As a government shutdown looms, representatives of the insurance industry are urging Congress to act swiftly to ensure that the National Flood Insurance Program can continue to operate even if appropriations lapse at the end of the fiscal year.
More than a dozen insurance industry and real estate trade groups penned a Sept. 29 letter to leaders in the US House and Senate, asking them to extend the NFIP's authorization and warning about the consequences American families may face without the extension. They also asked Congress to "consider other means" of extending the program "outside of the government funding legislation" if the next continuing resolution is not enacted in time.
The NFIP is a federally backed flood program administered by the Federal Emergency Management Agency and delivered to the public through partner insurance carriers. In February, the Federal Emergency Management Agency had to borrow $2 billion from the US Treasury to cover NFIP claims, which were exacerbated by hurricanes Milton and Helene.
A lapse in authorization would leave "millions" of property owners and renters at risk as they would be unable to purchase new policies, or renew policies, according to the industry letter.
"Without access to flood insurance, American families must rely on federal disaster aid, which is severely limited, and property buyers could lose financing or be forced to pay fees to hold interest rates," the groups said in their letter. "The risk of an unnecessary NFIP lapse could further impact affordable housing, create additional challenges for small businesses, unnecessarily further increase the cost of homeownership, and must be avoided."
In a scenario where the government fails to reach an agreement on a path for funding, the trade groups asked for immediate passage of the NFIP Extension Act of 2026, which would allow the NFIP to operate until Sept. 30, 2026. The groups applauded the House Financial Services and Senate Banking committees for their work toward a longer-term reauthorization of the NFIP.
The American Property Casualty Insurance Association, the National Association of Mutual Insurance Companies, the Council of Insurance Agents and Brokers and the National Association of Residential Property Managers, were among the letter's signees.
Coinciding with the start of a new presidential administration there was a movement to get rid of FEMA, creating uncertainty around what might happen to the NFIP. The Senate Committee on Banking, Housing and Urban Affairs held a hearing in May to discuss the insurance impact of cuts to FEMA where several senators expressed concern that a pullback in funding would hurt disaster mitigation and increase insurance costs.
In a recent interview, South Carolina Insurance Director Michael Wise advocated for a wider role for the private market when it comes to flood insurance, acknowledging that a large number of Americans rely on the federal program for coverage.
