should the flood insurance program continue?
yifeiyang
NFIPHistoryandObjectivesS19.pdf
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NFIP: History and Objectives
How did we end up with the federal government involved in flood
insurance?
Longstanding history of government involvement with floods
1917
Flood Control Act
o $45 million for comprehensive flood control
o lower Mississippi and Sacramento Rivers
o Congress recognizes federal responsibility for flood control
1927
Great Mississippi River Flood.
o 13 million acres of land are flooded
o Property damage exceeds $236 million
1929
Private insurance industry abandons the coverage of flood losses
1930s
Congress provides direct disaster assistance through loans
1951
Massive flooding in Kansas and Missouri
o $870 million of damages
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o President Truman proposes a national system of flood insurance
o private insurance
o reinsurance by the federal government
1956
American Insurance Association study on floods and flood losses
o Reinforces industry belief o Insurance not commercially feasible
1958
Study looks at behavior over past two decades
o White et al, Changes in Urban Occupancy of Flood Plains in the
United States
o people are moving into floodplains
o federal incentives created new perception that federal
government would deal with serious flood hazards
1965
The Southeast Hurricane Disaster Relief Act
o response to hurricanes including Hurricane Betsy
o devastated the south in 1963 and 1964
o authorized “an immediate study of alternative programs which
could be established to help provide financial assistance to those
suffering property losses in floods and other natural disasters,
including alternative methods of Federal disaster insurance…”
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The National Flood Insurance Program (NFIP) was created by the
National Flood Insurance Act of 1968.
In the original statute, Congress noted
“a program of flood insurance can promote the public interest by
providing appropriate protection against the perils of flood losses
and encouraging sound land use by minimizing exposure of
property to flood losses”
federal disaster relief provided to communities after flooding
“placed an increasing burden on the Nation’s resources”
“a reasonable method of sharing the risk of flood losses is through
a program of flood insurance which can complements and
encourage protective and preventing measures”
(Sec. 82 Stat. 573 as quoted in Horn & Brown, p.2)
The primary purposes of the legislation creating NFIP in 1968 are
o Better indemnify individuals for flood losses through insurance
o Reduce future flood damages through State and community
floodplain management regulations
o Reduce Federal expenditures for disaster assistance and flood control
(FEMA)
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Sources
Federal Emergency Management Administration (2002) National Flood Insurance
Program: Program Description. retrieved from https://www.fema.gov/media-
library-data/20130726-1447-20490-2156/nfipdescrip_1_.pdf
Horn, D.P. & J.T. Brown (2018, February 13). Introduction to the National Flood
Insurance Program (NFIP). Washington, D.C.: Congressional Research Service
The American Institutes for Research, The Pacific Institute for Research and
Evaluation, Deloitte & Touche LLP (2002). A Chronology of Major Events
Affecting the National Flood Insurance Program. Retrieved from
https://www.dhs.gov/xlibrary/assets/privacy/privacy_pia_mip_apnd_h.pdf
