What happens if the National Flood Insurance Program expires? Local experts weigh in

National Flood Insurance Program

HORRY COUNTY, S.C. (WMBF) - The National Flood Insurance Program, which provides flood insurance for nearly five million homeowners and business owners, is set to expire Nov. 21, providing a potential problem for federally insured flood zone properties.

The program was developed in 1969 due to the devastating loss of life and property following Hurricane Betsy in 1965. The aim of the NFIP is to reduce the impact of flooding on private and public structures by providing affordable insurance.

Since the passage of the National Flood Insurance Act in 1968, Congress has often waited until the last minute to reauthorize the program before its expiration and passed only short-term extensions.

The latest temporary extension of the NFIP, signed on Sept. 27, makes it the program’s 13th since 2017, but Congress has been working to reach a bipartisan five-year agreement.

If there is a lapse, the Federal Emergency Management Agency would still have authority to ensure the payment of valid claims with available funds. However, FEMA would stop selling and renewing policies for millions of properties in communities across the nation.

For those along the Grand Strand, a lapse in the NFIP could impact home sale closings. Local realtors in Myrtle Beach said they expect flood insurance policies for people who live in coastal areas to go up in the future.

“We’ve had two major storms in the last three years, and I think the areas that flooded during those times will probably have the most problems," said Jeremy Jenks, vice president of sales for the Trembley Group of Keller Williams. "I think oceanfront, your insurance is already expensive. It’s probably not going to affect those folks as much as the folks who are by the rivers that might get written into a new flood zone and it’s going to really put a squeeze on their budget.”

The short-term extension ensures policy holders will be able to renew their coverage and real estate agents won’t face an interruption while closing home sales. Critics said the program is in desperate need of reforms that will make it financially sound and reduce the complexity of the program in the long run.

“In the last two years alone, they’ve had 12 extensions and in the last two years they’ve had some of the biggest payout years," Jenks said. "So, the program is quite a few billion dollars in debt and I saw different estimates on it, but lots of billions of dollars in debt and I think what’s happening is Congress knows that they need to do something about this, but they’re not sure what to do and there is a bill in the Senate that would update the NFIP, but they just haven’t gotten there yet.”

If there were to be another lapse in the future, the National Association of Realtors predicts nearly 40,000 transactions would be at stake each month of a lapse.

“One of the things with the NFIP is they provide the insurance, but they also provide guidelines and so if a community - for example 22,000 communities - participate in this, in order for them to be involved with the NFIP and get that insurance they have to meet their requirements," Jenks said. "So, what we may see is those guidelines get stricter and so we have to build up higher. We have to use other measures for flooding. Maybe it’s on the developers for more drainage retention and things, but I think we’re going to see some things change because it’s gotten too expensive.”

There are options available, such as flood insurance through a private insurance company. Insurance agents said with the increase of severe weather along the Grand Strand, homeowners should understand how that impacts them all year-round, not just during hurricane season.

The National Association of Realtors is urging the longest extension possible while Congress continues working toward a five-year reauthorization measure.

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