Florida homeowners might soon find the state’s largest insurer against flood — the federal government — is getting out of the business, or significantly shrinking its role, according to a much-anticipated report on restructuring the Federal Emergency Management Agency.
And many fear that could drive up insurance costs in a state that is already paying some of the highest premiums in the country to protect their homes.
Still, President Donald Trump in his second term has said on numerous occasions that the agency tasked with responding when natural disasters hit should “go away.” He appointed a FEMA council to evaluate the agency in January 2025.
The council, in its 75-page report released May 7, didn’t call for FEMA’s dissolution, but made recommendations to privatize the national flood insurance program, streamline individual disaster assistance payments and curtail FEMA’s role in long-term, post-disaster housing, like the FEMA trailers that just received a six-month extension to continue housing 2024 storm victims through October.
If the reforms get congressional approval, it will affect Florida more than most other states, given the state’s propensity for disasters, most miles of coastal shore and overall land mass that’s often in the path of hurricane activity.
U.S. Rep. Debbie Wasserman Schultz, D-Weston, called the proposed reforms, which would have states playing a greater part in disaster relief “a disaster in itself.”
“These ‘reforms’ would rip support from underfunded state governments, privatize key programs like flood insurance, and shortchange Americans who lose their homes or livelihoods in hurricanes,” Wasserman Schultz said.
Why the Florida governor wants private, not federal, disaster management
Gov. Ron DeSantis’s office didn’t immediately respond to a query following the release of the report. In the past, however, he said he supports states taking a greater role in disaster management, arguing its response would be faster than the federal bureaucracy.
At the State Fair in 2025 — as the state recovered from a trio of 2024 hurricanes — DeSantis called FEMA “a nasty bureaucracy.”
“If a disaster comes, you can take whatever that amount is typically, send 80% of that block grant to the state, cut the bureaucracy of FEMA out entirely, and that money will go further than it currently does at greater amounts, going through the FEMA bureaucracy,” DeSantis said.
Why is FEMA important to Florida?
FEMA has been called into the state 14 times over the last 21 years. Payments in the wake of 2024’s string of storms, hurricanes Debby, Helene and Milton, have topped more than a billion in payments to local governments, more than a billion for individual assistance and several billion in flood insurance payments for tens of thousands of Florida households with flood damage.
Estimates are that up to 1/5 of Florida homeowners are covered by the federal flood insurance, with those in high-risk flood zones required by lenders to get it. Florida currently has 1.7 million active federal flood insurance policies in effect, the most of any state, accounting for 36% of the total of 4.7 million national flood insurance policies in force, according to the Insurance Information Institute, an insurance industry-backed research nonprofit.
Why has FEMA been targeted for reform?
Private insurers have been taking a greater role in flood insurance in recent years, according to insurance agents. But the national flood insurance program was started in 1968 because the private insurance market didn’t want to insure against catastrophic flooding. Currently, private companies cover 27% of the flood insurance market.
The report, however, says the national flood insurance, as it stands now, is “unsustainable,” the report says.
“The program … is burdened by $20 billion in debt and relies on outdated risk information,” the report says.
Robert Norberg, president of Arden Insurance Associates in Lantana, said he can see the private market taking on a bigger role.
“In probably 70% or more of my new business, flood (insurance) has gone to the private market,” he said.
The insurance premiums that FEMA charges for its policies don’t rise to the level of the risk it has taken on, the report says. That could mean its long-term financial stability of the national flood insurance relies on — and could swamp — taxpayers.
Is private flood insurance expensive?
National flood insurance is limited to covering a maximum of $250,000 if a home is damaged — which is becoming more insufficient as home replacement costs escalate. Private flood insurance can be cheaper than national flood insurance, especially in areas where the flood risk is low, but prohibitively expensive or nonexistent in high-risk flood areas.
The report calls for incentivizing a take-out program that would transfer more national flood policies to the private market and perhaps setting up a centralized flood insurance marketplace to make that happen.
Mark Friedlander, senior director of media relations for the Insurance Information Institute, sees that the private flood insurance market is growing and becoming more nimble. It’s also able to cover families when they need to find another place to live due to flood damage, which the federal program doesn’t, he said.
“Private insurers have been utilizing advanced analytics and improved data to better assess flood risk and offer alternatives to the federal program,” Friedlander said.
Still, he said, private insurers are not ready to take on the risk that the national flood insurance currently covers, especially as rising waters have become a bigger factor in disasters.
Many claims from the recent hurricanes of 2024 were denied because they were deemed the result of rising waters during the hurricane and not wind-driven water damage that is covered by most homeowner policies.
The latest “data shows rising flood risks and low coverage rates,” Friedlander said. “While private flood insurance is growing, NFIP remains vital for providing widespread, actuarially sound coverage against damages excluded from standard homeowners policies.”
Wasserman Schultz and Friedlander agree: The end of the national flood insurance could mean higher insurance costs. Currently, FEMA incentivizes communities to take steps to plan better and mitigate risk and that participation allows homeowners to get a discount on the national flood insurance premium.
“If implemented, these drastic changes would drive up already-skyrocketing insurance costs and divert limited and dwindling state funds from social programs, making life even less affordable in places like South Florida,” Wasserman Schultz said.
Anne Geggis is statewide reporter for the USA TODAY NETWORK FLORIDA, reporting on health and senior issues. If you have news tips, please send them to ageggis@usatodayco.com. You can get all of Florida’s best content directly in your inbox each weekday by signing up for the free newsletter, Florida TODAY, at https://palmbeachpost.com/newsletters
This article originally appeared on Palm Beach Post: Why proposed national flood insurance changes would hit Florida hardest
Reporting by Anne Geggis, USA TODAY NETWORK – Florida / Palm Beach Post
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