FEMA borrows additional $2B to pay for Helene, Milton claims

The National Flood Insurance Program needs $2 billion more from the government to cover tens of thousands of flood claims from Hurricane Helene and Hurricane Milton. 

Affected homeowners submitted a combined over 78,500 flood insurance claims after the storms battered the Southeast last year, the Federal Emergency Management Agency said Monday. The NFIP at the end of January expected to pay total losses up to $7.4 billion for Hurricane Helene and up to $2.9 billion for Hurricane Milton. 

FEMA's debt to the U.S. Treasury is now $22.525 billion, it said, with a borrowing limit of up to $30.425 billion. The NFIP overseer in a press release said the program isn't designed to pay for multiple catastrophic events in a single year without financial assistance. 

"We are strategically utilizing short-term borrowings in 60-day increments, demonstrating our careful and responsible management of the borrowing authority," said Elizabeth Asche, NFIP senior executive, in a press release. 

The agency emphasized FEMA has always paid its NFIP claims on all eligible losses. The federal program, which makes up the majority of the flood insurance market in the U.S., provides around $1.3 trillion in coverage to nearly 4.7 million policyholders, it said. 

The average premium for NFIP policyholders was $935 in 2022 according to FEMA's most recent estimate. Local and state governments have alleged premiums have soared since a new rating methodology went into effect in 2022. 

The NFIP is set to expire March 14, in conjunction with the federal budget. Federal lawmakers last month pledged to work toward a long-term reauthorization of the program, which has been extended dozens of times in the past decade.

Last fall's hurricanes affected an estimated 2.6 million mortgage loans guaranteed by the government-sponsored enterprises, according to the Federal Housing Finance Agency. In that assessment, the FHFA warned of possible future stress, as only 5.2% of GSE-held mortgages in Special Hazard Flood Areas in affected counties were required to buy flood policies.