National Flood Insurance Program


  • Affordable and readily available flood insurance is vital to many communities. ICBA has serious concerns about the impact of any drastic and unsustainable flood insurance premium increases on homeowners and small businesses, local housing markets, community bankers, and the broader economy.
  • ICBA is generally supportive of efforts to increase the role of private insurers in the flood insurance market. ICBA will evaluate all flood insurance reform proposals according to the following criteria:
    • Coverage must be affordable and reasonably available to all homeowners.
    • Banks are not required to review and approve flood policies and are not held liable for policies that are not adequate.
    • Community banks with assets of $1 billion or less should not be required to escrow for flood insurance premiums.


Congress created the National Flood Insurance Program (NFIP) in 1968 to help provide a means for property owners to protect themselves financially. The NFIP offers flood insurance to homeowners, renters, and business owners in participating communities that agree to adopt and enforce ordinances that meet or exceed Federal Emergency Management Agency (FEMA) requirements to reduce the risk of flooding.

In 2005 and 2006, and again in 2012, there were insufficient reserves to cover the billions in flood claims resulting from hurricanes Katrina, Rita, Wilma, and Super Storm Sandy. The NFIP currently has a deficit of $24 billion. In 2012, Congress reauthorized the NFIP, the Biggert-Waters Flood Insurance Reform Act of 2102 and made significant changes to the premium structure.

Changes to the National Flood Insurance Program (NFIP) by the Biggert-Waters Flood Insurance Act of 2012 caused certain properties to be subject to skyrocketing premium increases which would have been triggered by a new flood map or by a transfer of ownership. This is true even if the properties were built to code under then-current flood maps (“grandfathered properties”) and have never experienced a flood. Moreover, new flood maps did not take into account a community’s flood mitigation efforts, including levees and pump systems paid for by the community, and therefore mandate unnecessary elevations. Left unchanged this would have destroyed property values in many communities with low income residents being particularly hardest hit.

ICBA supported the 2014 Homeowner Flood Insurance Affordability Act which amended the Biggert- Waters Flood Insurance Act in order to provide immediate relief for policy holders. These changes include: delaying implementation of new premiums; requiring FEMA to complete an affordability study initially mandated by the Biggert-Waters Act and propose an affordability framework for consideration by Congress that will help homeowners cope with higher premiums; requiring FEMA to recognize community-funded flood protection systems; and improving the accuracy of flood maps.

The National Flood Insurance Program (NFIP) expires on September 30, 2017. Hard won modifications to the Biggert-Waters Flood Insurance Act of 2012 addressing affordability will be part of the debate. Some members of Congress are looking at major reforms of the program to limit the Federal Government’s exposure as well as to encourage the development of a private flood insurance market.

Staff Contacts: Ron Haynie and Renee Rappaport