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The National Flood Insurance Program: Financial Soundness and Affordability

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  • Congressional Budget Office

Abstract

The National Flood Insurance Program (NFIP) offers flood insurance and promotes floodplain management. CBO’s analysis of 5 million policies in effect in August 2016 showed that the NFIP’s expected one-year costs exceeded annual premiums (including fees and assessments paid by policyholders) by $1.4 billion. That shortfall stemmed primarily from premiums’ falling short of expected costs in coastal counties, which account for three-quarters of all NFIP policies nationwide.

Suggested Citation

  • Congressional Budget Office, 2017. "The National Flood Insurance Program: Financial Soundness and Affordability," Reports 53028, Congressional Budget Office.
    • Handle: RePEc:cbo:report:53028
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    File URL: https://www.cbo.gov/system/files/115th-congress-2017-2018/reports/53028-nfipreport2.pdf
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    Citations

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    Cited by:

    1. Terry Dinan & Perry Beider & David Wylie, 2019. "The National Flood Insurance Program: Is It Financially Sound?," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 22(1), pages 15-38, March.
    2. Graff Zivin, Joshua & Liao, Yanjun & Panassié, Yann, 2023. "How hurricanes sweep up housing markets: Evidence from Florida," Journal of Environmental Economics and Management, Elsevier, vol. 118(C).
    3. Sarah E. Anderson & Terry L. Anderson & Alice C. Hill & Matthew E. Kahn & Howard Kunreuther & Gary D. Libecap & Hari Mantripragada & Pierre Mérel & Andrew J. Plantinga & V. Kerry Smith, 2019. "The Critical Role Of Markets In Climate Change Adaptation," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 10(01), pages 1-17, February.
    4. Georgic, Will & Klaiber, H. Allen, 2022. "Stocks, flows, and flood insurance: A nationwide analysis of the capitalized impact of annual premium discounts on housing values," Journal of Environmental Economics and Management, Elsevier, vol. 111(C).
    5. Eugene Frimpong & Daniel R Petrolia & Ardian Harri & John H. Cartwright, 2020. "Flood Insurance and Claims: The Impact of the Community Rating System," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 42(2), pages 245-262, June.
    6. Miyuki Hino & Marshall Burke, 2020. "Does Information About Climate Risk Affect Property Values?," NBER Working Papers 26807, National Bureau of Economic Research, Inc.
    7. Koen de Koning & Tatiana Filatova & Okmyung Bin, 2019. "Capitalization of Flood Insurance and Risk Perceptions in Housing Prices: An Empirical Agent‐Based Model Approach," Southern Economic Journal, John Wiley & Sons, vol. 85(4), pages 1159-1179, April.
    8. Georgic, Will C. & Klaiber, Allen, 2018. "Identifying the Costs to Homeowners of Eliminating NFIP Subsidies," 2018 Annual Meeting, August 5-7, Washington, D.C. 274444, Agricultural and Applied Economics Association.
    9. Matthew E. Kahn & V. Kerry Smith, 2017. "The Affordability Goal and Prices in the National Flood Insurance Program," NBER Working Papers 24120, National Bureau of Economic Research, Inc.
    10. V. Kerry Smith & Ben Whitmore, 2019. "Amenities, Risk, and Flood Insurance Reform," NBER Working Papers 25580, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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