Conspiracy

A majority of Texans don't have flood insurance. That could be a problem for the government.

Those with flood insurance are likely to begin filing claims either through private insurers or through a federally-backed program known as the National Flood Insurance Program (NFIP). Those who opted for insurance coverage through the government are likely to place additional financial strain on a system that has been burdened following two costly storms: Hurricane Katrina and Superstorm Sandy. Those disasters alone left the federal program roughly $25 billion in debt to the Treasury Department.

That $25 billion puts the NFIP, which is administered through FEMA, close to its debt ceiling of $30 billion.

“It’s possible that an event as catastrophic as Hurricane Harvey could send the program to the point where it’s hitting that limit in terms of debt. Congress is set to reauthorize the National Flood Insurance Program this September, and Hurricane Harvey may light the fire to make some reforms that will put the program on a financially solvent path.

The government’s troubles are unlikely to end with the NFIP, however. According to Insurance Council of Texas, a stunning 80 percent of Texans don’t own flood insurance. That means the majority of disaster victims will look to federal agencies, like FEMA, for additional relief. Through FEMA’s Individuals and Households Program (IHP), disaster victims who don’t have insurance could file to receive up to $33,000 for home repair. They’ll also be able to apply for low-interest loans from the Small Business Administration (SBA).

Though the Hurricane Harvey’s aftermath continues to affect communities in Texas, as well as some in neighboring Louisiana, FEMA officials said on Monday that they’re anticipating more than 450,000 disaster relief claims. Similar to the NFIP, these claims could tax an agency that’s seen continued budget cuts throughout the years.

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