National Flood Insurance - 1989 To 2008

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Release date: 
September 6, 2008
Release Number: 

MADISON, Wis. -- The National Flood Insurance Program (NFIP) had its roots in the 1800s as the country recognized the federal government must play a leading role in controlling and responding to floods.

Two previous chronological articles traced the evolution of a National Flood Insurance Program from its origins in a Supreme Court ruling of 1824 through major flooding events and other disasters that prompted the government's responses and shaped the program.

The following chronology illustrates a shifting of flood management emphasis to mitigating disaster damage, promoting flood insurance participation and improving floodplain mapping:

1989 - Hurricane Hugo wreaks havoc in the Carolinas, Puerto Rico and the Virgin Islands. Structures that had been built to meet the NFIP's requirements for floodplain management performed well.

1989 - FEMA revises the definition of "substantial improvement" and, for the first time, defines "substantial damage" - terms that affect floodplain management and reimbursement of disaster losses.

  • Substantial improvement represents any reconstruction, rehabilitation, addition or other improvement of a building where the cost of the improvement equals or exceeds 50 percent of the market value of the building before the start of construction.
  • Substantial damage reflects damage of any origin sustained by a building when the cost of restoring the building to its before-damaged condition would equal or exceed 50 percent of the market value of the building before the damage occurred.

1990 - NFIP establishes the Community Rating System, which discounts flood insurance premiums in communities that voluntarily adopt measures that reduce flood losses or that increase the number of flood insurance policies.

1992 - Hurricane Andrew devastates south Florida.

1993 - The Great Midwest Flood of the upper Mississippi and lower Missouri River basins results in presidential disaster declarations for 505 counties in nine states and damage as high as $16 billion. Only about one in ten affected structures are covered by flood insurance.

1993 - Extensive flooding causes NFIP losses of more than twice the historic level and forces the program to borrow $100 million from the U.S. Treasury. This is the first time such borrowing has been necessary since 1984. The funds are repaid in fiscal year 1994.

1993 - Congress passes the "Volkmer Amendment" to the 1988 Stafford Act.

  • Increases federal support for relocating flood-prone properties.
  • Increases hazard-mitigation funds available after a disaster to 15 percent of all of FEMA's appropriated federal disaster funds, up from the previous 10 percent.
  • The federal share of approved mitigation projects increases from 50 percent to 75 percent.
  • Clarifies conditions for the purchase of damaged homes and businesses.
  • Dictates that purchased structures must be removed and the land dedicated in perpetuity for a use that is compatible with open-space, recreational or wetlands-management practices.

1994 - The National Flood Insurance Reform Act includes the most comprehensive changes to NFIP since 1973.

  • Strengthens requirement that flood insurance be purchased by recipients of federal disaster assistance.
  • Requires lenders to purchase flood insurance where required if the borrower fails to do so.
  • Imposes penalties for failure to require flood insurance or to notify borrowers when flood insurance is required.
  • Establishes notice requirements for properties located in flood hazard areas.

1995 - Congress passes the National Flood Insurance Reform Act.

  • Applicants for Individual and Family Grants who receive federal disaster ass...
Last Updated: 
July 16, 2012 - 18:46
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