In 1968 Congress created the National Flood Insurance Program (NFIP) in response to the rising cost of taxpayer-funded disaster relief for flood victims and the increasing amount of damage caused by floods. The NFIP makes federally backed flood insurance available in communities that agree to adopt and enforce floodplain management ordinances to reduce future flood damage. The NFIP is self-supporting for the average historical loss
year. This means that unless there is a widespread disaster, operating expenses and flood insurance claims are financed through premiums collected.

A growing number of private insurers have begun offering “excess flood” policies, intended to provide more extensive water damage protection to homeowners than coverage provided by National Flood Insurance Policies alone. In addition, some insurers have introduced special policies for high value properties. These high-end policies may cover homes in noncoastal areas and/or provide enhancements to traditional flood coverage.

The 2004 Flood Insurance Reform Act addressed the issue of repetitive loss properties, which represented 1 percent of all properties insured but 25 to 30 percent of claims losses. The 2004 reforms provide for a pilot program to mitigate repetitive losses.

In 2005 the average amount of flood coverage was $176,545 and the average premium was $453.The average flood claim in the same year was $87,512, up from $39,094 in 2004. Loss payments totaled $13.1 billion in 2005, the highest on record, including losses from hurricanes Katrina, Rita and Wilma. Some 96 insurance companies participate in the "Write-Your-Own" Program, a program started in 1983 in which insurers issue policies and adjust flood claims on behalf of the federal government under their own names.

NATIONAL FLOOD INSURANCE PROGRAM, 1980-2005

		Losses paid
Year	Policies in force at end of year	Number	Amount ($000)
1980	2,103,851	41,918	$230,414.3
1985	2,016,785	38,676	368,238.8
1990	2,477,861	14,766	167,919.6
1995	3,476,829	62,441	1,295,575.2
1996	3,693,076	52,675	828,040.3
1997	4,102,416	30,338	519,511.9
1998	4,235,138	57,340	886,026.0
1999	4,329,985	47,240	754,837.8
2000	4,369,087	16,358	251,551.7
2001	4,458,470	43,539	1,276,846.3
2002	4,519,799	25,261	433,198.8
2003	4,565,491	36,478	771,794.5
2004	4,667,446	54,745	2,140,197.7
2005	4,956,055	149,711	13,101,490.6
Source: U.S. Department of Homeland Security, Federal Emergency Management Agency.

FLOOD INSURANCE PENETRATION

MARKET PENETRATION RATE OF FEDERAL FLOOD INSURANCE FOR SINGLE FAMILY HOMES, 2004 (1)

Location	Market penetration rate (percent)
Inside SFHAs (2)
Northeast	28.0%
South	61.0
Midwest	22.0
West	60.0
Total U.S.	49.0
Outside SFHAs (2)
Northeast	0.6
South	3.0
Midwest	0.4
West	1.0
Total U.S.	1.0
(1) Projected, based on “address matching” analysis by RAND. (2) Special Flood Hazard Areas. Source: RAND.

