The NFIP affects many constituencies, including property owners, local governments, builders, realtors, mortgage lenders, insurers, and taxpayers. The program differs from traditional private insurance in several fundamental ways. Changing it without causing market disruption or triggering unintended consequences may be difficult. The program’s current authorization expires in September 2017 and Congress will need to consider many complex and highly technical issues as it debates reauthorization.
The American Academy of Actuaries Flood Insurance Work Group developed this monograph to assist Congress and other stakeholders in understanding the key issues surrounding the NFIP and its role in flood management and recovery after catastrophic events.
Flood insurance in the United States primarily is provided by the federal government via the National Flood Insurance Program (NFIP), in partnership with private insurers and servicing contractors. In the aftermath of the 2004 and 2005 hurricanes that struck the East and Gulf coasts of the United States, and in consideration of the substantial losses suffered in those storms, there have been calls for reform of the program. But since the NFIP is substantively different from typical insurance, few insurance professionals and public policymakers are sufficiently familiar with the NFIP to recognize the broad consequences of changing it. This monograph is focused on the background and the current structure of the program and the primary issues surrounding the program today.
Flood Insurance Subcommittee presentation regarding the actuarial condition of the National Flood Insurance Program (NFIP) and its future. (July 12, 2011)