Should the National Flood Insurance Program be privatized?

According to a recent story in National Underwriter, FEMA has indicated that Congress is considering significant reforms to the National Flood Insurance Program (NFIP).  At a recent FEMA-sponsored forum, several trade groups have put forth suggestions for reform, among them privatization, either partially or in total.  The speakers, representing the Reinsurance Association of America and the Association of Bermuda Insurers and Reinsurers, indicated that there is bandwidth and interest in the private market to underwrite flood insurance.  They pointed out benefits of such an arrangement, including:

• Incentives to preserve environmentally sensitive land
• Promote risk mitigation among property owners
• Greater protection of coastal wetlands that act as a flood buffer
• Reduced risk for taxpayers that support NFIP now

 What do you think? Does the NFIP need reform? Should the NFIP be privatized? What impact would major reform have on the flood insurance marketplace? Let us know.