Where Did NFIP’s Debt Come From?

Studying how the National Flood Insurance Program (NFIP) became more than $23 billion in debt reveals some interesting dynamics about U.S. flood risk.

• Of the top 15 loss events, 14 are related to tropical cyclones. The top three loss events (in order) arose with Hurricanes Katrina, Sandy and Ike.
• Over NFIP’s more than 40-year history, just two years are responsible for more than 50 percent of its losses: 2005, following Hurricanes Katrina, Wilma and Rita, and 2012 following Hurricanes Sandy and Isaac.
• This tropical cyclone-dominated loss is partly because the penetration in coastal states is much higher than in inland areas. In other words, by virtue of how the NFIP has underwritten, it is more exposed in coastal areas.