What Happened?

Only about 4% of homeowners carry flood insurance, so if you own a home, a proposed overhaul of the program that covers them could hit your wallet. The Federal Emergency Management Agency (FEMA) Review Council's final report, released May 7, recommends a gradual, voluntary shift of certain National Flood Insurance Program (NFIP) policies to private insurers where private capacity exists, and that shift would require a change in federal law. A Congressional Research Service (CRS) report says the Federal Emergency Management Agency (FEMA) Review Council (FRC) issued its final report on May 7. ​

The Trump administration's FEMA Review Council, established by Executive Order 14180 in January 2025, has recommended an overhaul of the National Flood Insurance Program (NFIP), which provides over $1.3 trillion in coverage.

The FRC's core proposal calls for gradually transferring eligible NFIP policies to private insurers where private coverage is available, on a voluntary basis. Most of these changes would require Congress to pass new legislation.

Why Does it Matter to Me?

The NFIP carries $22.5 billion in debt despite collecting about $4.6 billion annually in premiums, fees, and surcharges. Over 22,000 communities across 56 states, territories, and jurisdictions participate, yet FEMA estimates about 4% of homeowners have flood insurance.

The FEMA Review Council recommended keeping Risk Rating 2.0, the pricing method FEMA put in place in 2023 that calculates premiums based on individual property risk. The Government Accountability Office found about 66 percent of premiums increased in the first year under that system.

Congress capped annual increases at 18 percent for primary residences and 25 percent for other policies, meaning it could take until 2037 for 95 percent of policies to reach full risk-based rates.

Both Sides, Now

The council recommends gradually moving eligible NFIP policies to private insurers in areas where private capacity exists.

Opponents warn that private coverage is not guaranteed to reach all floodplain residents and that consumer protections may vary, according to the CRS. Public comments on the FRC report also flagged that it made no recommendations on premium rate increases, funding levels, minimum standards, or how to boost overall enrollment.

The Trump administration established the FEMA Review Council (FRC) by Executive Order 14180 in January 2025, and the council acknowledged that most of its reforms require legislative action. Moving policies to private insurers would require a change in federal law.

What Happens Next?

The NFIP expires Sept. 30, 2026. Since the end of fiscal year 2017, 35 short-term NFIP reauthorizations have been enacted.

If policies shift to private insurers, FEMA would lose Federal Policy Fee revenue it currently uses to fund floodplain mapping and management programs, a gap the FRC did not address.

Congress must pass legislation to enact the FRC's main proposals before the September deadline.

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