Dwight D. Eisenhower photo

Statement by the President Upon Signing the Federal Flood Insurance Act of 1956.

August 07, 1956

I HAVE TODAY signed into law the Federal Flood Insurance Act of 1956.

This Act directs the Housing and Home Finance Administrator to establish a system of indemnification, within limits, for losses sustained in flood and tidal disaster; to re-insure private insurance coverage of such losses; and to assure a line of credit, where necessary, for the restoration and reconstruction of properties damaged or lost as a result of flood.

I believe this Act will open the way to a new field of protection for our homes and our business and community properties against one of the most serious exposures to loss that we face today. Protection against loss from virtually every other type of natural disaster is already obtainable at practical cost. But we have not yet developed a feasible method of insuring against the unpredictable and catastrophic losses that floods entail.

The average annual flood damage that the Nation suffers runs into hundreds of millions of dollars, and in years of major disaster, such as 1951 and 1955, is in excess of a billion dollars. Private insurance companies have found no way within the limits of their own resources to venture into this field of risk without danger of being wiped out before adequate reserves can be established. No attempt up to now has been made to use public resources to develop a method of indemnification as a solution of this problem.

Last year, only four years after the flood disaster in the midwest, major floods wrought tremendous damage to homes and businesses and whole communities both in the East and the West. It seemed to me, therefore, that the Government, in the public interest, should take the lead in developing a means of helping our people to protect themselves against having their assets and their livelihood wiped out overnight.

This new program is a venture into an untested field of risk protection, and is admittedly experimental. It does not propose putting the Federal Government permanently into the flood insurance business. On the contrary, it provides for the government to lead the way on a basis that will enable this field of responsibility to be absorbed into our private system in the shortest possible time.

The Act provides that the insurance extended shall to the fullest degree possible be issued through private insurance carriers. It authorizes public funds to help establish a system of protection against flood loss, but at the same time encourages and assists private insurance companies, on the basis of developing experience, to employ their own means for insuring against such risks. The full cooperation and active support of the private insurance carriers is an essential to the successful accomplishment of the Act's immediate and ultimate objectives.

A maximum public subsidy of 40 percent is authorized to supplement fee (or premium) payments by policy-holders. Initially I had recommended that this subsidy be shared equally between the Federal and State governments.

The Congress determined, however, that state participation should be deferred until July 1, 1959, with the Federal Government carrying the full subsidy cost until that time. This will give all states an ample period in which to consider the importance of flood loss protection for their citizens and to take the required legislative action to participate in the program.

As I see it, it is a proper function of the Federal Government to pioneer the establishment of a system of insured protection against the crippling losses of flood and tidal disaster. But when such a disaster strikes, it does not strike the country as a whole. Its severity is concentrated in specific areas and localities, and no one can predict where they will be. It is accordingly proper and just that each state should help share the cost of such protection in due proportion to the benefits that its citizens receive.

It is important, therefore, that state and local governments and the state legislatures familiarize themselves at an early date with the financial, as well as the flood zoning requirements of this Act in order that they will be fully prepared, by the date set, to continue the program's benefits to their citizens if they so choose.

Note: The Federal Flood Insurance Act' of 1956 is Public Law 1016, 84th Congress (70 Stat. 1078).

Dwight D. Eisenhower, Statement by the President Upon Signing the Federal Flood Insurance Act of 1956. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/233016

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