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INSIGHTi
National Flood Insurance Program Borrowing
Authority
Updated October 11, 2023
This Insight evaluates the National Flood Insurance Program (NFIP) borrowing authority to receive loans
from the Treasury and the current financial situation of the NFIP.
NFIP Funding
Funding for the NFIP is primarily maintained in an authorized account called the National Flood
Insurance Fund (NFIF). The NFIP is funded from receipts from the premiums of flood insurance policies,
including fees and surcharges; direct annual appropriations for specific costs of the NFIP (only for flood
mapping); and borrowing from the Treasury when the NFIF’s balance has been insufficient to pay the
NFIP’s obligations (e.g., insurance claims). Since the end of FY2017, 26 short-term NFIP
reauthorizations have been enacted. For further details of these reauthorizations, see CRS Insight
IN10835, What Happens If the National Flood Insurance Program (NFIP) Lapses? The current
reauthorization is set to expire on November 17, 2023. These extensions did not increase the NFIP’s
borrowing limit or provide additional funds to the NFIP.
NFIP Borrowing Authority
The NFIP was not designed to retain funding to cover claims for truly extreme events; instead, the
National Flood Insurance Act of 1968 allows the program to borrow money from the Treasury for such
events. For most of the NFIP’s history, the program has been able to cover its costs, borrowing relatively
small amounts from the Treasury to pay claims and to repay the loans with interest. Only current and
future participants in the NFIP are responsible for repaying NFIP debt, as the insurance program itself
owes the debt to the Treasury and pays for accruing interest on that debt through the premium revenues of
policyholders. Since 2005, the NFIP has made six principal repayments totaling $2.82 billion and has paid
$5.71 billion in interest. The program paid $300.44 million in interest in FY2022.
Table 1 shows NFIP borrowing, repayments, and debt from FY1980 to FY2022. Comparable figures are
not available before 1980. When the NFIP was established, the borrowing limit was $250 million. In
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1973, the borrowing limit was increased to $500 million, or $1 billion with Presidential approval. The
borrowing limit was increased to $1.5 billion in 1996; however, borrowing at that level was not required
before 2005. The largest debt was $917 million in 1997, which was reduced to zero by the end of
FY2003. Congress increased the level of borrowing to pay claims in the aftermath of the 2005 hurricane
season (particularly Hurricanes Katrina, Rita, and Wilma). Congress increased the borrowing limit to
$18.5 billion in November 2005 and further increased the borrowing limit to $20.775 billion in March
2006. In July 2010, the borrowing limit was decreased to $20.725 billion. In 2013, following Hurricane
Sandy, Congress increased the borrowing limit to the current $30.425 billion.
Table 1. NFIP Borrowing FY1980 to FY1998
(nominal dollars)
Fiscal Year
Amount Borrowed
Amount Repaid
Cumulative Debt
1980
917,406,008
0
917,406,008
1981
164,614,526
624,970,099
457,050,435
1982
13,915,000
470,965,435
0
1983
50,000,000
0
50,000,000
1984
200,000,000
36,879,123
213,120,877
1985
0
213,120,877
0
1986
0
0
0
1987
0
0
0
1988
0
0
0
1989
0
0
0
1990
0
0
0
1991
0
0
0
1992
0
0
0
1993
0
0
0
1994
100,000,000
100,000,000
0
1995
265,000,000
0
265,000,000
1996
423,600,000
62,000,000
626,600,000
1997
530,000,000
239,600,000
917,000,000
1998
0
395,000,000
522,000,000
1999
400,000,000
381,000,000
541,000,000
2000
345,000,000
541,000,000
600,000,000
2001
600,000,000
345,000,000
600,000,000
2002
50,000,000
640,000,000
10,000,000
2003
0
10,000,000
0
2004
0
0
0
2005
300,000,000
75,000,000
225,000,000
2006
16,600,000,000
0
16,885,000,000
2007
650,000,000
0
17,735,000,000
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Fiscal Year
Amount Borrowed
Amount Repaid
Cumulative Debt
2008
50,000,000
225,000,000
17,360,000,000
2009
1,987,988,421
347,988,421
19,000,000,000
2010
0
500,000,000
18,500,000,000
2011
0
750,000,000
17,750,000,000
2012
0
0
17,750,000,000
2013
6,250,000,000
0
24,000,000,000
2014
0
1,000,000,000
23,000,000,000
2015
0
0
23,000,000,000
2016
0
0
23,000,000,000
2017
7,425,000,000
0
30,425,000,000
2018
6,100,000,000
16,000,000,000a
20,525,000,000
2019
0
0
20,525,000,000
2020
0
0
20,525,000,000
2021
0
0
20,525,000,000
2022
0
0
20,525,000,000
Sources: CRS analysis: data 1980-2017 provided by FEMA Congressional Affairs, November 20, 2017. Data since 2017
from NFIP Watermark financial statements.
a. The $16 bil ion of debt was cancelled rather than repaid (P.L. 115-72, Title III, §308).
In January 2017, the NFIP borrowed $1.6 billion for flood losses in 2016 and debt repayments. On
September 22, 2017, FEMA borrowed the remaining $5.825 billion from the Treasury, reaching the
NFIP’s authorized borrowing limit of $30.425 billion. On October 26, 2017, $16 billion of NFIP debt was
cancelled to make it possible for the program to pay claims for Hurricanes Harvey, Irma, and Maria. This
represents the first time NFIP debt has been cancelled, although Congress appropriated funds between
1980 and 1985 to repay NFIP debt. FEMA borrowed another $6.1 billion on November 9, 2017, to fund
estimated 2017 losses, including those incurred by Hurricanes Harvey, Irma, and Maria, increasing the
debt to $20.525 billion. The NFIP has not borrowed from Treasury since 2017.
The NFIP currently has $9.9 billion of remaining borrowing authority. As of September 13, 2023, the
NFIP had $3.9 billion available to pay claims, with $991 million in the NFIF and $2.99 billion in the
Reserve Fund.
The NFIP transfers a portion of its risk to the private sector through the purchase of reinsurance and the
issuance of catastrophe bonds. The NFIP’s first large reinsurance purchase was in January 2017, when
FEMA purchased $1.042 billion of reinsurance, structured to pay 26% of losses between $4 billion and $8
billion arising from a single flooding event. Claims for Hurricane Harvey exceeded $9 billion, triggering
a full reinsurance claim. Since then, the NFIP has not claimed any reinsurance, as no storms have reached
the threshold for claims.
The NFIP could claim up to $2.48 billion in reinsurance in 2023. In order for the NFIP to claim on these
policies, losses for a single named storm would have to reach $7 billion for the 2023 traditional
reinsurance, $6 billion for the 2021 and 2022 catastrophe bonds, and $7 billion for the 2023 catastrophe
bond. For more information on NFIP reinsurance, see CRS Insight IN10965, The National Flood
Insurance Program (NFIP), Reinsurance, and Catastrophe Bonds.
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Author Information
Diane P. Horn
Specialist in Flood Insurance and Emergency
Management
Disclaimer
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