As critics predicted, the NFIP encouraged people to locate in areas more susceptible to flood damage.
Prior to the NFIP's existence, insurance coverage for flood losses was not provided by any private insurance carriers.
Insurance losses stemming from flood damage were largely the responsibility of the property owner, although the consequences were sometimes mitigated through provisions for disaster aid.
Today, owners of property in flood plains frequently receive disaster aid and payment for insured losses, which in many ways negates the original intent of the NFIP. Consequently, these policy decisions have escalated losses stemming from floods in recent years, both in terms of property and life.
Moreover, certain provisions within the NFIP increase the likelihood that flood-prone properties will be occupied by the people least likely to be in a position to recover from flood disasters, which further increases demand for aid. Some factors contributing to increased demand for aid are: