This past fall, Hurricane Helene and Hurricane Milton struck southern parts of the nation such as Florida, Tennessee, Virginia, and a few other states. Ranked as two of the deadliest storms in the U.S. to date, both hurricanes have caused severe devastation for families, individuals and communities. On Nov. 14, lead Democrat of the House of Financial Services Committee, Rep. Maxine Waters (CA-43) sent a letter to Democratic leader Hakeem Jeffries and Speaker of the House Mike Johnson, encouraging the House to execute immediate support of recovery efforts through the National Flood Insurance Program (NFIP) for those affected by the deadly hurricanes.
Despite these two hurricanes occurring far away from California and being some of the deadliest within the past 30 years, the natural disasters spark concern for many citizens across the nation and local officials, as flood management still affects California communities. Waters’ request is essential for disaster-prone states such as California—a state where flood risks, earthquakes and wildfires are common and projected to increase—placing millions of businesses and residents in need of cost-friendly and economical insurance options. It is anticipated that flooding disasters, particularly flash floods, would get worse around Los Angeles. Due to its size and capability of flooding, recent storms in the Los Angeles area have been dubbed by some as “biblical” floods.
“As of October 7, 2024, the NFIP had a total of more than $14.1 billion in capacity, including over $4.2 billion in cash-on-hand resources and $9.9 billion in borrowing authority. Make no mistake: just one more storm could bankrupt the program and prevent future claims payments to devastated communities and responsible, taxpaying policyholders.
According to Jeremy Mount, Senior Fellow of the Public Policy Institute of California (PPIC), “California storms can be just as intense and destructive as hurricanes. Although hurricanes are not part of California’s natural disaster portfolio, people sometimes forget that California has its own equivalent in atmospheric rivers (ARs).” Mount continues, “These storms—which often carry as much water as the Amazon River up in the atmosphere—originate in the subtropical Pacific Ocean and deliver prodigious amounts of rain and snow to California. Although ARs do not pack the high-speed winds of hurricanes, their precipitation intensities match what we’ve seen in Helene and Milton.”
Waters’ highlights the importance of NFIP debt, which she also included in the “Housing Crisis Response Act.” Currently, increasing NFIP debt will limit the NFIP’s ability to compensate flood insurance claims and make coverage far more costly and less available for current and future policyholders. “This debt represents claims from homeowners who responsibly retained flood insurance coverage in order to be able to rebuild after a storm,” said Ranking Member Maxine Waters.
She further explained what the NFIP debt signifies for policyholders, how it affects homeowners, and the significance of stabilizing the program—in the case of future disasters that can even affect California communities if a natural disaster occurred. Ranking Member Waters stressed that Congress should not castigate policyholders with “skyrocketing debt that pushes up the cost of premiums.” Waters also mentioned how Congress regularly provides disaster recovery grants for “underinsured or uninsured households” upon her request.
FEMA is currently paying almost $700 million in annual interest to the U.S. Treasury while the NFIP currently has $20.5 billion in outstanding debt, according to Waters.
Congresswoman Waters continues, “Factoring in projected claims from Helene and Milton, FEMA estimates that these interest payments would go up to $1.3 billion by 2034. This debt not only hamstrings the NFIP’s capacity to pay claims, but it also makes NFIP coverage more expensive for current and future policyholders.” This signifies the importance of keeping the NFIP on sound financial ground so it can continue to be an option for affordable and comprehensive flood coverage for Californians as flooding is expected to worsen.
According to a source, the state of California has a total of 185,866 NFIP policies in force based on the latest public NFIP data. This amounts to more than $56.4 billion in total coverage for Californian policyholders who may be affected by flood-related disasters. Los Angeles County accounts for 8% of these policies and coverage. Ultimately, NFIP debt forgiveness will hopefully be prioritized as a focal point within the Disaster Supplemental.
