National Flood Insurance Reserve Fund

What this funds

These funding and staffing levels are subject to change due to Administration priorities and a mission analysis The National Flood Insurance Program (NFIP) is a federal program that enables property owners and renters in participating communities to purchase flood insurance in exchange for the communities adopting and enforcing floodplain management requirements that reduce the future economic impact of floods on private and public structures. The NFIP provides the nation with protection from flood damages by: ' Providing flood insurance and claim payments to policyholders. ' Improving floodplain management, developing maps of flood hazard zones, and educating property owners about the risk of floods. ' Offering grants for Flood Mitigation Assistance (FMA) to communities to avoid future flood losses and accelerate recovery from flood damage. ' Managing the finances of the NFIP, which includes the National Flood Insurance Fund (NFIF) and the Reserve Fund. FEMA is building a culture of preparedness by helping individuals, communities, and businesses understand their risk and available options for managing those risks. These mitigation efforts in turn reduce the impact of disasters. Fee Authority: Established in the U.S. Treasury by the National Flood Insurance Act of 1968, the NFIF is a premium and fee-generated fund that supports the NFIP. The Act, as amended, authorizes the federal government to provide flood insurance on a national basis. FEMA partners with state and local governments to reduce the cost of flood damage on private and public structures by identifying, analyzing, and reducing flood risk. FEMA also works to close the insurance gap so that more people are indemnified by insurance for future flood losses, facilitating their recovery, rebuilding communities, and reducing costs to taxpayers. Fee Uses: Funding for the NFIP comes from offsetting collections from the following sources: ' Flood insurance premiums: Pays claims, funds flood-related grants and provides funding to support the operating and administrative costs associated with maintaining the program, including the work of the Office of the Flood Insurance Advocate. These funds are mandatory and deposited into the NFIF Program, Project, or Activity (PPA). ' Assessments and Surcharges on NFIP Policies: Funds the National Flood Insurance Reserve Fund. These collections can be used to meet future obligations of the NFIP. These funds are also mandatory and are deposited into the National Flood Insurance Reserve Fund PPA. ' Federal Policy Fees: Also paid by flood insurance policyholders, policy fees support floodplain management, flood mapping, and NFIP management. These funds are discretionary and are deposited into the Mission Support and Floodplain Management and Flood Mapping PPAs. Change Mechanism: The premium rates that FEMA collects from NFIP policies are comprised of several components. The first and largest is insurance premiums (see 42 U.S.C. ' 4014(a)(1)), which includes support for costs and allowances incurred to sell and administer insurance as well as administrative expenses of running the program (as part of the premium). ' The NFIP establishes premium rates based on an actuarial model that reflects a property's flood risk by considering a building's location, its replacement cost and the value of its contents, the amount of coverage and deductible requested, and the building's characteristics, such as construction type, foundation type, first floor height, and other factors. In addition, the NFIP issues periodic rate changes designed to achieve ' The second component is the Federal Policy Fee (FPF). FEMA has the flexibility to increase or decrease these fees annually based on flood Risk Policies. In October 2017, the FPF was set at $25.00 for contents-only policies. Since April 2024, the FPF amount has remained at $47.00 for all NFIP policies other than residential condominiums with more than 20 units, with the FPF reduced according to the number of units. The FPF amount is not expected to change in FY 2027. required to maintain a reserve ratio of 1.0 percent of the total loss exposure through the Reserve Fund assessment. However, FEMA can phase in the Reserve Fund assessment to obtain the ratio over time, with an intended target of not less than 7.5 percent of the 1 percent Reserve ratio Recovery Rate: The NFIP was not designed to pay for catastrophic events without additional financial assistance. Fifty-eight percent of NFIP contracts are actuarially sound and reflect a single property's flood risk over time, which will help close the gap between premiums and losses. However, the NFIP collects insufficient premium revenue to cover future expected losses because statutorily mandated discounts, program execution, and subsidies mean that the premiums a portion of policyholders pay do not reflect their true risk. Moreover, policyholder revenue funds other important public benefits of the program, including flood mapping, flood mitigation assistance grants, and floodplain management. Together with interest payments on the NFIP's debt, these expenses limit the program's ability to build reserves to cover future losses. Even if the NFIP collected sufficient revenue to meet long-term expected losses, the magnitude, volatility, and geographic concentration of flood risk means that truly catastrophic events could occur that exceed the capacity of the NFIP. The NFIP currently carries $22.5B in debt to the U.S. Treasury. As presently structured, the program is unable to pay this debt back in full. The Historical Collections and Cost Recovery Rate 1 - Collections include premiums and fees. Eligible expenses refer only to expenses under the NFIF and does not include all expenses and claims paid. The NFIP includes the following Discretionary PPAs: Mission Support: This PPA funds administrative support, tools, and resources needed to manage the NFIP. Functions funded by this PPA include

Extracted from Federal Emergency Management Agency, p. 6. Verbatim; nothing here is paraphrased.

Contracts funded by this line

44 linked contracts. These are obligations — lifetime awarded money — and they are not comparable to the request above and are never added to it. No total is shown: an award linked to several lines is counted in full on each, so the sum would not be a fact.

Showing 8 of 44 — most confidently matched first, largest within a confidence tier. These are not necessarily the largest 8.

Confidence mix · 44 medium

Linked contracts are a floor, not a census. Coverage is bounded by how distinctively a program is named and, for performer links, to RDT&E and Procurement — O&M and military construction publish no performers. Budget figures are FY2027 request dollars; contract figures are obligations. The two measure different things and must never be summed together.

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