---
kind: "section"
citation: "42 U.S.C. § 4017a"
title: "42"
title_heading: "The Public Health and Welfare"
number: "4017a"
heading: "Reserve Fund"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/42/4017a"
units:
  - "Chapter 50 — National Flood Insurance"
  - "Subchapter I — The National Flood Insurance Program"
---

# §4017a. Reserve Fund

- (a) **Establishment of Reserve Fund—** In carrying out the [flood](/usc/42/4121.md?p=a-1) insurance program authorized by this subchapter, the [Administrator](/usc/42/4003.md?p=a-6) shall establish in the Treasury of the [United States](/usc/42/4121.md?p=a-2) a National [Flood](/usc/42/4121.md?p=a-1) Insurance Reserve Fund (in this section referred to as the “Reserve Fund”) which shall—
  - (1) be an account separate from any other accounts or funds available to the [Administrator](/usc/42/4003.md?p=a-6); and
  - (2) be available for meeting the expected future obligations of the [flood](/usc/42/4121.md?p=a-1) insurance program, including—
    - (A) the payment of claims;
    - (B) claims adjustment expenses; and
    - (C) the repayment of amounts outstanding under any note or other obligation issued by the [Administrator](/usc/42/4003.md?p=a-6) under [section 4016(a) of this title](/usc/42/4016.md?p=a).
- (b) **Reserve ratio—** Subject to the phase-in requirements under [subsection (d)](#d), the Reserve Fund shall maintain a balance equal to—
  - (1) 1 percent of the sum of the total potential loss exposure of all outstanding [flood](/usc/42/4121.md?p=a-1) insurance policies in force in the prior fiscal year; or
  - (2) such higher percentage as the [Administrator](/usc/42/4003.md?p=a-6) determines to be appropriate, taking into consideration any circumstance that may raise a significant risk of substantial future losses to the Reserve Fund.
- (c) **Maintenance of reserve ratio—**
  - (1) **In general—** The [Administrator](/usc/42/4003.md?p=a-6) shall have the authority to establish, increase, or decrease the amount of aggregate annual insurance premiums to be collected for any fiscal year necessary—
    - (A) to maintain the reserve ratio required under [subsection (b)](#b); and
    - (B) to achieve such reserve ratio, if the actual balance of such reserve is below the amount required under [subsection (b)](#b).
  - (2) **Considerations—** In exercising the authority granted under [paragraph (1)](#c-1), the [Administrator](/usc/42/4003.md?p=a-6) shall consider—
    - (A) the expected operating expenses of the Reserve Fund;
    - (B) the insurance loss expenditures under the [flood](/usc/42/4121.md?p=a-1) insurance program;
    - (C) any investment income generated under the [flood](/usc/42/4121.md?p=a-1) insurance program; and
    - (D) any other factor that the [Administrator](/usc/42/4003.md?p=a-6) determines appropriate.
  - (3) **Limitations—**
    - (A) **Rates—** In exercising the authority granted under [paragraph (1)](#c-1), the [Administrator](/usc/42/4003.md?p=a-6) shall be subject to all other provisions of this chapter, including any provisions relating to chargeable premium rates or annual increases of such rates.
    - (B) **Use of additional annual insurance premiums—** Notwithstanding any other provision of law or any agreement entered into by the [Administrator](/usc/42/4003.md?p=a-6), the [Administrator](/usc/42/4003.md?p=a-6) shall ensure that all amounts attributable to the establishment or increase of annual insurance premiums under [paragraph (1)](#c-1) are transferred to the [Administrator](/usc/42/4003.md?p=a-6) for deposit into the Reserve Fund, to be available for meeting the expected future obligations of the [flood](/usc/42/4121.md?p=a-1) insurance program as described in [subsection (a)(2)](#a-2).
  - (4) **Deposit of premium surcharges—** The [Administrator](/usc/42/4003.md?p=a-6) shall deposit in the Reserve Fund any surcharges collected pursuant to [section 4015a of this title](/usc/42/4015a.md).
- (d) **Phase-in requirements—** The phase-in requirements under this subsection are as follows:
  - (1) **In general—** Beginning in fiscal year 2013 and not ending until the fiscal year in which the ratio required under [subsection (b)](#b) is achieved, in each such fiscal year the [Administrator](/usc/42/4003.md?p=a-6) shall place in the Reserve Fund an amount equal to not less than 7.5 percent of the reserve ratio required under [subsection (b)](#b).
  - (2) **Amount satisfied—** As soon as the ratio required under [subsection (b)](#b) is achieved, and except as provided in [paragraph (3)](#d-3), the [Administrator](/usc/42/4003.md?p=a-6) shall not be required to set aside any amounts for the Reserve Fund.
  - (3) **Exception—** If at any time after the ratio required under [subsection (b)](#b) is achieved, the Reserve Fund falls below the required ratio under [subsection (b)](#b), the [Administrator](/usc/42/4003.md?p=a-6) shall place in the Reserve Fund for that fiscal year an amount equal to not less than 7.5 percent of the reserve ratio required under [subsection (b)](#b).
- (e) **Limitation on reserve ratio—** In any given fiscal year, if the [Administrator](/usc/42/4003.md?p=a-6) determines that the reserve ratio required under [subsection (b)](#b) cannot be achieved, the [Administrator](/usc/42/4003.md?p=a-6) shall submit, on a calendar quarterly basis, a report to Congress that—
  - (1) describes and details the specific concerns of the [Administrator](/usc/42/4003.md?p=a-6) regarding the consequences of the reserve ratio not being achieved;
  - (2) demonstrates how such consequences would harm the long-term financial soundness of the [flood](/usc/42/4121.md?p=a-1) insurance program; and
  - (3) indicates the maximum attainable reserve ratio for that particular fiscal year.
- (f) **Investment—** The [Secretary](/usc/42/242q–4.md?p=2) of the Treasury shall invest such amounts of the Reserve Fund as the [Secretary](/usc/42/242q–4.md?p=2) determines advisable in obligations issued or guaranteed by the [United States](/usc/42/4121.md?p=a-2).

## Source credit

(Pub. L. 90–448, title XIII, § 1310A, as added Pub. L. 112–141, div. F, title II, § 100212, July 6, 2012, 126 Stat. 922; amended Pub. L. 113–89, §§ 8(b), 20, Mar. 21, 2014, 128 Stat. 1024, 1028.)

## Notes

### Editorial Notes

### References in Text

This chapter, referred to in subsec. (c)(3)(A), was in the original “this Act”, and was translated as reading “this title”, meaning title XIII of Pub. L. 90–448, Aug. 1, 1968, 82 Stat. 572, known as the National Flood Insurance Act of 1968, which is classified principally to this chapter, to reflect the probable intent of Congress. For complete classification of this Act to the Code, see Short Title note set out under section 4001 of this title and Tables.

### Amendments

2014—Subsec. (c)(4). Pub. L. 113–89, § 8(b), added par. (4).

Subsec. (e). Pub. L. 113–89, § 20, inserted “, on a calendar quarterly basis,” after “submit” in introductory provisions.