Watery Marauders: How the Federal Government Retarded the Development of Private Flood Insurance

This paper describes how America’s National Flood Insurance Program came into existence and seeks to answer the question of why private flood insurance never developed in the United States on a significant scale. It consists of three sections.

The first section attempts to provide a brief theoretical framework for thinking about flood insurance. It describes what flood insurance does and presents a theory as to how it ought to work.

The second section provides the early history of the flood insurance program. It outlines how the federal government first took on the responsibility of protecting the nation from flooding and how Congress failed in its first effort to offer federal flood insurance.

The third section explains how America got the system of flood insurance that it has today. It explains how the Tennessee Valley Authority, U.S. Geological Survey, and a variety of local governments gathered enough risk data to make federal flood insurance palatable to Congress, how Congress implemented a program, and then stripped it of its risk-based character.