Flood Insurance

The National Flood Insurance Act of 1968 authorized the creation of the National Flood Insurance Program (NFIP) because this type of insurance was unavailable from the private insurance markets. FEMA was overwhelmed by NFIP claims from the 2004 and 2005 hurricane season, and Congress had to act to raise the programs borrowing authority to pay claims. Fundamental reforming of the program is necessary to ensure its viability going forward.

Regulation of the property insurance market is handled mostly at the state level by NAIC members, but the NFIP is a federal program where state regulators have no formal authority. To ensure consumers are protected an informed the NAIC collaborates with the NFIP. This working relationship has developed minimum flood insurance training and education requirements for agents who sell flood insurance policies for FEMA.

There is now a push in Congress to expand the flood program to offer wind coverage. The NAIC has called for a more comprehensive insurance policy that offers consumers seamless coverage for all catastrophic perils. Integrating the flood program into such a policy should be considered as part of any flood reform package.