The Flood Peril and the Federal Flood Insurance Act of 1956

Floods are the most destructive of natural disasters; the 1951 floods in the Southwest caused property damage estimated at two and a half billion dollars. By comparison, all property and casualty insurance companies pay an nually for losses totaling about one billion dollars, or about twice the average annual cost of floods. Private insurance companies do not regard flood peril, therefore, as an insurable risk. The Federal Flood Insurance Act of 1956 is designed to fill this gap. It provides for the establishment of a program of in surance, reinsurance, and loans to assist persons to recover from loss due to de struction by floods. The author analyzes the act in some detail.—Ed.