The NFIP is administered by FEMA, part of the Department of Homeland Security. Flood insurance was initially only available through insurance agents who dealt directly with the federal program. Flooding is the most common and costly natural disaster in the United States, causing billions in economic losses each year. According to the National Flood Insurance Program (NFIP), “90 percent of all-natural disasters in the United States involve flooding.” (Spotlight on flood insurance) As we are aware that there is no coverage for flooding in a standard homeowner policy, rentals policy or in majority of the commercial property insurance policy typically, but it can be purchased by some private insurers or by National Flood Insurance Program. The National Flood Insurance Program started a reinsurance program to be able to manage losses in a better way that took place from some of the major events that happened recently. It was indeed a great way to divert …show more content…
Over the years, the private insurers are getting more comfortable by using sophisticated models to underwrite insurance risk and the modeling firms are getting better at predicting flood risks. In the past, flood insurance was considered to be an untouchable risk by private insurers because there weren’t many ways to measure the flood risk like now, whereas last year private insurers have introduced flood insurance premiums separately. Risk managers for businesses that operate in flood and hurricane prone areas have learned that understanding the precise parameters of their insurance coverage for flood and estimating what would be covered by the National Flood Insurance Program and the commercial property coverage when an occurrence takes place is necessary and the key to manage their risks. Risk managers who don’t pay extra attention to all policy terms and condition often tend to lose the coverage when a destruction