Reforming the National Flood Insurance Program: Toward Private Flood Insurance

24 Pages Posted: 12 Nov 2017

See all articles by Ike Brannon

Ike Brannon

The Jack Kemp Foundation

Ari Blask

Cato Institute

Date Written: July 19, 2017


Authorization for the National Flood Insurance Program (NFIP) expires on September 30, 2017, offering policymakers an opportunity to rethink the scheme and bring forward reforms that would allow a private flood insurance market to develop in its place. Congress tried to fix the NFIP’s flawed premium structure in 2012. However, most of the changes made were repealed or put on hold two years later. This time around, Congress should focus on measures that would enable the growth of the private flood insurance market. Advances in catastrophic modeling, as well as financial instruments used to hedge risk, make widespread private coverage more commercially viable than ever. Privatization would not disproportionately hurt the working class. A fully private flood insurance market coupled with a targeted, means-tested subsidy would be much less regressive than the status quo. Short of full privatization, Congress should ensure that private insurers can compete on an even playing field with the NFIP.

Keywords: flood insurance, National Flood Insurance Program, NFIP, private market, reinsurance, CAT bond, moral hazard, & regressive

JEL Classification: G22, G28

Suggested Citation

Brannon, Ike and Blask, Ari, Reforming the National Flood Insurance Program: Toward Private Flood Insurance (July 19, 2017). Cato Institute Policy Analysis No. 817, Available at SSRN:

Ike Brannon (Contact Author)

The Jack Kemp Foundation ( email )

1200 New Hampshire Avenue N.W.
suite 800
Washington, DC 20036
United States

Ari Blask

Cato Institute ( email )

1000 Massachusetts Avenue, N.W.
Washington, DC 20001-5403
United States

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