a senior member of the Banking Committee who authored a key provisions on flood risk mapping as part of 2012 NFIP reauthorization and cosponsored the Senate version of the bipartisan Homeowner Flood Insurance Affordability Act of 2014.

NFIP was originally established in 1968 and today there are 5.1 million policyholders nationwide, including about 15,000 policies in force in Rhode Island.  The program seeks to combat the effects of flooding through four interrelated components:

  • Flood insurance - to help property owners recover quickly after a flood and reduce the need for federal emergency appropriations;
  • Floodplain management - to minimize damage to people and property through the adoption of local ordinances and building codes;
  • Floodplain mapping – to identify flood hazards and communicate that risk to homeowners and communities; and
  • Mitigation – to help remove property from harm’s way through property-level and community investments that reduce our overall level of flood risk.

At today’s hearing, Roy Wright, the deputy associate administrator of Federal Emergency Management Agency (FEMA), testified that: “When the program lapses we cannot write new policies” and noted that would have a “dampening or even an absolute limiting effect” on markets in flood-prone areas.

In December, Senator Reed organized a roundtable conversation in Rhode Island featuring Mr. Wright, who leads FEMA’s Flood Insurance and Mitigation Programs, and state leaders and members of the business community to help solicit thoughts and concerns from Rhode Islanders in advance of the NFIP reauthorization.

During today’s hearing, Senator Reed noted that one of the most cost-effective ways to reduce flood damage is through well-planned mitigation, which saves $4 to $5 for every dollar invested and can significantly reduce flood insurance premiums.  Today, the NFIP spends more than twice as much on interest payments on its debt as it does on flood mitigation. 

“I am very interested in exploring new ways to support flood mitigation, including using time tested approaches like revolving loan programs” said Reed. “I hope that this is something we could work on together as part of NFIP and certainly, it would appropriate for any large-scale infrastructure package.”

Reed concluded: “Congress must find a way to stabilize the program and prevent soaring costs from straining household budgets in Rhode Island, both on the coast and by our many inland rivers and streams.  I hope the Senate will continue to make this a priority and work toward a balanced, bipartisan solution.”