When President-elect Donald Trump said, he wanted to "drain theswamp," he may not have been referring to the sinking federal flood insurance program.

However, it is likely the nationalization of the flood insuranceindustry and years of federal interference in the sale of privateflood insurance will not go unnoticed.

The government monopoly on flood insurance has been a majorimpediment to the growth of the private flood insurance market andhas only exacerbated the $23 billion debt the National Flood Insurance Program owes taxpayers. Itseems foreseeable that a Trump administration will act to correctsuch needless waste.

Swamps are typically drained to remove the water that harborsmosquito larvae and alligators. Over the years, pundits haveembraced this analogy when looking to rid Washington, D.C., ofself-serving politicians and feckless bureaucrats or — as in thematter at hand — a flawed federal program costing taxpayersbillions.

Started in 1978

In 1978 during a congressional recess, the secretary of the U.S.Department of Housing and Urban Development nationalized the floodinsurance program by forcing private insurers out.

By 1983, so little flood insurance had been written by thefederal program that a no-risk deal had to be offered to enticeprivate insurers to market federally backed flood insurancepolicies. Write Your Own (WYO) insurers, as they wereironically called, were created to write policies under their owncompany names, but assume no real flood risk. Under this structure,the government transfers all underwriting losses to U.S.taxpayers.

The record makes clear that Congress' original intent was forthe private market to eventually assume all flood risk. However,contradictory to this intent, the NFIP has acted to preserve itsmonopoly. Manifestly, the NFIP has been catastrophic for taxpayersand flood insurance buyers alike.

Trump's appointees to the U.S. Department of the Treasury andthe U.S. Department of Homeland Security, where the NFIP is nowhoused, could act swiftly to replace defective regulations and NFIPpractices that perpetuate the nationalization of flood insurancewithout congressional action.

New life for Flood Insurance Market Parity andModernization Act?

The Trump administration will almost certainly support passageof the Flood Insurance Market Parity and Modernization Act, whichpassed in the House of Representatives last April with nodissenting votes, but stalled in the Senate as S. 1679. Thismeasure aims to correct defective language misguidedly added to thelast reauthorization of the NFIP in 2012. The defective languagehas proven to be a legal quagmire for federal lendingregulators.

Trump appointees will likely take issue with the current effortsof WYOs to continue collecting their expense allowances while theysimultaneously move the best risks to their own private marketfacilities. New appointees may well see this double-dipping asbeing akin to the kind of privatization that took place in Russiaduring the 1990s and make efforts to create a level playing fieldfor all flood insurance competitors.

The HouseFinancial Services Committee wisely took a step toward reformDec. 7 in releasing its Principles for Flood Insurance Reauthorization andReform, which detail what they would like to see when the NFIPcomes up for reauthorization. While not mentioned as one of theprinciples, it seems certain that the committee will require anyreauthorization to contain measures prohibiting the largest WYOparticipants from replacing the NFIP monopoly with a WYO oligopoly.It seems certain that Congress and the Trump administration willdisallow the continuance of unfair competition in the U.S. floodinsurance space whether by the NFIP monopoly or by a WYOoligopoly.

It seems certain that Congress and the Trump administration willfind a way to disallow the continuance of unfair competition in theU.S. flood insurance space whether by monopoly or oligopoly.

NFIP facing expiration in September2017

Regardless of whether the modernization legislation passes ornot, Congress must tackle how and whether to reauthorize the NFIP'scharter, which expires in September 2017. Upon close inspection, aTrump administration might look at the issues surrounding theNFIP's reauthorization, see the $23 billion debt and the program'smany shortfalls, and move to dismantle the whole thing, but that isimprobable.

Given his enthusiasm for free enterprise, President-elect Trumpseems likely to move away from a "Big Government" NFIP,particularly when private insurers have been improperly stifledsince 1978. Hopefully, when the new president and new Congress takea closer look, they will see the need for free-market reform andclear the way for private insurers to operate— unobstructed — in the flood insurance market,in turn freeing the government, and its taxpayers from the massivefinancial burden that is the NFIP.

Craig Poulton is chief executive officer of Salt LakeCity-based Poulton Associates, which administers the country'slargest private flood insurance program, the Natural CatastropheInsurance Program at CATcoverage.com.

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