National Flood Insurance Program (NFIP)
Last updated: 10/01/15

Issue: Floods are the most common and most destructive natural disaster in the United States. Ninety percent of all natural disasters involve flooding, according to 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.

Background: 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. Information detailing how to obtain flood insurance can be found at, the official site of the NFIP.

Since NFIP’s inception, additional legislation has been enacted to strengthen the program, ensure its fiscal soundness and inform its mapping and insurance rate-setting. More recently:

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.

Status: 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 2015 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: The National Flood Insurance Program: Status and Remaining Issues for Congress
February 2013
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
NAIC Consumer Alert: Basic home Insurance Does Not Cover Flood Damage
FEMA: Homeowner Flood Insurance Affordability Act Overview
FEMA: BW-12 Timeline

FEMA: BW-12 Quick Reference Guide The official site of the NFIP
CIPR Flood Insurance Summit
Agenda | Presentations
News Releases and Testimony
NAIC Supports Flood Bill
NAIC President Weighs in on Flood Insurance
Insurance Regulators Applaud Passage of Long-Term Flood Insurance Reauthorization Bill
National Flood Insurance Program reauthorization protects consumers across the country
Insurance Regulators Urge Senate to Pass Flood Insurance Bill Quickly
Long-term extension of national flood program critical to market stability
Sara Robben
Statistical Advisor
NAIC Center for Insurance Policy and Research (CIPR)
CIPR Homepage
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