PIA Connection Online

As the Trump administration moves forward with its overhaul of the federal government, the future of the Federal Emergency Management Agency (FEMA) remains unclear. Since President Trump took office in January, FEMA has lost approximately one-third of its permanent workforce after Executive Order (EO) 14239, “Achieving Efficiency Through State and Local Preparedness” signaled a seismic shift in responsibility for disaster preparedness and response. The EO, which aims to transfer the bulk of responsibility for disaster management to individual states and reduce federal bureaucracy, could have significant impacts on the National Flood Insurance Program (NFIP) and independent insurance agents.

While the goal of the EO is to enhance efficiency, trim bureaucracy, and cut wasteful spending, the NFIP plays an invaluable role in FEMA’s disaster mitigation and response efforts which would be nearly impossible to replicate at the state-level or in private markets. The NFIP provides flood insurance to over 5 million policyholders, accounting for 95% of all flood insurance policies in the United States. With a miniscule private market and state governments with smaller budgets and fewer resources to lead disaster management efforts, FEMA and the NFIP are essential to protecting American homes, businesses, and infrastructure from flood events.

A potential concern for the future of the NFIP is the shift in responsibility of disaster efforts to state authorities and the possibility for deeper cuts to FEMA’s funding and personnel. NFIP cuts could impact their ability to manage claims, update flood zone mapping, and provide assistance to local communities. Decreased funding could also cause the NFIP, which is over $20 billion in debt, to increase premiums and reduce accessibility to quality flood coverage. With no clear mechanism at the state-level or in the private market to fund and execute a comprehensive flood insurance and mitigation program, it is vital the administration fully supports the NFIP and the independent insurance agents who carry out the program on behalf of the federal government.

With proper funding and staffing, the EO also includes potential enhancements for FEMA, including the development of a National Resilience Strategy (NRS) utilizing a risk-informed approach. With a focus on specific risks, like flooding, the NRS could increase the accuracy of the NFIP’s flood risk assessments including Risk Rating 2.0 methodologies. Further, the creation of a National Risk Register (NRR) that “identifies, articulates, and quantifies natural and malign risks to our national infrastructure, related systems, and their users” as proposed in the EO could strengthen the data framework for quantifying flood risks and setting policy premiums. Finally, a more streamlined FEMA could be able to more quickly manage claims and respond to flood events if essential NFIP resources and personnel are retained.

PIA recognizes the need and has long called for NFIP reforms to create a solvent and effective flood insurance program and looks forward to working with Congress to secure these necessary reforms and a long-term reauthorization of the NFIP. PIA urges the Trump administration to carefully consider the potential effect of further disruptions to FEMA’s activities and prioritize a reformed, but fully supported NFIP.