Federal flood grants now fund private insurance—with a catch

What it does

This bill allows communities receiving federal flood-mitigation grants to spend up to 15% of those funds on premiums for 'parametric flood insurance'—a private-sector product that pays out automatically when measurable flood conditions are met, without waiting for damage assessment. The bill runs for 5 years, requires communities to report on how they promote flood insurance awareness and enrollment, and mandates disclosure of the policy's limits (including 'basis risk'—situations where a flood occurs but individual households don't qualify for payout). FEMA must also report to Congress on whether this approach increases overall flood insurance participation.

Why we flagged it

The bill's core mechanism is to redirect existing federal flood-mitigation grants toward private parametric insurance products, effectively expanding the private flood insurance market while maintaining a federal subsidy. This is a public-private hybrid that shifts risk-transfer mechanisms but does not fundamentally change federal flood assistance.

What the text implies

• Parametric insurance payouts are triggered by objective metrics (e.g., rainfall amount), not actual damage—creating 'basis risk' where a community receives a payout even if no individual household was harmed, or conversely, where households suffer losses but the trigger was not met. The bill discloses this but does not prevent it, potentially leaving vulnerable residents uncompensated.
• Redirecting up to 15% of federal mitigation grants to insurance premiums may reduce funds available for physical resilience projects (levees, drainage, buyouts) that prevent floods rather than insure against them. The long-term trade-off between prevention and insurance is not analyzed.
• The bill incentivizes communities to promote private flood insurance alongside the National Flood Insurance Program (NFIP), but does not require that private policies meet NFIP standards or protections. Private insurers may cherry-pick low-risk areas, leaving high-risk communities dependent on NFIP or uninsured.
• FEMA's reporting requirement focuses on whether NFIP enrollment changes, but does not mandate analysis of whether total flood risk coverage (NFIP + private + parametric) actually improves or whether basis risk leaves gaps in protection for low-income households.

Who it affects

Communities gain faster, more flexible disaster payouts and federal support for insurance premiums—a genuine benefit for flood-prone households. However, parametric insurance has structural gaps ('basis risk') that may leave individuals uncompensated even when floods occur, and the bill does not guarantee that federal grant money actually increases net insurance coverage or protects the most vulnerable. The outcome depends heavily on implementation and whether communities use the tool responsibl

Who stands to gain

• private parametric flood insurance underwriters and brokers
• reinsurance companies
• insurance technology (InsurTech) firms specializing in parametric products

Named in the bill

Federal Emergency Management Agency (FEMA), National Flood Insurance Program (NFIP), National Flood Insurance Act of 1968, private flood insurance sector, parametric insurance underwriters, state and local governments

Where it stands

4 cosponsors: 2 Democrats, 2 Republicans.

• May 29, 2026 — Introduced · Congress.gov: “Introduced in House”
• May 29, 2026 — Referred to House Committee on Financial Services · Congress.gov: “Referred to the House Committee on Financial Services”

Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.

Money around this bill

1 lobbying clients named this bill on 1 disclosure filings across 1 quarter, Jun 2026 to Jun 2026. Those filings disclosed $520,000 in lobbying spend. A filing names 5 bills on average, so that figure is what each filing reported, not a share belonging to this bill.

More lobbying clients named this bill than 0% of bills with at least one filing.

Andrew Garbarino, the sponsor, reported $1,954,500 in PAC receipts in the 2026 cycle. $10,000 of that came from 1 PAC tied to these lobbying clients.

• Marsh & Mclennan Companies, Inc. — $520,000 on 1 filing

Lobbying Disclosure Act filings through Jul 16, 2026. A filing shows who paid to lobby on a bill it names, not what changed.