A silver lining for Florida
The federal shutdown has sweeping effects on FEMA, the federal flood insurance program lapse is impacting home sales, while Florida’s Congressmen continue the push for long-term reforms to that program with two new bills requiring greater transparency and private market collaboration. It’s all in this week’s Disaster Management Digest.
Feeling the Federal Shutdown: The federal government shutdown last week following Congress’ failure to reach a budget agreement is making the future quite muddy for many federal employees and agencies. While most FEMA employees are considered exempt and will still be available in case of emergency, some 4,000 employees have been furloughed, and other restrictions abound. Namely FEMA’s primary source of funding, the Disaster Relief Fund, is running dangerously low. This means the agency will focus on immediate needs funding only, delaying reimbursements to state and local governments. Coupled with a steep reduction in borrowing authority from the US Treasury (from $30.4 billion down to $1 billion), FEMA will be limited in paying claims after a major disaster. Weather forecasts, extreme weather alerts, and warning information are still available from the National Weather Service during the shutdown, which is continuing much of its day-to-day operations uninterrupted. However, routine maintenance, upgrades, and larger projects could be shelved in the meantime – previous shutdowns stalled the processing of federal climate and weather data.
NFIP Lapse: The National Flood Insurance Program (NFIP) also ran into a wall on October 1st, expiring after a six-month short-term extension. As a result, no new federal flood insurance policies are being written, and no expiring policies are being renewed for now. Given that flood insurance is required for properties in flood zones in order to qualify for a federally-backed mortgage, real estate sales are being impacted. The National Association of Realtors® (NAR) projects that 1,300 property sales per day could be in delayed or outright lost. That adds up to around 500,000 home sales each year, a staggering number that led NAR to pen a letter to Congress (along with all the major property insurance associations) in early September, urging NFIP’s long-term reauthorization and reforms. The reforms echo cries we’ve heard for years: better flood maps, better mitigation, and updated pricing. The silver lining here in Florida: We have a vibrant private flood insurance market, with 57 companies now offering flood insurance, according to the Florida Office of Insurance Regulation flood insurance website. Given that Florida residents are the largest customers of the NFIP (with 1.7 million of its 4.7 million policies), this will not only help them, but could be a boon for private flood carriers, as explored in this Sun Sentinel article.
Broader NFIP Reforms: U.S. Representatives Greg Steube (R-FL) and Jimmy Patronis (R-FL), together with U.S. Senator Rick Scott (R-FL) recently introduced two pieces of legislation in their respective chambers. The Flood Insurance Transparency Act of 2025 would require the NFIP to disclose its methods used in premium calculations and flood elevations. This includes sharing a given property’s loss ratio, policy history, and homes that have experienced multiple losses without mitigation measures. The Removing Barriers to Private Flood Insurance Act would eliminate the “Write Your Own” (WYO) non-compete clause from the NFIP, allowing private insurance companies to sell flood insurance products that overlap with NFIP products.
LMA Newsletter of 10-6-25
