The National Flood Insurance Program was established in 1968. It's a government-run program that fills the void in standard homeowners' policies that may exclude storm surge and flooding that can cause catastrophic damage.
"Essentially, it's Obamacare for flooding decades before Obamacare was created for health insurance," said Robert Moore, a senior policy analyst with the Natural Resources Defense Council and expert in flooding in climate change.
The program creates flood maps to determine what homes around the country are at-risk for floods, it sets rules for building on the coast, and, perhaps most significantly, it requires flood insurance for anyone the government determines has at least a 1 percent chance of flooding in a given year and offers its own policies for sale. Any homeowner with a federally backed home mortgage is required to buy additional flood coverage if they are in a designated high-risk area, but it is optional for everyone else. As a result, many consumers are unprepared if a disaster strikes.
The NFIP has generally been successful over the years at its goal of expanding flood insurance availability, Moore said, but now, "The program is broken on just about every level."
It needs to be reauthorized by the federal government every five years and hits that mark next month. Climate change had made its problems far worse by increasing the frequency and magnitude of floods, Moore said, which the NFIP was not built to handle. Their flood maps are out of date almost as soon as new ones are released, he said, and its not taking in even close to as much money as its giving out.
The program has borrowed almost $40 billion from the government since Hurricane Katrina in 2005, Moore said, as the income it generates from premiums can't keep up with the amount of major flood events. Its current debt on the books is $20.5 billion; the government forgave another $16 billion in debt. Since 2004, the program has borrowed $39.4 billion from the Treasury and repaid just $2.82 billion of that principle, according to the Insurance Journal. The Congressional Budget Office projects the program should be expected to lose, on average, about $1.4 billion a year for the foreseeable future.
"You could even say they're deep underwater and getting deeper," Moore said.