FEMA insurance program runs out of money

The federal program that provides most of the nation’s flood insurance has run out of money to pay claims, forcing it to borrow $2 billion from taxpayers and likely increasing insurance rates.

The Federal Emergency Management Agency, which runs the program, said Monday that claims worth billions of dollars due to catastrophic hurricanes in 2024 “have depleted” the program’s reserves.

The borrowing will enable FEMA to pay insurance claims from flooding caused by hurricanes Helene and Milton and other events last year. But it will likely increase insurance rates by forcing the agency to pay interest on the $2 billion, a cost that will be passed down to policyholders.

The insurance program is not designed to be self-sustaining and has borrowed money from the U.S. Treasury numerous times after draining its reserves, most recently in 2018.