The History of Flood Insurance
In 1968, Congress created the National Flood Insurance Program (NFIP). Since most homeowners policies did not cover flood, property owners who experienced a flood often found themselves financially devastated and unable to rebuild. The NFIP was formed to fill that gap. The NFIP is designed to provide an insurance alternative to disaster assistance to meet the escalating costs of repairing damage to buildings and their contents caused by floods. This is especially significant to the coastal community of the Outer Banks.
The Federal Emergency Management Agency (FEMA) manages the NFIP. In 1979, the Federal Emergency Management Agency (FEMA) was established by an executive order, which merged many of the separate disaster-related responsibilities into a single agency. After Hurricane Katrina, FEMA was reformed and expanded. The new FEMA leads and supports the nation in a risk-based, comprehensive emergency management system of preparedness, protection, response, recovery and mitigation.
In 2012, the U.S. Congress passed the Flood Insurance Reform Act of 2012 which calls on the Federal Emergency Management Agency (FEMA), and other agencies, to make a number of changes to the way the NFIP is run. As the law is implemented, some of these changes have already occurred, and others will be implemented in the coming months. Key provisions of the legislation will require the NFIP to raise rates to reflect true flood risk, make the program more financially stable, and change how Flood Insurance Rate Map (FIRM) updates impact policyholders. The changes will mean premium rate increases for some – but not all — policyholders over time.