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A Brief Introduction to the National Flood Insurance Program (CRS Report for Congress)

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Release Date Revised Nov. 4, 2024
Report Number IF10988
Report Type In Focus
Authors Diane P. Horn
Source Agency Congressional Research Service
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Summary:

The National Flood Insurance Program (NFIP) is the primary source of flood insurance coverage for residential properties in the United States. The NFIP has two main policy goals: (1) to provide access to primary flood insurance, thereby allowing for the transfer of some of the financial risk of property owners to the federal government; and (2) to mitigate and reduce the nation’s comprehensive flood risk through the development and implementation of floodplain management standards. A longer-term objective of the NFIP is to reduce federal expenditure on disaster assistance after floods. As a public insurance program, the goals of the NFIP are different from the goals of privatesector insurance companies. It encompasses social goals to provide flood insurance in flood-prone areas to property owners who otherwise would not be able to obtain it, and to reduce the government’s cost after floods. The NFIP also engages in many “noninsurance” activities in the public interest: it identifies and maps flood hazards, disseminates flood-risk information through flood maps, requires community land-use and building-code standards, contributes to community resilience by providing a mechanism to fund rebuilding after a flood, and offers grants and incentive programs for household- and community-level investments in flood-risk reduction. Over 22,000 communities in 56 states and jurisdictions participate in the NFIP, with over 5 million policies providing nearly $1.29 trillion in coverage. The program collects nearly $3.6 billion in premium revenue each year. Floods are the most common natural disaster in the United States, and in recent years all 50 states have experienced flood events.