The Academy's examination of reform approaches and aspects of the NFIP and the private flood insurance market covers:

Options for paying for the program's debt and financing its future obligations, including consideration of where public contributions to NFIP finances may be appropriate and of the time horizon to be used to measure future obligations.
The need for clarity around NFIP funding sources for actuarially sound rates to be computed.
Take-up rates in "low-risk" areas and the potential benefits and challenges of improving the NFIP risk pool to include more properties that are at lesser risk.
How improved data and modeling may affect private market underwriting.
Potential implications of flood insurance privatization, including the possibility of adverse selection for the NFIP if private insurers underwrite more policies, as well as incorporation of private flood insurers within the state-level system of insurance regulation.
Evaluation of existing approaches to property insurance market challenges at the state level and whether they could be used or adapted for the NFIP.
Assessment of the value of the non-insurance activities of the NFIP, such as promulgating maps and encouraging smart land use policy, and consideration of how changes in those activities might affect other federal budget outlays such as disaster assistance.

Rising sea levels

In addition, the Academy encourages Congress to take a forward look at the NFIP in the context of rising sea levels, noting the prospect of sea level rise of 3 feet or more in the coming decades and observing that the United States is especially vulnerable to large property losses because of the amount of valuable property in at-risk coastal areas.

Special Reports /

NFIP challenges & reform options from the American Academy of Actuaries

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