The Nation's Responses To Flood Disasters: A Historical Account

The 1970s and 1980s: The Flood Insurance Era 39
conservative principles with federal spending reductions in a way that would be
acceptable to the full range of the political spectrum. By taking away all federal financial
assistance, development would be slowed and cost savings and environmental protection
achieved without actually regulating floodplain development. In other words, people
could develop property at their own risk. The idea did not work well, and the antiregulation
fervor of the early Reagan administration died down. 97
In 1983, the Vice President’s Task Force on Regulatory Relief, the Grace
Commission, and the President’s Commission on Housing scrutinized both Executive
Order 11988–Floodplain Management and the concept of the 100-year frequency flood
used for floodplain delineation and as the minimum regulatory flood level in local
ordinances. Generally, the concerns expressed by the Reagan administration were the
cost, but not the benefits, of compliance with the Executive Order and impacts on
affordability of housing. 98 FEMA reviewed these measures and its NFIP regulations
under the direction of the Office of Management and Budget (OMB). The final report
concluded that all should be retained.
Insurance: Privatizing policies and reducing premiums
Insurance policies during the 1970s were issued through private sector insurance
companies but were centralized in the FIA. In 1983, the FIA initiated the Write Your
Own (WYO) Program, a re-involvement of private sector insurance companies.
Participating insurance companies could and did begin selling NFIP policies under their
own company names, even though the FIA still assumed financial risk. In 1985, the
NFIP became self-supporting, with policy premiums paying for claims, mapping,
personnel, and administrative costs. The self-supporting program, then, on average,
collected enough in premiums to pay all claims and program operating expenses that
would be expected based on claims experience. Since that time, the program has
remained self-supporting even though it has borrowed from the Federal Treasury (with
repayment and interest) on a few occasions when large numbers of flood insurance
claims depleted NFIP resources.
In 1990, FEMA implemented a Community Rating System that allowed for flood
insurance premium reductions for those communities participating in other designated
flood loss activities. It was designed to reward communities that were doing more than
the minimum to protect their citizens from flood losses and to encourage other
communities to initiate new flood protection activities. At the end of 1999, some 900
communities participated in this special program, representing 65 percent of the total
flood insurance policies in the nation. About 90 percent had achieved a Class 9 or a
Class 8 rating, resulting in premium reductions of 5 and 10 percent, respectively. Two
97 Robinson, 19 January 2000.
98 Ibid.