Once again, we face a looming expiration of the National Flood Insurance Program (NFIP), with the program’s authorization set to expire on September 30 of this year. NFIP has received temporary reauthorizations eight times since 2008 and has gone into technical lapse on several occasions.
The good news is that this time, Congress has started to address a comprehensive flood insurance reform bill well in advance of the next deadline. Already, hearings have been held before the House Subcommittee on Insurance, Housing and Community Opportunity and on April 11, 2011, the subcommittee passed the Flood Insurance Reform Act of 2011 (H.R.1309). PIA has endorsed this bill and has reaffirmed its support of the NFIP.
When it comes to reforming the NFIP, privatization is not a panacea. Solving the program’s problems can be accomplished by the common-sense reforms proposed in H.R. 1309. What should be avoided is a public-private hybrid approach that places good risks in the private sector and assigns bad risks to the government. Such an approach would aggravate rather than minimize the program’s problems.