Close enough. There is no economic incentive for the private market to provide flood insurance because the at risk group is too small and too well defined. Banks require flood insurance before they issue a loan to anyone in the "Hundred Year" flood plain. This greatly increases the premium paying base. Development which increases the rate of runoff has expanded this plain, which has led to more regulation of land use.
Government flood insurance allows people to invest in property which no private insurer would touch, in other words, land that was reclined long before there was such a term.
If it works for geographically unviable land, it would work for the economically unviable land as well.
But why should we be subsidizing living on geographically nonviable land??
(Although I would like to see how they're doing their 100-year calculations. When this place was built we had to have flood insurance that year. The next year we weren't in the 100-year floodplain any more and we dropped it. Looking at the area it would be nearly impossible to flood our house--it would take either a wall of water or an incredible amount of it to avoid it simply running down the street. Our fence is one block higher on the west side than the east side and I know at least some other houses on the street are the same way--while I've never measured it there's no question we are multiple feet higher than half a block away. While we don't get a lot of rain here it can be very concentrated and I certainly would not consider buying a house where the water wouldn't just run down the street.)
I don't think the government should be living on geographically nonviable land, but as the old saying goes, "It's not what you know, but who you know." Back when the Indonesian Tsunami was all in the news, a conservative friend thought it was strange that in the US, only rich people could afford water front property, but over there it seemed to be the poorest. I tried to explain how government intervention in the marketplace for the benefit of people like her was the reason. She couldn't understand what I was saying.
Yeah, for many years now I have been saying that if your property is destroyed by a large-area natural disaster the land should be zoned such that only structures that can stand up to that disaster are allowed to be built there, other than expendable stuff that is specifically is not permitted long term inhabitation. (Thus you can have a business renting out beachfront cabanas or bungalows or the like, but you simply have to consider their periodic destruction a normal part of business.)
The hundred year flood plain is a standard model used by civil engineers. It's a combination of history and statistical projection. In my lifetime, I've seen three 100 year floods, for what that's worth.
What I'm saying about the local situation is that I can't imagine the area flooding because it's not a
plain. Dump a bunch of water on it and it goes running down the gullies (that is, before the builder graded the land.) I most certainly would not want to be standing in such a gully in a downpour, but I would be at no flood risk standing between two gullies. The way they grade the land during construction ends up being the streets are the gullies, the houses are the space between the gullies. Our old house was in similar terrain--and maybe once a year enough water would go down the main streets to make them impassable, but the neighborhood never had water even reaching the sidewalk. Since we bought this place I've never seen that kind of water on the main streets but the pattern remains--the housing areas simply do not have long enough sections to build up that kind of water.
You do see people in the city that got flooded now and then, but they're always people living in flatter areas.