Long-Term Reauthorization Urged for National Flood Insurance Program

The National Flood Insurance Program (NFIP) recently experienced lapses in its authority to issue new flood insurance policies during a federal government shutdown. This disruption impacted up to 40,000 pending home sales in FEMA-designated high-risk flood areas, exposing broader vulnerabilities in flood insurance availability and market stability. The pause in NFIP operations also delayed flood mapping projects, affecting buyer knowledge of flood risks and causing uncertainty for homeowners whose policies were expiring during this period. With flooding identified as the nation’s most common and costly natural disaster, the NFIP plays a critical role in the mortgage and commercial lending processes, providing essential coverage that private insurers are unable to fully replicate due to risk and affordability challenges. Despite a growing private flood insurance market, the NFIP remains a primary source of flood protection for U.S. homeowners, with only about 4% carrying flood insurance, largely driven by federal purchase mandates. Core NFIP functions extend beyond insurance provision to include floodplain management, flood mapping, and funding for mitigation efforts, highlighting the program’s integral role in national flood risk management. Stakeholders from real estate, insurance, lending, and state and local government sectors are urging Congress to enact a long-term NFIP reauthorization to prevent further operational disruptions and market instability. Bipartisan legislative proposals have surfaced aiming to provide extended authorization and reforms to enhance program stability and facilitate improved risk-based pricing technologies. The American Bankers Association and other industry groups emphasize the importance of ending short-term extensions and lapses to ensure continuous flood insurance availability and reliable support for policyholders and affected communities. They advocate for congressional collaboration to establish a durable, stable NFIP framework that supports housing markets, enhances risk management, and sustains federal mitigation programs.