Breaking Down the National Flood Insurance Program Reauthorization Legislation 


  • Yucel Ors
July 20, 2023 - (5 min read)

Congress created the National Flood Insurance Program (NFIP) in 1968 to make affordable flood insurance available to homeowners, renters, and business owners. The NFIP makes federally backed flood insurance available in states and cities, towns, or villages that agree to adopt and enforce floodplain management ordinances to reduce future flood damage. This program is essential to helping home or business owners (including local governments) recover faster after a flooding disaster strikes. While FEMA administers the program, NFIP is a partnership between the federal government, local officials, states, property and casualty insurance industry, lending institutions and property owners. 

New legislation has been introduced in Congress to provide long-term certainty and stability to the NFIP while also promoting affordable flood insurance and effective floodplain management regulations. The National League of Cities (NLC) endorsed this legislation, the National Flood Insurance Program Reauthorization (NFIP Re) Act of 2023 (H.R.4349/S.2142), which is currently awaiting consideration in the House Financial Services Committee and the Senate Committee on Banking, Housing and Urban Affairs. 

Key Provisions in the National Flood Insurance Program Reauthorization Act 

Protection against rate hikes 

The NFIP Reauthorization Act takes a significant step towards protecting policyholders from sudden and disruptive cost spikes by implementing a cap on annual premium increases at 9%. By establishing this limit, the legislation ensures that individuals and businesses relying on flood insurance are not burdened by unaffordable premiums, enabling them to maintain financial stability and safeguard their properties against potential flood risks. 

Means-tested affordability vouchers 

Recognizing the need to ensure accessibility to flood insurance for low- and middle-income policyholders, the NFIP Reauthorization Act introduces means-tested affordability vouchers. These vouchers alleviate the financial burden of flood insurance premiums, making coverage more affordable and enabling individuals and families with limited resources to protect their homes and belongings. By addressing affordability concerns, the legislation helps to create a fairer and more inclusive flood insurance program. 

Cost-saving mitigation efforts 

The NFIP Reauthorization Act prioritizes cost-saving mitigation efforts to improve the solvency of the program and reduce the long-term impact of floods. One notable provision is the freezing of interest payments on NFIP debt. By redirecting the savings generated from this measure, resources can be channeled into proactive mitigation initiatives. This approach not only enhances the program’s financial stability but also promotes investments in measures that minimize flood risks, protecting communities and reducing the potential for property damage and displacement. 

Limits on Write Your Own (WYO) program compensation

The Write Your Own (WYO) program allows private insurance companies to sell and service NFIP policies. However, excessive compensation through the WYO program can divert funds from affordability efforts. The NFIP Reauthorization Act addresses this issue by capping compensation, ensuring a significant portion of the program’s resources are directed towards improving affordability for policyholders. This measure aligns with the overarching goal of prioritizing the needs of individuals and businesses seeking flood insurance coverage. 

Increased ICC coverage 

To incentivize proactive mitigation efforts, the NFIP Reauthorization Act expands eligibility for Increased Cost of Compliance (ICC) coverage. ICC coverage provides additional funds to policyholders for implementing measures that mitigate future flood risks. By expanding access to ICC coverage, the legislation encourages communities to invest in resilience-building projects and take preventive measures to reduce the potential damage caused by floods. This proactive approach helps create a more resilient infrastructure and reduces the financial strain on affected policyholders. 

Enhanced flood mapping accuracy

Accurate flood risk assessment is crucial for informed decision-making and effective floodplain management. The NFIP Reauthorization Act recognizes this and allocates increased funding for enhanced flood mapping efforts. The legislation also promotes the use of Light Detection and Ranging (LiDAR) technology, which provides precise data on elevation and flood-prone areas. By improving flood mapping accuracy, communities can better understand their vulnerability to floods, allowing for targeted mitigation strategies and informed land-use planning. 

Oversight and claims process reforms

Provides FEMA with greater authority to terminate contractors that have a track record of abuse and creates new oversight measures for insurance companies and vendors. The legislation also reforms the claims process based on lessons learned from Superstorm Sandy and other disasters to level the playing field for policyholders during appeal or litigation, hold FEMA accountable to strict deadlines so that homeowners get quick and fair payments, and ban aggressive legal tactics preventing homeowners from filing legitimate claims. 

Building Flood Resilience 

This comprehensive approach to flood insurance ensures that individuals and businesses can obtain affordable coverage, protecting their properties and livelihoods. The introduction of means-tested affordability vouchers and the cap on premium increases make flood insurance more accessible and prevent policyholders from facing sudden financial hardships. 

Furthermore, the emphasis on cost-saving mitigation efforts and increased ICC coverage promotes resilience-building initiatives, enabling communities to proactively reduce their vulnerability to floods. By investing in floodplain management, accurate flood mapping, and preventive measures, the NFIP Reauthorization Act supports the long-term goal of minimizing flood-related damages and fostering sustainable development in flood-prone areas. 

The NFIP Reauthorization Act of demonstrates a strong commitment to building resilient communities. By addressing key issues such as rate hikes, affordability, solvency, mitigation, mapping accuracy, oversight and claims process reforms, the legislation aims to enhance the effectiveness and accessibility of the flood insurance program.  

With its focus on protecting individuals, businesses, and critical infrastructure, the NFIP Reauthorization Act aligns with the shared goals of safeguarding communities and ensuring affordable flood insurance nationwide. It is imperative for Congress to pass this critical legislation promptly to strengthen the NFIP and promote the well-being of communities across the country. 

About the Author

Yucel Ors

About the Author

Yucel (u-jel) Ors is the Director of Public Safety and Crime Prevention at the National League of Cities.