Draft reveals deep cuts, privatizing federal flood insurance
The FEMA Review Council’s big recommendations are postponed amid leaked reports of its draft report, while the My Safe Florida Home Program is touted as a model for insurance premium savings in a New York state senate hearing. It’s all in this week’s Disaster Management Digest.
FEMA Review Council Fallout: For almost a year now, emergency management and related industries (including insurance) have been anxiously awaiting the final FEMA Review Council recommendations that will decide the future direction of the agency and its involvement in American disasters. The panel, chaired by U.S. Dept. of Homeland Security Secretary Kristi Noem and U.S. Defense Secretary Pete Hegseth, was slated to vote on releasing the report on December 11, when a leaked draft made its rounds just before the meeting, with reports that Secretary Noem had reduced the 160 pages down to 20. The draft included a reduction in FEMA staff of around 50%, and unveiled a new block grant system meant to streamline the delivery of money and aid to communities in need – including direct payments to affected individuals and families. The reported draft also included privatizing the National Flood Insurance Program. Along with renaming the agency, initially there were talks about raising FEMA to a cabinet-level position, but the draft shows the panel decided against this, leaving the agency under DHS.
According to FEMA Councilmember Governor Glenn Youngkin of Virginia, “the basic tenants are a federal government that is supporting the leadership of local and state capabilities to both respond and repair to emergencies.” However, just after the leaked draft hit the internet, the vote was suddenly cancelled with no warning to registrants – or apparently, to some of the participants. Days later on December 15, a Carnegie Endowment for International Peace webinar to allow industry thought leaders such as former FEMA Administrator Pete Gaynor to speak on the report, instead allowed them to opine on what could’ve been and what still may be. Gaynor described the transformative nature of the first draft, calling it “the north star” that would “offer predictability to FEMA and to the entire emergency management enterprise.” But with no formal report, many were left frustrated and without this sense of clarity. He continued, “Everyone is standing fast … because some days you may have federal dollars, and the next day you may not.” Uncertainty seems to be the operative word for much of the ongoing FEMA rework, as many await sure footing before their next move. “It stifles innovation,” added Gaynor. “It’s a giant ecosystem that is yearning for clarity … a signal, let’s get back to what the American public needs.”
My Safe Florida Home in the Empire State: Another topic discussed at the New York state senate hearing on insurance affordability was the My Safe Florida Home program, which we have long championed here at LMA. Panelists mentioned the program as a potential means to incentivize home fortification in the Empire State like it has done here in Florida. Elizabeth Derbes, Director of Financial Regulation and Climate Risk at the Natural Resources Defense Council, listed the My Safe Florida Home program as a great way to offer discounted insurance rates for homeowners, stating that “the financial benefits of risk reduction far outweigh the costs … to protect homes against wind and hurricanes.”
Data from the program corroborates this idea, with 63,000 low-to-moderate income homeowners being approved for mitigation grants, 43,000 mitigation projects completed, and 21,000 of those projects seeing an average premium decrease of $938 in 2024. Some 12,000 more had no premium increase or decrease, and were simply given a grant for a much more resilient home when the next hurricane arrives, a net positive for the risk pool.
Almost $834 million in mitigation grants have gone towards building a stronger Florida, and other states are taking note, with Louisiana proposing similar legislation and New York considering the benefits. “Shouldn’t we be trying to figure out what the best practices are?” asked Chair Kavanagh in his closing statements. “We mentioned Florida has mandatory discounts for wind … (they’re) incentivizing the best practices and incentivizing all property owners to minimize the harm.”
LMA Newsletter of 1-6-26
