Trump's FEMA Overhaul Would Accelerate Flood Insurance Privatization And Price Millions Out of Coverage
WASHINGTON, D.C. — Sabotaging Our Safety (SOS) today released the next installment in its series examining the Trump administration's FEMA Review Council final report, focusing on two recommendations that together would strip flood-prone families of both the insurance coverage they need before a disaster and the housing assistance they depend on after one.
The Council's report recommends accelerating full risk-based pricing under the National Flood Insurance Program's Risk Rating 2.0 system and creating a voluntary clearinghouse to transfer flood insurance policies to the private market, while ending FEMA's role in long-term housing assistance at the same time. Peer-reviewed research shows Risk Rating 2.0 has already driven up to a 39% decline in new flood insurance policies, with the steepest drops in the lowest-income communities.
"The National Flood Insurance Program was created because the private market would not cover high-risk communities at affordable prices," said Sabotaging Our Safety Advisory Council member Davante Lewis. "The FEMA Review Council's answer to that problem is to accelerate the very pricing scheme that is already driving those communities out of coverage and then eliminate the housing safety net for families who can't afford insurance when the next flood hits. Cutting corners only hurts the communities most in need after a disaster.”
A Pricing Policy Already Pushing Low-Income Families Out: The NFIP was established 58 years ago on a straightforward premise: the private insurance market would not provide affordable flood coverage to high-risk communities, so the federal government would. Risk Rating 2.0 moves premiums toward full private-market pricing, and the impact is already documented. The median annual premium increase under full Risk Rating 2.0 pricing is $433 — a 63% jump.
The lowest-income ZIP codes are losing new flood insurance policies at rates two to four times higher than the wealthiest. Accelerating this program fundamentally restructures flood insurance and completely undermines the NFIP’s entire purpose.
Premiums are projected to increase by 279% in the most flood-ZIP codes under the Council’s risk-based pricing scheme, which comes out to more than $2,000 per year.
A Privatization Scheme That Would Destabilize the Program It Claims to Fix: The Council's proposed voluntary policy transfer clearinghouse would leave the NFIP in a worse financial position, not a better one. Private insurers would absorb the program's lowest-risk, most profitable policyholders, leaving the NFIP responsible for the highest-risk properties while losing the premium base that partially offsets catastrophic losses.
Stripping Insurance and Housing Assistance Together Means No Path to Recovery: The report's flood insurance privatization recommendation and its recommendation to end FEMA's long-term housing assistance role will leave the most vulnerable families behind. Families priced out of flood insurance under Risk Rating 2.0 are the same families who, after a flood, will most need federal housing help to rebuild. The report proposes withdrawing both. Without insurance to trigger a recovery and without a federal housing program to bridge the gap, displacement becomes permanent.
Read the full SOS report here.
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