Industry Insight: The Role of Federal Insurance Programs in Mitigating the Impact of Natural Disasters

By William Koppelmann, CEO of Standard Premium Finance Holdings, Inc. (OTCQX: SPFX)

www.standardpremium.com


Natural disasters, including hurricanes, wildfires, floods, and other catastrophic events, have become more frequent and severe in recent years. According to a report by insurance broker Aon, the $126 billion in losses from natural disasters in the United States is triple the average over the last century. Over the last forty-five years, the total cost of damages from weather and climate disasters in the U.S. approximates $2.915 trillion 1 (as of February 2025). These disasters cause extensive physical and financial damage, while disrupting communities, economies, and public services.


In response to these challenges, the implementation of federal insurance programs has played a critical role in mitigating the financial impact of such events and supporting recovery efforts. This paper explores the necessity of federal insurance programs and the need for expansion to include additional coverage types. Citing key examples such as the devastation caused by Hurricane Helene in North Carolina and recurring wildfires in California, this paper explores the current financial burdens created by gaps in coverage availability and affordability.


With the onset of the 2025 hurricane season lending itself to several named hurricanes and tropical storms by August, the increasing frequency and severity of natural disasters underscore the importance of robust insurance mechanisms to protect individuals, businesses, and communities. Private insurers often face limitations in providing affordable and comprehensive coverage for catastrophic events. Federal insurance programs step in to fill this gap, offering financial protection and facilitating disaster recovery.


Natural disasters disproportionately affect specific geographic regions. Federal insurance programs help ensure that residents and businesses in high-risk areas can obtain coverage that would otherwise be unavailable or prohibitively expensive through private insurers. Disasters cripple local economies by disrupting businesses and reducing property values. Federal insurance programs provide a financial safety net, enabling quicker recovery and stabilization. Without federal insurance programs, the government would need to allocate significant emergency funds to cover uninsured losses. Structured insurance programs distribute risks and costs more efficiently.

Case Studies

Hurricanes: Back-to-back Helene and Milton

Hurricane Helene, though initially forecasted to bypass the U.S., brought unexpected severe weather conditions to parts of North Carolina. Shortly thereafter, Hurricane Milton made landfall, exacerbating the damage with additional heavy rainfall and strong winds. The combined effects of these hurricanes led to widespread flooding.


Many affected property owners relied on the National Flood Insurance Program (NFIP) for coverage, which proved essential in facilitating recovery. The NFIP provided financial resources to rebuild homes and businesses, reducing the economic strain on local communities 2 . However, gaps in coverage, such as lack of wind insurance, led to individual financial burdens. Helene’s total costs approximated $78.7 billion, while Milton caused an additional $34.3 billion in damage 1 .

Wildfires in California

California’s wildfire season has grown longer and more destructive in recent years. Events such as the L.A. Wildfires (including Pacific Palisades, Eaton, and many more) of January 2025 caused an unfathomable $250 billion in damage 3 , destroying entire towns and displacing thousands of residents.


The Federal Emergency Management Agency (FEMA) and the Federal Crop Insurance Program (FCIP) have played critical roles in supporting recovery efforts. These programs offer insurance for properties and agricultural losses, ensuring that individuals and businesses can recover and rebuild. However, the lack of availability and affordability of private fire coverage has led individuals and businesses to forgo insurance and assume the financial burden of these disasters.


In May 2025, State Farm gained permission to raise premiums by 17% or all of its home insurance customers in California 4 . According to the state Insurance Department, California’s plan that provides insurance to homeowners who can’t get private coverage needs $1 billion more to pay out claims related to the 2025 Los Angeles wildfires 5 .

Floods in Texas

The disastrous floods in Texas of July 2025 gained national attention due to the velocity in which they escalated and the heartbreaking devastation at a summer camp for young girls. The economic losses from these floods are expected to exceed $20 billion.


The deployment of relief efforts highlighted both the strengths and limitations of federal aid. FEMA’s disaster declaration unlocked essential support, including emergency housing and public assistance. The NFIP is expected to issue millions in claims to insured homeowners and businesses, significantly reducing the financial burden on those with active policies. These reimbursements accelerate rebuilding and enable municipalities to restore vital services more quickly.


Even with the availability of national flood insurance through the NFIP, only around 7% of homes in Texas are insured for flooding 6 . Inland, where these floods occurred, flood insurance rates drop dramatically to around 2%.

Proposal: Expanding Federal Insurance Programs

To better protect individuals and businesses from the growing risks posed by natural disasters, a solution could consist of expanding federal insurance programs to include coverage for wind damage and fire damage. Many private insurers are either withdrawing from high-risk markets or significantly raising premiums. Federal insurance programs help manage rising premiums in high-risk markets by spreading the covered pool to include low-risk markets.


Implementation of additional federal insurance programs could involve a multi-pronged approach, including the creation of a National Wind Insurance Program (NWIP) and National Wildfire Insurance Program (NWFIP). Modeled after the NFIP, the creation of NWIP and NWFIP programs would provide affordable wind and fire damage insurance to property owners in high-risk areas. FEMA could administer a national wind and fire damage insurance program, ensuring that property owners have access to coverage for hurricane and wildfire losses. Additional efforts could include the expansion of public-private insurance partnerships. Collaboration with private insurers could help share risks and improve the financial sustainability of these programs. Additionally, using risk-mitigating incentives, the programs can encourage property owners to adopt wind-resistant building materials and fire-resistant landscaping through premium discounts.


Expanding federal insurance programs comes with its own challenges. Many property owners in high-risk areas remain uninsured or underinsured. Efforts to increase awareness and participation in federal insurance programs are essential. Yet, federal insurance programs face financial challenges due to the increasing frequency of disasters. Policymakers will need to explore strategies for risk mitigation and premium adjustments to ensure long-term sustainability. Investments in resilient infrastructure and land-use planning can reduce the financial burden on federal insurance programs.


Federal insurance programs are indispensable in managing the financial risks associated with natural disasters. By providing essential coverage and financial support, these programs help communities recover and build resilience against future events. Expanding these programs to include wind and fire damage coverage will further enhance their effectiveness and ensure better protection for at-risk communities. As we continue to see intensified natural disasters, strengthening and expanding these programs will be crucial for protecting lives, property, and the economy.

About Standard Premium Finance Holdings, Inc. (OTCQX: SPFX)

Standard Premium Finance Holdings, Inc. (OTCQX: SPFX), is a specialty finance company pursuing M&A opportunities of synergistic businesses to leverage economies of scale. SPFX has financed $2+ Billion of property and casualty insurance, operates in 40+ states and targets roll-ups in an $80 Billion market to drive consolidation and deliver shareholder value.

https://www.standardpremium.com/

About William Koppelmann

William Koppelmann is the president, CEO and co-founder of Standard Premium Finance (OTCQX: SPFX). An entrepreneur with more than thirty years of experience in the insurance premium finance industry, he is proficient in receivables management, capital raising and debt restructuring. His expertise in strategic planning, sales, marketing and organizational development contributes to his track record for driving business success.


Mr. Koppelmann has served on the board of the Florida Premium Finance Association for more than 15 years. He is the immediate past president, serving in that capacity for three successive terms. He is a member of the Florida Association of Insurance Agents, Professional Insurance Agents Association, Latin American Insurance Association and Independent Insurance Agents of Dade County.


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