FLOOD INSURANCE IN THE TOP 75 COUNTIES, RANKED BY MARKET PENETRATION RATE, 2005

Rank	County	State	Residential policies in force  at end of year	Total single family homes in 2004 (1)	Market penetration rate (Percent)
1	Jefferson Parish	Louisiana	105,615	131,883	84.0%
2	Walton County	Florida	13,919	17,454	81.5
3	Broward County	Florida	402,964	516,584	80.0
4	Collier County	Florida	76,199	100,259	78.7
5	Lee County	Florida	135,324	181,331	77.1
6	Galveston County	Texas	56,495	79,505	74.1
7	Glynn County	Georgia	15,232	22,976	69.6
8	St. Bernard Parish	Louisiana	13,874	21,010	68.4
9	Miami-Dade County	Florida	378,708	574,616	68.1
10	Orleans Parish	Louisiana	76,966	121,730	66.7
11	Carteret County	North Carolina	14,205	22,616	65.9
12	St. Charles Parish	Louisiana	9,625	15,153	65.5
13	St. Johns County	Florida	31,236	51,820	62.4
14	Charlotte County	Florida	37,363	65,488	59.0
15	St. Tammany Parish	Louisiana	37,284	68,729	56.2
16	Horry County	South Carolina	36,904	73,514	51.6
17	Indian River County	Florida	22,371	47,134	49.6
18	Bay County	Florida	23,639	51,022	48.0
19	Brunswick  County	North Carolina	13,904	31,449	46.3
20	Nassau County	Florida	8,887	20,836	44.4
21	Berkeley County	South Carolina	17,525	44,339	42.8
22	Pinellas County	Florida	128,583	323,781	42.8
23	Brazoria County	Texas	29,953	76,338	42.0
24	Chatham County	Georgia	27,734	68,708	41.9
25	Terrebonne Parish	Louisiana	12,133	31,858	40.1
26	Baldwin County	Alabama	21,253	54,414	39.8
27	Sarasota County	Florida	55,194	142,906	39.7
28	Palm Beach County	Florida	154,081	404,960	39.2
29	Charleston County	South Carolina	37,778	99,950	39.1
30	Manatee County	Florida	41,335	109,674	38.7
31	Martin County	Florida	18,910	52,301	37.2
32	Atlantic County	New Jersey	27,869	78,444	36.5
33	Lafourche Parish	Louisiana	10,043	29,171	36.2
34	Okaloosa County	Florida	18,935	57,576	34.2
35	Georgetown County	South Carolina	6,564	20,946	33.0
36	Flagler County	Florida	8,759	27,722	32.1
37	Maui County	Hawaii	11,563	38,618	30.6
38	Livingston Parish	Louisiana	9,143	33,835	28.3
39	Brevard County	Florida	49,466	184,495	27.6
40	Sussex County	Delaware	16,160	61,556	27.0
41	Volusia County	Florida	42,761	168,616	26.8
42	St. Lucie County	Florida	20,890	80,907	26.4
43	Jefferson County	Texas	18,528	74,208	26.1
44	Hampton,Independent City Of	Virginia	10,082	40,515	25.4
45	Ocean County	New Jersey	48,336	195,555	25.3
46	Harris County	Texas	209,146	862,472	25.2
47	Pasco County	Florida	32,575	144,098	23.4
48	Bossier Parish	Louisiana	6,989	31,691	23.3
49	New Hanover County	North Carolina	12,043	56,533	22.1
50	Bronx County	New York	19,761	94,501	21.7
51	Cameron County	Texas	13,337	71,064	21.6
52	Fort Bend County	Texas	22,407	112,805	20.9
53	Santa Rosa County	Florida	9,059	45,914	20.1
54	Harrison County	Mississippi	9,900	55,761	19.1
55	Jackson County	Mississippi	7,423	42,081	18.3
56	Norfolk, Independent City Of	Virginia	9,136	53,143	17.8
57	Hillsborough County	Florida	55,600	327,376	17.7
58	Lafayette Parish	Louisiana	9,579	57,678	17.5
59	East Baton Rouge Parish	Louisiana	18,461	116,035	16.7
60	Virginia Beach, Independent City	Virginia	20,907	131,023	16.3
61	Escambia County	Florida	14,883	98,093	15.8
62	Honolulu County	Hawaii	32,420	212,760	15.6
63	Sacramento County	California	56,323	378,524	15.4
64	Calcasieu Parish	Louisiana	8,004	58,225	14.5
65	Montgomery County	Texas	12,680	94,717	14.0
66	Citrus County	Florida	6,548	53,436	13.3
67	Merced County	California	6,827	55,752	12.9
68	Chesapeake, Independent City O	Virginia	7,664	62,490	12.6
69	Osceola County	Florida	6,903	61,007	11.7
70	Hudson County	New Jersey	9,320	83,463	11.6
71	Duval County	Florida	25,924	238,658	11.3
72	Barnstable County	Massachusetts	8,427	87,506	10.2
73	Marin County	California	6,372	74,514	9.3
74	Tulare County	California	8,447	98,042	9.1
75	Monmouth County	New Jersey	15,331	188,377	8.5
(1) Based on 2004 census data of all single family homes, both owner-occupied and renter-occupied. If county or parish was not surveyed in 2004, the number of single-family homes was estimated based on 2000 census data and on overall growth in the county or parish. Note: List includes 75 counties or parishes that sold the highest number of flood insurance policies. A few counties were not included in the ranking because reliable estimate of single-family homes could not be obtained. Sources: National Flood Insurance Program, U.S. Census Bureau, Staff Research By New Orleans Times-Picayune.