How Fares the National Flood Insurance Program?

Congress created the National Flood Insurance Program (NFIP) in 1968 in response to the ongoing unavailability of private flood insurance and the continued increase in federal disaster assistance. Few property owners purchased flood insurance in the early years of the program, and in 1973 and 1994, Congress passed laws requiring structures in Special Flood Hazard Areas (SFHAs) with loans from federally insured or regulated lenders to have flood insurance. Due in part to this “mandatory purchase requirement,” more than 4.5 million flood policies are in now in place. Recent questions about flood insurance have emerged following Hurricanes Katrina and Rita. As part of a Federal Emergency Management Agency (FEMA) evaluation of NFIP that began in 2001, RAND Corporation researchers used property parcel data from 100 communities across the country to develop more reliable estimates of how many single-family homes have flood insurance (the market penetration rate), assessed factors that ...  more