September 03, 2014 Article

Rate Hikes and Litigation: Changes to Federal Flood Insurance Program

Deadlines for the Homeowner Flood Insurance Affordability Act raise the specter of litigation

by Andrew M. Lieb

Changes to the federal flood insurance program in March attempted to address deep concerns about skyrocketing rates for those in flood-prone areas covered by the National Flood Insurance Program (NFIP), but upcoming deadlines implementing these changes raise the specter of litigation.

The National Flood Insurance Program

Reacting to failures of the private insurance industry to provide coverage for flooding beginning in the 1960s, Congress established the NFIP through Title XIII of the Housing and Urban Development Act of 1968 to alleviate “personal hardships and economic distress” through “sharing the risk of flood losses” and “encourag[ing] preventive and protective measures.” The NFIP was designed to provide “previously unavailable flood insurance protection to property owners in flood-prone areas” because it was “uneconomic for the private insurance industry alone to make flood insurance available to those in need of such protection on reasonable terms and conditions.”

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