On Deck: Flood Insurance Reauthorization

FEMA deputy praises REALTORS® for their effective collaboration.

The head of the federal government flood insurance program says he’s confident Congress wants to avoid the short-term, stop-and-start reauthorizations of the National Flood Insurance Program that led to so much market instability half a dozen years ago. Roy Wright, deputy associate administrator for insurance and mitigation at the Federal Emergency Management Agency, says lawmakers in the House of Representatives will likely start working on reform and reauthorization of the program in the next two to three weeks and the Senate should follow shortly after that.

Roy Wright, head of the federal government's flood insurance program, talks with REALTORS® Tuesday about improving and reauthorizing the program. Credit: Robert Freedman

Wright said he’d like to see more households buy coverage, whether through the federal government or the small but growing private market, because the insurance is crucial for households’ ability to recover from flooding, whether it’s caused by a natural disaster like Hurricane Katrina or Sandy or by a small, localized event.

Households owning homes in or near flood zones often have the mistaken idea that large amounts of federal disaster assistance are available to individuals in the event of a big storm, but nearly 85 percent of Disaster Relief Fund assistance after a presidentially declared disaster goes to public infrastructure, leaving around 15 percent available for private households. And that 15 percent goes mainly to the neediest households. FEMA expects households to tap their own resources or take out a loan first.

Wright said the typical payout from disaster assistance after a big event is about $4,000, maybe $8,000 in special cases, but it’s almost never as high as the $33,000 maximum available. Households with flood insurance, by contrast, are typically able to get their get their entire structure replaced, with payouts well over $100,000 not uncommon.

Wright indicated that several potential changes to the insurance product are among the reforms being discussed as part of reauthorization process, including adding basement coverage, creating a single deductible for damage to the structure and to personal property, and more money for living expenses. Wright praised REALTORS®’ involvement in the reauthorization of the program five years ago, their work toward reauthorization this year, and for their close working relationship with FEMA. “Part of the commitment I made to your leaders is, I want to work with you,” he said. “I want to know what you need from us and I want you to know what we need from you. Collectively we’ll find a way forward and get there.”