Under current law, property owners can buy flood insurance through the National Flood Insurance Program (NFIP). Property owners who buy insurance through the NFIP pay annual premiums which are deposited into the National Flood Insurance Fund (NFIF) and are used to pay flood damage claims submitted by policyholders. Those premiums and payments are not subject to annual appropriation.
H.R. 2875 would give NFIP policyholders the option to buy a higher level of coverage under the Increased Cost of Compliance (ICC) program, which provides payments to property owners to undertake flood mitigation activities following a flood claim. The bill also would direct the Federal Emergency Management Agency (FEMA) to make several administrative changes to the NFIP related to claims payment determinations, program staffing, and related matters.
Assuming appropriation of the necessary amounts, CBO estimates that implementing H.R. 2875 would cost $11 million over the 2018-2022 period, mostly for an advisory committee on flood insurance. Enacting the legislation would affect direct spending and revenues; therefore, pay-as-you-go procedures apply. However, because any increase in NFIP collections and revenues would be offset by increased direct spending, CBO estimates that the net effect on the deficit would be negligible.
CBO estimates that enacting H.R. 2875 would not increase net direct spending or on-budget deficits in any of the four consecutive 10-year periods beginning in 2028.
H.R. 2875 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would impose no costs on state, local, or tribal governments.