NAMIC urges subsidy reform in National Flood Insurance Program

The National Association of Mutual Insurance Companies (NAMIC) recently urged Congress to reform the National Flood Insurance Program (NFIP) as it works to reauthorize it in a letter to the Senate Banking Committee and House Financial Services Committee.

“Since private-sector insurance companies must charge risk-based rates to remain viable, they cannot compete with the subsidized rates of the NFIP,” said NAMIC Senior Vice President of Government Affairs Jimi Grande. “For any effort to increase private-sector participation in the flood insurance marketplace to be successful, it must address the fact that, unless the subsidy issue is addressed, companies will be asked to sell a similar product at, in many cases, a much higher price.”

The letter took aim at NFIP subsidies that NAMIC suggests are preventing the program from meeting potential obligations. In the letter, Grande argues that the subsidies create inadequate rates that do not reflect the risks of living in high-risk flood zones and that make policyholders less cognizant of those risks.

“If nothing else, people need to understand the truth about what they’re facing when it comes to flood risk,” Grande said. “Even if they continue to receive a subsidy, NAMIC believes that helping homeowners understand the risks they face is the best incentive for them to act to reduce that risk.”