The Homeowner Flood Insurance Affordability Act: Why the Federal Government should Not Be in the Insurance Business

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The Biggert-Waters Flood Insurance Reform Act of 2012 revised the National Flood Insurance Program (NFIP) in order to make the debt-ridden program financially viable. Less than two years later the Homerowner Flood Insurance Affordability Act delayed or eliminated many of the Biggert-Waters' reforms, most notably the reduction or elimination of flood insurance subsidies. This legislative activity sparked critical discussions on ways to improve the NFIP in an era of rising sea levels, continuing coastal development, and increasing national debt. Most commentary focuses on the changes in rules and regulations, while missing the salient point relating to the Congressional legislative process itself. If the goals of the NFIP are to be met, sound policies have to not only be enacted, but also implemented and sustained. Flood insurance, mitigation of risk, and disaster relief are intertwined and, although well intentioned, sometimes at cross-purposes. Financial viability requires economic discipline imposed by a capitalist marketplace, whereas the recent policy reversal relating to the NFIP highlights why the Federal Government should not be in the insurance business.