The Federal Emergency Management Agency’s (FEMA) National Flood Insurance Program (NFIP) has about $7.6 billion in available funds to pay for claims related to Hurricane Harvey – but a good $5.9 billion of the budget will be borrowed from the US Treasury.
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“The National Flood Insurance Program has $1.7 billion available to pay claims,” said Andy Read, an executive officer for the Federal Insurance and Mitigation Administration, itself a part of FEMA.
“Additionally, the NFIP has $5.9 billion in borrowing authority to pay claims resulting from Hurricane Harvey,” Read added. “This does not include additional resources that reinsurance may provide.”
On Monday, Bloomberg Intelligence said that insured losses arising from the hurricane event could top $10 billion, but analysts say it is too early to make accurate estimates of possible claims. Preliminary estimates, however, place total losses (both insured and otherwise) between $30 billion and $100 billion.
Bloomberg also noted that the NFIP covers $105 billion of property in areas of Texas where Harvey’s rains hit the hardest. The NFIP, set to expire next month, owes nearly $25 billion to the US Treasury.
Although there are plans in Congress to reauthorize the program, some believe that the NFIP needs an overhaul to properly and efficiently address flood damage.
“[The] program is actuarially unsound with an imbalance between premiums collected and incurred losses,” Bloomberg observed.
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