For decades, the federal government has played the role of flood insurer through the National Flood Insurance Program (NFIP). What began as a public backstop has hardened into a routine subsidy, with Washington absorbing risks that private insurers would normally price—and often avoid—without a premium that reflects the true likelihood of loss.
The program’s structure shifts the consequences of building and living in flood-prone areas away from the people making those choices and onto taxpayers nationwide. When insurance prices are held below what risk would justify, the signal that normally discourages dangerous or imprudent development is muted. The predictable result is more construction, more rebuilding, and more repeated claims in places where flooding is not a remote possibility but an expected hazard.
A market-based approach would treat flood exposure the way other major risks are handled: through pricing, underwriting, and incentives that reward mitigation. Homeowners who choose high-risk locations—especially affluent property owners—should be able to purchase coverage that reflects their actual risk or decide to self-insure, elevate structures, relocate, or take other steps that reduce potential losses. When the cost of risk is visible and borne by the decision-maker, fewer resources are wasted and communities can adapt more realistically to changing conditions.
Ending the NFIP would also restore a clearer division between legitimate disaster relief and ongoing, pre-arranged subsidies. Emergency assistance after severe events can be debated and targeted openly. But standing federal insurance that repeatedly covers foreseeable, location-specific damage functions as a long-term transfer payment, not a neutral public service. It encourages rebuilding in the same vulnerable spots rather than supporting resilience and smarter land use.
A phase-out of the NFIP would let private insurers and reinsurers step in where coverage is viable, while pushing states and localities to reconsider zoning and building decisions that amplify risk. In a freer system, people would still be able to live near coasts, rivers, and floodplains—but they would do so with prices and policies that reflect reality rather than federal guarantees. The practical and fair course is to end the National Flood Insurance Program and allow insurance markets, property owners, and local governments to manage flood risk without a permanent national subsidy.
