The Federal Emergency Management Agency is borrowing $2 billion from the US Treasury to cover National Flood Insurance Program claims, which were exacerbated by recent hurricanes Milton and Helene.
The agency said in a Feb. 10 press release that total losses in 2024 "depleted" the National Flood Insurance Program's pool of premiums, noting that the program is not designed to cover multiple catastrophes in a year without needing extra financial help.
According to the latest estimates by the Federal Emergency Management Agency (FEMA), there have been 57,400 flood insurance claims filed due to damage from Hurricane Helene, which resulted in more than $4.5 billion in payouts as of Feb. 6. FEMA estimates total losses from Hurricane Helene under the National Flood Insurance Program (NFIP) will land somewhere between $6.4 billion and $7.4 billion, based on its data as of Jan. 31.
Meanwhile, Hurricane Milton so far has garnered 21,100 flood insurance claims that amount to more than $740 million as of Feb. 6. Total losses expected to be paid fall between $1.2 billion and $2.9 billion.
Devastating catastrophes
FEMA said in the press release that the National Flood Insurance Act of 1968 gives the agency borrowing power and that it has borrowing authority of $30.425 billion. Between 2005 and 2017, the agency borrowed $20.53 billion to cover hurricanes Katrina, Sandy and Harvey.
"The widespread, devastating flooding following hurricanes Helene and Milton reemphasizes the financial effects flooding can have not just to survivors but also the National Flood Insurance Program," NFIP Senior Executive Elizabeth Asche said in the release. "We are strategically utilizing short-term borrowings in 60-day increments, demonstrating our careful and responsible management of the borrowing authority."
The two hurricanes also impacted property and casualty insurers, heavily contributing to third-quarter 2024 catastrophe losses for many insurers including The Allstate Corp., Liberty Mutual Holding Co. Inc. and The Travelers Cos. Inc.
The NFIP provides roughly $1.3 trillion in coverage to about 4.7 million policyholders across the US, according to FEMA.
FEMA's shaky ground
Many Republican leaders have increasingly condemned FEMA's existence and practices.
President Donald Trump has been critical of FEMA and issued an executive order Jan. 24 to review its practices with the intent of overhauling the agency. It is unclear where exactly Trump stands on the NFIP, but the Project 2025 handbook, which outlines Republican policy goals, suggests that the NFIP should be "wound down and replaced with private insurance."
Prior to his election, Trump distanced himself from Project 2025, but many individuals he has appointed for key roles in his administration were heavily involved with the development of the handbook.
During a Jan. 24 press conference in North Carolina, Trump said he was considering "getting rid of FEMA," adding that disaster management is better left to individual states.
Tech mogul Elon Musk, who is heading up efforts to reduce government spending through the newly formed Department of Government Efficiency initiative, said in a post on X on Feb. 10 that his team found that FEMA had spent $59 million on "luxury hotels" in New York City just last week to provide housing for undocumented immigrants. Musk claimed that the action "violated the law" and was in "gross insubordination to the president's executive order," noting that a "clawback demand" would be issued today to regain those funds.
