The National Flood Insurance Program

Photo from sea Grant ArchivesThere is essentially no private insurance for flood damage in the U.S. The National Flood Insurance Program (NFIP) was established to aid personal and community recovery after flood events. Coverage through the NFIP is provided at substantially subsidized rates. While the original intent of the program was to assist in recovery from floods and other disasters, the net effect has been to subsidize development in hazardous areas, and thus to perversely increase the number of flood victims over the years.

The Federal Emergency Management Agency (FEMA), under the Department of Homeland Security, has a direct mandate to coordinate disaster response when state and local entities are overwhelmed. As a result of this mandate and the agency’s coordination of the NFIP, FEMA plays an ever increasing role in guiding state and local mitigation or prevention of loss efforts from natural disasters. FEMA has more impact on and authority over the development and execution of policies that could lead to effective adaptation to climate change on the coast than any other federal agency.

Improvements to the National Flood Insurance Act in the last few decades have required participating local governments to adopt building codes for floodproofing and the elevation of structures above the base flood elevation. In general, the focus of this law has been on floodproofing and otherwise protecting structures rather than restricting development in hazardous areas.

An important recent enhancement to this law has been the development of the Community Rating System (CRS). Local communities can obtain substantial discounts on insurance premiums paid by their residents by scoring points for exceeding the basic requirements of the NFIP, through such things as better mapping and better community outreach. Land use planning that keeps new development out of the floodplain is one of the areas that can contribute to a better score. For example, communities can score points for managing the development of land so new projects avoid floodplains or minimize the amount of construction in floodplains. FEMA will award credits for stricter regulation requiring appropriate development and zoning restrictions.

Flood Insurance Reform

The Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12) instituted changes to NFIP. It required rate increases for some policyholders to reflect actual risk and to ensure financial stability of the program. BW-12 was repealed in part and amended in part on March 21, 2014 by Homeowner Flood Insurance Affordability Act of 2014 (HFIAA), which provides relief to qualifying policyholders from rate increases.

The Association of State Floodplain Managers (ASFPM) maintains a website dedicated to flood insurance reform).  In 2014, ASFPM completed an analysis of the impacts of the HFIAA.

More information on NFIP reform is available at FEMA’s website dedicated to flood insurance reform: http://www.fema.gov/flood-insurance-reform.

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