FEMA to Borrow $2 Billion to Pay Flood Claims After Hurricanes Helene and Milton

The Federal Emergency Administration Company stated in February that it must borrow $2 billion from the U.S. Treasury to cowl claims from Nationwide Flood Insurance coverage Program policyholders.

FEMA, administrator of NFIP, stated it expects to pay out greater than $10 billion in flood claims associated to hurricanes Helene and Milton in 2024, in addition to claims for different flooding occasions final 12 months.

“The NFIP will not be designed to pay for a number of catastrophic occasions in a single 12 months with out further monetary help,” FEMA stated. “The mixed losses from 2024 have depleted the NFIP’s funds generated from premiums to pay claims.”

Greater than 57,400 flood claims associated to Hurricane Helene have been dealt with by this system, which has paid out greater than $4.5 billion as of Feb. 6. It expects to pay losses from Helene of between $6.4 billion and $7.4 billion.

For Milton, the NFIP to this point has paid out over $740 million as of the primary week in February on over 21,100 claims. The vary of ultimate losses from Milton is estimated to be $1.2 billion to $2.9 billion, FEMA stated.

Milton struck Florida on Oct. 9, 2024. For the personal insurance coverage trade, Milton will go down as the most expensive hurricane of the historic 2024 season, and the storm will doubtless be one of many costliest of all time. However Milton was extra of a wind occasion than Helene, which made landfall in Florida as a Class 4 in late-September earlier than dumping document rainfall in Southeast states together with Georgia, North Carolina, and South Carolina.

FEMA’s debt is now about $22.5 billion. It has the authority to borrow as much as about $30.4 billion and already had borrowed $20.5 billion following hurricanes Katrina, Sandy, and Harvey, FEMA stated.

Elizabeth Asche, senior government of the NFIP, stated it’s “strategically using short-term borrowings in 60-day increments, demonstrating our cautious and accountable administration of the borrowing authority.” She added: “The widespread, devastating flooding following hurricanes Helene and Milton re-emphasizes the monetary results flooding can haven’t simply to survivors but additionally the Nationwide Flood Insurance coverage Program.”

In accordance with the Congressional Analysis Service, the NFIP—funded by the premiums it collects for flood insurance coverage insurance policies—had $615 million available as of Jan. 25 to pay claims.

CRS, a nonpartisan shared workers to congressional committees and members of Congress, stated NFIP owes the debt it takes and pays for accruing curiosity by premiums. Since 2005, the NFIP has made six principal repayments totaling about $2.8 billion and curiosity of about $6.2 billion. CRS stated this system pays about $619 million in curiosity yearly, accruing $1.7 million in curiosity each day.

This system didn’t have to borrow between November 2017 and February 2025. In accordance with CRS, NFIP in October 2017 had $16 billion of debt cancelled of a complete of about $30.4 billion on the time. This was to pay claims for hurricanes Harvey, Irma, and Maria. However in November 2017, NFIP borrowed $6.1 billion to pay claims for losses incurred from this trio of hurricanes, growing whole debt to about $20.5 billion—the place it stood till now.

NFIP has been reauthorized 32 instances since 2017. Its present reauthorization is about to run out on March 14.

Subjects
Disaster
Pure Disasters
Claims
Flood
Hurricane