Role of Actuarial Soundness in the National Flood Insurance Program

摘要

Flooding is the most common source of catastrophic loss for individuals and businesses in the United States. However, standard homeowner policies do not include flood coverage: private insurers have historically found it unprofitable to insure low-frequency, high-severity disasters such as floods, because their future losses are difficult to measure. Until the establishment of the National Flood Insurance Program (NFIP) in 1968, the primary recourse for flood victims was federal government disaster assistance (FEMA 2002 p.1). Congress adopted the NFIP in response to the ongoing unavailability of private insurance and continued increases in federal disaster assistance. The primary goals of the National Flood Insurance Program are to: decrease the risk of flood losses; reduce the costs and adverse consequences of flooding; and reduce the demands for and expectations of federal flood disaster assistance. While not listed specifically as a goal for the NFIP, protection and enhancement of the natural and beneficial functions of floodplains is an inherent part of the program, and has been interpreted as another goal of the NFIP over time.