NU Online News Service, Oct. 28, 2:55 p.m. EDT
Significant changes in the National Flood Insurance Program—including an end to all subsidies within five years—are being proposed by a diverse coalition organized by SmarterSafer.org.
In a letter sent this week to the legislative Joint Select Committee on Deficit Reduction, the coalition also recommends creation of a mapping council “to ensure all maps are up to date, accurate and reflect real risk.”
The letter also supports requiring the Federal Emergency Management Agency, which administers the NFIP, to examine the ability of the private sector to assist the program through reinsurance or catastrophe bonds.
It also proposes that the NFIP be streamlined and mitigation efforts strengthened.
The deficit-reduction “super committee” was created to come up with $1.5 trillion in deficit reduction measures over a 10-year period by Nov. 23.
According to an August law, if the group is unsuccessful, the funds will be taken out of existing programs, including defense appropriations, and Medicare and Medicaid.
If the committee fails to agree on a package or the full Congress fails to pass it, a so-called "trigger mechanism" would enact $1.2 trillion in automatic spending cuts to serve as the second installment of cuts. These cuts would be split between national security and domestic programs, but the biggest entitlement programs would be excluded from the cuts.
The letter says that while it is only a small part of federal spending, the NFIP represents a significant cost to taxpayers.
It adds that the program is now almost $18 billion in debt, “with all indications that FEMA will never be able to pay back taxpayers.”
In fact, the letter says, “Unless significant reforms are made, we believe that taxpayers will be called on to further support this program.”
The letter says the coalition “believes that Congress could protect taxpayers and reduce inefficient federal spending by reforming NFIP.”
The coalition supports legislation passed by the House in July and the Senate Banking Committee in late September. The letter says the bills move in the right direction for reforming the NFIP.
The letter was signed by such groups as the Environmental Defense Fund and the National Wildlife Federation; Americans for Prosperity; Americans for Tax Reform; the Center on Risk, Regulation, and Markets—The Heartland Institute; and the Competitive Enterprise Institute.
Insurance groups signing on include Allianz of America; Association of Bermuda Insurers and Reinsurers; Chubb; Liberty Mutual Group; National Association of Mutual Insurance Companies; National Flood Determination Association; Reinsurance Association of America; Swiss Re and USAA.