Barr proposes flood insurance reforms to save U.S. taxpayer dollars

Subsidies for flood insurance coverage under the National Flood Insurance Program (NFIP) would be eliminated under a new bipartisan bill introduced on Oct. 16 by U.S. Rep. Andy Barr (R-KY), potentially saving American taxpayers billions of dollars in rebuilding costs. 

“Our bill reforms the NFIP to give taxpayers a better deal,” Rep. Barr said. “Congress must restructure the NFIP to rely on more accurate and recent floodplain maps to ensure taxpayers are not footing the bill for construction or rock bottom insurance rates in areas dangerously prone to flooding.” 

The NFIP, which offers flood insurance to property owners, renters and businesses at discounted rates, relies on flood zone maps to determine who is obligated to carry flood insurance in any given year. While useful in setting a single year’s flood insurance rates, the process program does not account for the potential worsening of disasters in subsequent years, resulting in underestimations that might mislead communities, developers and property owners about the real risk of flooding. The existing process also results in short-sighted building within flood-prone areas, according to information provided by Rep. Barr’s office.

Specifically, the Build for Future Disasters Act, H.R. 8616, which Rep. Barr cosponsored with bill sponsor U.S. Rep. Scott Peters (D-CA), would end NFIP subsidies for newly constructed properties in areas vulnerable to flooding, according to a bill summary provided by congressional staff, and would require that newly constructed properties built in 2025 or later be subject to rates that reflect up-to-date, flood-risk information.

Structures built prior to 2025 in flood zones or that are re-mapped into flood zones would remain eligible for grandfathering subsidies, according to the summary. 

Additionally, H.R. 8616 would require that the U.S. Government Accountability Office study the feasibility and implications of lowering all subsidies to a point that improves NFIP finances, according to the summary, which noted that the program currently runs a $1.4 billion yearly deficit.

“NFIP’s consistent budget deficits in recent years highlight the need for this bipartisan reform,” said Rep. Barr.

The bill is supported by The Pew Charitable Trusts, the National Association of Mutual Insurance Companies, the Natural Resources Defense Council, and the R Street Institute.