Reforming the National Flood Insurance Program

The National Flood Insurance Program (NFIP) is a critical facility for helping Americans recover from catastrophic flooding events such as Hurricane Katrina, Superstorm Sandy, and many others. Yet the program is mired in controversy and debt as it heads into reauthorization in 2017. Marsh & McLennan Companies has developed this paper to offer policymakers an overview of the NFIP, including several straightforward recommendations to improve customer experience, lower costs, reduce debt, and strengthen engagement among the relevant parties.

The recommendations include:

1. Increasing the risk community size.
2. Sharing the risk community with the private sector.
3. Adopting modern technologies and business models.

About the Report

This report is a collaborative effort by Marsh and McLennan Companies subsidiaries Marsh, Torrent Technologies, Guy Carpenter, and Oliver Wyman.  During the course of 2013 and 2014, Guy Carpenter in concert with Oliver Wyman, Marsh, and others worked with the Federal Emergency Management Agency (FEMA) to deliver the “Flood Insurance Risk Study” to Congress. This work studied the means by which the NFIP could consider privatization and how the NFIP might use reinsurance to support its risk management objectives.