National Flood Insurance Program Is Broke – Even Before Claims from Hurricane Harvey


The National Flood Insurance Program offered through FEMA is insolvent and on track for bankruptcy at $24.6 billion in debt. It has a borrowing cap of $30 billion, and Hurricane Harvey claims have not even started to come in. The Program has been kept afloat from ‘loans’ from the Treasury, which means it will never be paid back except by citizens in the form of higher taxes and inflation.

The National Flood Insurance Program (NFIP) offered by the Federal Emergency Management Agency (FEMA) is insolvent and on track for bankruptcy at $24.6 billion in debt to the U.S. Treasury, The Advocate reports.

Insurance claims from the Category 4 hurricane that flooded the Gulf Coast of Texas last month haven’t even begun pouring in yet, according to Louisiana’s The Advocate.

The NFIP’s borrowing authority is capped at $30.4 billion, leaving a cushion of $5.8 billion before the program either shuts down or is restructured to cover its costs, according to a Congressional Budget Office report released Friday.

Loans from the Treasury operating like government subsidies are the only way the NFIP has managed to stay afloat, Louisiana State University finance professor Jim Boyd told The Advocate.

“Somebody’s not running this so-called insurance program correctly,” Boyd said. “That’s maybe a government bail-out, not insurance.”

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