U.S. Rep. Andy Barr, R-Lexington, and U.S. Rep. Scott Peters, D-California, introduced the “Build for Future Disasters Act,” which would end NFIP subsidies for newly built properties in areas vulnerable to flooding.
Newly constructed properties built during 2025 or later would be subject to rates that reflect up-to-date flood risk information and will not later qualify for a subsidy, and structures built before 2025 in flood zones or that are re-mapped into flood zones would still be eligible for grandfathering subsidies.
The bill also requires the U.S. Government Accountability Office to study the feasibility and implications of lowering all subsidies to a point that puts the NFIP on a path to stronger financial footing. Together, this would reduce taxpayer burden, stop growing government risk and put an end to the implication that if insurance is cheap, the risk must be low.
“Congress must restructure the NFIP to rely on more accurate and recent floodplain maps to ensure taxpayers are not footing the bill for construction or rock bottom insurance rates in areas dangerously prone to flooding,” said Barr. “NFIP’s consistent budget deficits in recent years highlight the need for this bipartisan reform, and I look forward to working with Congressman Peters to pass this reform bill in the House.”
Peters noted, “Right now, federal taxpayer money is subsidizing the rebuilding of structures where we know they will be destroyed again, costing more taxpayer money and creating extensive suffering. This bill would put an end to that and would instead encourage regional resiliency planning, crucial as we prepare for the climate crisis-induced disasters of the future.”
The NFIP offers flood insurance to property owners, renters and businesses at discounted rates, relying on flood insurance rate maps that draw from past experience and, for the most part, disregard the future.
While the flood zone maps determine who is obligated to carry flood insurance in any given year and may be useful in setting a single year’s flood insurance rates, it does not account for the potential worsening of disasters in following years. Such an underestimation can mislead communities, developers and property owners about the real risk of flooding and results in short-sighted building within flood-prone areas.
This has led the program into significant debt. Currently, the NFIP runs a $1.4 billion deficit each year and causes a great financial loss for American taxpayers who fund the program.
"If the private sector looks at future flood risk when pricing insurance, why shouldn’t the federal government? The current system cheats taxpayers and hides the cost of flooding from homebuyers in perpetuity,” said Craig Fugate, FEMA administrator during the Obama Administration. “This legislation would go a long way toward tackling that problem by ensuring federal insurance for new construction in flood-prone areas reflects real flood risk.”