NFIP participation is based on an agreement between the federal government and local communities to provide insurance if a community will implement and enforce measures to reduce future flood risks (to new construction) in special flood hazard areas.

Why was NFIP established by Congress?

In the past, the national response to flood disasters was pretty much limited to the construction of dams, levees, sea walls, and so forth. This approach did little to reduce losses and, in some instances, may have actually encouraged careless development. To make matters worse, the public could not buy flood coverage from insurance companies and building techniques (to reduce flood damage) were often overlooked.

As a result of mounting flood losses and escalating costs to the general taxpayers of disaster relief, Congress created the NFIP to: [1] mitigate future damage and, [2] provide protection for property owners against potential losses through insurance.

How was the NFIP established and who administers it?

Congress established the NFIP in 1968 with the passage of the National Flood Insurance Act. The NFIP was expanded and modified in 1973 with the passage of the Flood Disaster Protection Act and other legislative measures. The NFIP is administered by the Federal Insurance Administration (FIA), a component of the independent Federal Emergency Management Agency.

Do the state insurance regulators have any jurisdiction over the NFIP in their respective states?

The NFIP is subject to the rules/regulations of the Federal Insurance Administration which has elected to have state-licensed insurance companies' agents and brokers sell flood insurance to consumers. State regulators hold the insurance companies' accountable for providing NFIP customers with the same level of service also required of them in selling other lines of insurance.

Private insurance companies participating in the Write Your Own (WYO) program are licensed and regulated by states to engage in the business.

What is the "Write Your Own" (WYO) program?

In 1981, the Federal Insurance Administrator attempted to persuade private-sector insurance companies to participate in the NFIP. Major insurance companies and insurance trade associations met with FIA officials to outline conditions under which the voluntary sector would become involved in the WYO program. The goals of the WYO program were to:

[1] Increase the NFIP policy base and geographic distribution of policies,

[2] Improve service to NFIP policyholders by including insurance industry knowledge,

[3] Provide the insurance industry with direct operating experience with flood insurance

In 1988, over 200 insurance companies signed arrangements with FIA to sell and service flood insurance under their own names and this was the beginning of the WYO program..

What are the benefits to property owners? Taxpayers? Communities?

With the NFIP, property owners (in participating communities) can obtain insurance against loss by flooding. With competent floodplain management, participating communities can provide protection against devastating financial losses resulting from future flood disasters. More-careful local management and the adoption of construction practices intended to reduce flood losses benefits all levels of government.

NFIP: National Flood Insurance Program

SFHA: Special Flood Hazard Area

FEMA: Federal Emergency Management Agency