NFIP Needs Renewal. . .But

Unfortunately, Congress needs to renew the National Flood Insurance Program sometime in the next few weeks. Right now, the program provides the only flood coverage that most people can buy. Although I have written about how the program probably wasn’t needed in the first place, and could be privatized and would be hurt if wind insurance were added. It’s not reasonable to think that Congress would or could abolish it right away.
On balance, the legislation before Congress takes steps in the right direction. It reduces subsidies on some properties that probably shouldn’t have been included in the program in the first place. It also tightens eligibility criteria and will likely result in some modest rate increases across the board.
The real threat, however, is the house-passed provision that would add wind insurance to the National Flood Insurance Program. For all intents and purposes, this would replace homeowners’ insurance in much of the country with a government program. It would cost a fortune and wouldn’t work well even on a modest scale. Congress needs to renew the program but, with luck, it can pass legislation that will contract it rather than making it bigger and more burdensome.