The NFIP is sinking, so who will protect my house when it drowns?
- Shirley Gordon
- Practice Leader, Personal & Family Office Risk Management
Most buyers of flood insurance have traditionally purchased coverage through the National Flood Insurance Program (NFIP), but the tides are changing.
Prices for this coverage has historically been based on whether or not a home was in or out of a 100-year flood plain which is a broad criteria.
Beginning in October 2020, the NFIP will begin to tie insurance premiums to the actual flood risk of individual homes. On one hand, this will allow buyers to pay for their insurance based on a more accurate risk assessment. On the other hand, rates are likely to increase.
Experts are questioning the long-term viability of the NFIP. In fact, it is likely that funding will continue to shrink, eventually leaving policyholders exposed. In anticipation of this happening, however, flood insurance products are rapidly developing in the private market so we expect solutions to start filling the gaps soon.