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Study: California Should Leave the NFIP

According to a new University of California at Davis study, California — which has 290,000 flood policies — is not benefiting from participating in the National Flood Insurance Program, and the state may be better off running its own program...
December 20, 2016

According to a new University of California at Davis study, California — which has 290,000 flood policies — is not benefiting from participating in the National Flood Insurance Program (NFIP), and the state may be better off running its own program. The state only received a small fraction of economic benefits from participating in the NFIP compared to the premiums it has paid.

Scientists at UC Davis examined NFIP databases and found that since 1994, damage payouts have totaled just 14 percent of premiums collected. The study's authors suggest that California partner with private insurers and reinsurers to provide flood insurance, as “California has paid in more than $3 billion more than it's received in payments over the last 21 years,” says Nicholas Pinter with the UC Davis Center for Watershed Sciences. He said the funds saved by partnering with private insurers and reinsurers could be used to invest in projects that reduce flood risk.