Flood Insurance



Subsidy Type


Committees of Jurisdiction

Senate Banking Committee

$479 FY 16 Budget Score (in mil.)
$4,790 FY 16-25 Budget Score (in mil.)

The National Flood Insurance Program (NFIP) was created to provide “a reasonable method of sharing the risk of flood losses through a program of flood insurance which can complement and encourage preventative and protective measures.” To foster increased participation, the NFIP did not charge actuarially sound rates, or increase rates based on previous loss experience. After catastrophic storm year of 2005 (including Hurricanes Katrina, Rita, and Wilma – three of the costliest disasters in the nation’s history), the program was $17 billion in debt to the Treasury, far outstripping annual premium revenues of roughly $3.5 billion. The program went even more in the red after Superstorm Sandy, now owing taxpayers more than $23 billion. Simply dividing the total program debt by the years the program has been in existence yields an annual taxpayer cost of $479 million. In July, 2012, the Biggert-Waters National Flood Insurance Reform Act was enacted, which set in motion a process to gradually increase premiums to risk-based rates for many properties.

Two years later, several of the Biggert-Waters Act reforms were either reversed or reduced. However, rates are rising on many policies, creating a burgeoning U.S. private flood insurance industry. Congress could shift more of the burden off the federal government and onto the private sector by removing impediments to the industry’s development.

« Back to Database