Secret Rate Law, FEMA Cuts, and Flood Insurance Crisis Put Families at Risk
NORTH CAROLINA – North Carolina homeowners are trapped in an insurance crisis manufactured by the state’s lawmakers. While Insurance Commissioner Mike Causey’s settlement this week limits housing insurance rate increases to 5% annually, a state law—expanded by the Republican-controlled General Assembly in 2018 to make it automatic without the policyholder’s signature—means many North Carolinians will still face massive increases. North Carolina allows insurers to legally raise rates by up to 250% of the maximum allowed through a “consent-to-rate” loophole. Over half of the state’s homeowners are now paying excessive premiums, often without their approval.
At the same time, the federal disaster safety net has been systematically dismantled: the Trump administration canceled nearly $190 million in North Carolina flood protection projects (and then was forced to reinstate), slashed FEMA’s workforce by one-third, and left the National Flood Insurance Program—the only flood coverage available to most homeowners—$22.5 billion in debt and careening toward a September 2026 expiration.
“This is a leadership issue first and foremost. And North Carolina leaders are not putting North Carolinians first. Instead, they’re making choices that drive up risks and shrink federal backstops,” said Unlocking America’s Future spokesperson Kyle Herrig. “North Carolina families are caught in a vise: a state law that lets insurers bypass negotiated protections, a federal disaster apparatus being systematically dismantled by the very lawmakers they elected, and a national flood insurance program lurching from one expiration deadline to the next.”
FEMA CUTS INCREASE RISKS: Making matters worse, the federal safety net that once helped buffer these risks is fraying rapidly. The Trump administration canceled the BRIC program in April 2025, putting nearly $190 million in awarded North Carolina projects in jeopardy — including flood walls, water system relocations, and stormwater improvements in communities still recovering from Hurricane Helene. North Carolina Attorney General Jeff Jackson sued to restore the funds, and a court ultimately ordered FEMA to pay, but as of April 2026 many communities are still waiting for the money to arrive.
Compounding the crisis, FEMA has shed roughly one-third of its workforce, and the Trump administration has continued to signal it wants to shift disaster-relief responsibility entirely to the states.
North Carolina’s Republican congressional delegation bears direct responsibility for this vulnerability. The House passage of the Big Ugly Bill in May 2025, backed by nearly every NC Republican representative, advanced deep federal spending cuts that gutted disaster-preparedness funding and accelerated FEMA restructuring. NC Republicans in the General Assembly separately blocked adoption of more resilient building codes in 2023 (HB 488) — a decision that has already cost the state an estimated $70 million in FEMA resilience grants and will continue to cost tens of millions annually through 2031.
FLOOD WARNING: A new and urgent threat now looms over flood coverage specifically. The National Flood Insurance Program (NFIP) — the only source of flood insurance for many North Carolina homeowners, particularly in coastal and floodplain areas — is currently operating on a short-term extension set to expire September 30, 2026. The program already lapsed for 43 days during the 2025 government shutdown, freezing new policy sales and renewals and disrupting an estimated 1,300 property closings per day nationwide. FEMA borrowed an additional $2 billion from the Treasury in early 2025 to pay claims, pushing total NFIP debt to $22.5 billion.
With flood damage claims nearly doubling in 2025 compared to prior years, the program’s long-term solvency remains an open question — and Congress has yet to pass long-term reauthorization. North Carolina homeowners and many other homeowners would be forced to pay for costly surplus lines of flood insurance through private insurers, if coverage was available at all, without a functioning National Flood Insurance Program.
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