National Flood Insurance Program (NFIP)
Last updated: 11/13/14

Floods are the most common and most destructive natural disaster in the United States. Ninety percent of all natural disasters involve flooding, according to Floodsmart.gov. The damage from a flood is not covered under a standard homeowners policy. Flood insurance is a special policy that is federally backed by the National Flood Insurance Program (NFIP) and available for homeowners, renters and businesses.

The National Flood Insurance Program (NFIP) was created as a result of the passage of the National Flood Insurance Act of 1968. Congress enacted the NFIP primarily because flood insurance was virtually unavailable from the private insurance markets following frequent widespread flooding along the Mississippi River in the early 1960s. The NFIP is a Federal program, managed by the Federal Emergency Management Administration (FEMA), and has three components: to provide flood insurance, to improve floodplain management and to develop maps of flood hazard zones.

The NFIP allows property owners in participating communities to buy insurance to protect against flood losses. Participating communities are required to establish management regulations in order to reduce future flood damages. This insurance is intended to furnish as an insurance alternative to disaster assistance and reduces the rising costs of repairing damage to buildings and their contents caused by flood. A homeowner is able to purchase excess flood insurance, but they must be covered by NFIP flood insurance first.

On July 6, 2012, President Obama signed into law the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12),which reauthorized the NFIP through Sept. 30, 2017, and made a number of reforms aimed at making the program more financially and structurally sound. The purpose of the legislation was to change the way the NFIP operates and to raise rates to reflect true flood risk, as well as make the program more financially stable. As implementation moved forward, constituent concerns over flood insurance premium increases prompted legislative efforts to modify some of the BW-12 reforms.

On March 21, 2014, President Obama signed the Homeowner Flood Insurance Affordability Act of 2014 into law, which repeals and modifies certain BW-12 provisions and makes additional program changes to other aspects of the NFIP. According to FEMA, the law lowers the rate increases on some policies, prevents some future rate increases, and implements a surcharge on all policyholders. It also repeals certain rate increases that have already gone into effect and provides for refunds to those policyholders.

Click here for an overview of the Homeowner Flood Insurance Affordability Act of 2014.

Click here for FEMA’s overview of BW-12.

The NAIC Property and Casualty (C) Committee is charged to coordinate with the NFIP on the regulation of flood insurance and to continue developing a handbook or white paper to assist state insurance regulators in understanding the federal flood insurance program and how it interacts with state insurance regulation. Complete work on a handbook or white paper is expected by the 2014 Fall National Meeting.

Committees Active on This Topic
Property and Casualty Insurance (C) Committee

Catastrophe Insurance (C) Working Group

Special Reports/Studies
Overview of GAO's Past Work on the National Flood Insurance Program
May 2014
Focusing on Flood Insurance and Implementation of the Biggert-Waters Flood Insurance Reform Act of 2012
July 2013, CIPR Newsletter
Biggert-Waters Flood Insurance Reform Act of 2012
October 2012, CIPR Newsletter
Congressional Research Service Report to Congress: National Flood Insurance Program—Background, Challenges, and Financial Status
March 4 ,2011
Additional Resources
NAIC Consumer Alert: Flood Insurance
FEMA: The National Flood Insurance Program
FEMA: Flood Insurance Rate Map (FIRM)
FEMA: Homeowner Flood Insurance Affordability Act Overview
FEMA: BW-12 Timeline
FloodSmart.gov: The official site of the NFIP
CIPR Flood Insurance Summit
8/14/12
Agenda | Presentations
News Releases and Testimony
NAIC President Weighs in on Flood Insurance
08/02/13
Insurance Regulators Applaud Passage of Long-Term Flood Insurance Reauthorization Bill
National Flood Insurance Program reauthorization protects consumers across the country
07/02/12
Insurance Regulators Urge Senate to Pass Flood Insurance Bill Quickly
Long-term extension of national flood program critical to market stability
6/19/12
NAIC Commends U.S. Senate Action on Key Insurance Legislation
Banking Committee Passes Bills to Extend Terrorism Insurance Program and Flood Insurance Program
10/18/07

Contacts

Sara Robben
Statistical Advisor
816-783-8230

CIPR staff:
CIPRNews@naic.org

Media queries should be directed to the NAIC Communications Division at 816-783-8909 or news@naic.org.