U.S lawmakers have reintroduced a bill that pushes for the National Flood Insurance Program (NFIP) to cede more of its risk to the private reinsurance market.
The Taxpayer Exposure Mitigation Act is one of four bills introduced by Missouri Congressman Blaine Luetkemeyer that calls for improvements to the Federal Emergency Management Agency’s (FEMA) flood program.
The proposed legislation would require FEMA to purchase reinsurance or some capital market alternative to further protect taxpayers from future NFIP losses.
FEMA first entered the reinsurance market in 2016 with $1 million of protection for the NFIP and returned with reinsurance placements of $1.024 billion and $1.46 billion in 2017 and 2018, respectively.
The Agency also secured an additional $500 million of reinsurance for the NFIP from the capital markets last year with the issuance of its FloodSmart Re 2018-1 catastrophe bond.
It is expected that FEMA will have renewed its NFIP reinsurance coverage this January but has been unable to make an announcement due to the ongoing U.S government shutdown.
However, Congressman Luetkemeyer is among lawmakers who believe that FEMA could go further in utilising the private reinsurance market to protect taxpayers from losses.
“Throughout my time in Congress, bipartisan calls for comprehensive reform of the NFIP have gone unanswered,” said Luetkemeyer. “I represent thousands of miles of shoreline along the Lake of the Ozarks, Mississippi River, Missouri River, and Osage River where my constituents continue to face threats of flooding while we kick the can down the road, continuing the inadequate status quo.”
“Today I reintroduced four bills that will make a real difference to coastal Americans,” he continued. “I hope my colleagues will support these bills as we continue to work toward permanent, comprehensive reforms that ensure the program is financially sound, taxpayers are protected from footing the bill for future losses, and power is shifted from bureaucrats in Washington to states, local communities and policyholders.”
Among the other bills introduced by Luetkemeyer is the Community Mapping Act, which would allow local communities to develop alternative flood maps to those produced in Washington.
Another bill requires the use of replacement cost value in determining the premium rates for flood insurance coverage under the NFIP, while the final bill allows commercial properties to opt-out of the NFIP mandatory purchase requirement, allowing businesses to more easily purchase private flood coverage.