A bill introduced in the US Senate proposes extending the National Flood Insurance Program (NFIP) until December 31, 2026. This would mark a significant shift away from the pattern of short-term extensions that have characterized the program over the past decade, according to a report by AM Best.
The most recent temporary extension, passed in December 2024, is set to expire at midnight on March 14. Unless Congress passes this legislation, or another extension through the government funding resolution, the program faces a lapse.
The House of Representatives approved the continuing resolution on March 11, but the Senate had yet to vote on the measure. Louisiana Republican Senators Bill Cassidy and John Kennedy, who introduced the bill, stated that the repeated use of short-term extensions weakens the NFIP’s ability to “protect the 4.7 million policyholders” across the nation. “The purpose of an insurance program is to provide certainty. Renewing every two months is not that,” Senator Cassidy explained.
During a speech on the Senate floor on March 13, Cassidy criticized the NFIP’s rising rates, which are due to the implementation of Risk Rating 2.0. However, he emphasized the need to maintain the program. “We need to make flood insurance affordable again — and I will keep working to do that — but first, let’s make sure it survives the weekend,” Cassidy stated.
If the NFIP lapses, no new policies would be issued. Existing policies would expire at the end of their one-year terms, according to the Congressional Research Service (CRS). Additionally, the NFIP’s borrowing authority from the US Treasury would decrease from $30.43 billion to $1 billion.
“Other activities of the program would technically remain authorized, such as the issuance of Flood Mitigation Assistance Grants,” the CRS wrote in January. “However, the expiration of the key authorities listed above would have potentially significant impacts on the remaining NFIP activities.”
In 2011, the largest carrier in the write-your-own (WYO) program left the NFIP, citing the administrative complications caused by the numerous short-term extensions and potential lapses, according to the CRS. Private carriers participate in the WYO program by writing and servicing NFIP policies.
Concerns regarding the NFIP’s stability and increasing costs have led lawmakers in several states to consider alternative solutions. In January, a bill was introduced in Alaska to create a state-based flood insurance program. Republican state Senator Bert Stedman, the bill’s sponsor, indicated that Alaska’s program would serve as an alternative to the NFIP, financed by premiums rather than operating as a subsidiary.
In 2024, a bipartisan bill was introduced in the Senate with the intention of providing financial relief to low- and middle-income homeowners experiencing increasing flood insurance premiums under the NFIP. This proposed tax credit would be exclusively available to primary residences insured through the NFIP and would not apply to married taxpayers filing separate returns, according to the text of the proposed legislation.
