The National Flood Insurance Program Is Broken
The most expensive type of disaster in the United States is flooding. Hurricanes, a major source of flooding, make up seven of the 10 costliest disasters in United States history, from Katrina in 2005 to Ian in 2022. Together, these storms alone have cost $800 billion, adjusted for inflation.
Half a century ago—before any of these storms occurred—the federal government created the National Flood Insurance Program (NFIP), a public sector alternative to fill in the gaps in higher-risk areas where commercial insurance is unavailable. But as the frequency and severity of flooding events have increased—and as insurers continue to add to the list of states they refuse to insure—the NFIP has become massively oversubscribed, amassing more than $20 billion in debt on behalf of its five million policyholders.