Congress may aid National Flood Insurance Program

WASHINGTON—Congress may have to act to prevent a federal flood insurance program that is already $24.6 billion in debt from running out of money because of flooding caused by this season’s hurricanes.

The National Flood Insurance Program is likely to lack sufficient funds to pay out all flood damage claims caused by Hurricane Harvey in Texas, according to estimates by the Federal Emergency Management Agency, which administers the program.

FEMA estimates it will pay $11 billion in flood claims for Harvey to National Flood Insurance Policyholders in Texas, Roy E. Wright, the deputy FEMA administrator in charge of the program, told reporters in a briefing. The estimate, which doesn’t include cost projections for Hurricane Irma in Florida, exceeds the roughly $1.5 billion FEMA says the National Flood Insurance Program has on hand.

Congress appropriated $7.4 billion for FEMA in an emergency measure enacted last week. But that money doesn’t go to the flood insurance program. Most of the rest of the $15.25 billion emergency relief package would go to the Small Business Administration and the Housing and Urban Development Department.

The flood insurance program’s $24.6 billion in debt, caused largely by damage claims from hurricanes Katrina and Rita in 2005 and Superstorm Sandy in 2012, leaves FEMA with the ability to borrow $5.8 billion from the Treasury to cover claims. Congress would need to increase the borrowing limit for the program if those funds aren’t adequate, lawmakers say.

“Even though we reauthorized it for three months, and extended it, it’s gonna run out of money probably in October,” Rep. Tom MacArthur, R-N.J., said. “They’ve got $1.5 billion in hand, maybe $5.5 billion left in borrowing authority, and then they’re going to be coming to Congress saying they need more.”

MacArthur, a former insurance executive whose New Jersey district was hit by Sandy, said he wants to ensure the program has the funds to pay out the claims.

“We’re going to have to give it more money. I don’t know what form that will take,” he said, adding that extra funds “must come with reform.”