Flood Money

This year, the National Flood Insurance Program is expected to pay out nearly $30 billion in damage claims, with minimal government involvement in the process. Here's how the program works:

1. The Federal Emergency Management Agency draws flood maps to determine which houses are vulnerable across the country. It contracts with 95 insurance companies to sell policies to homeowners in flood areas.
2. Computer Sciences Corp., under contract with FEMA, handles policyholder information and premiums, keeps the NFIP books and trains adjusters to assess flood damage.
3. Through an insurance agent, one of 95 "write your own" insurance companies sells a policy to a homeowner in a qualifying area.
4. After taking one-third of the homeowner's premium payment as its fee, the company passes the remaining money to CSC.
5. A policyholder reports flood damage to the insurance company, which dispatches an adjuster, usually a contract employee from a third-party company.
6. Adjuster assesses house damage and reports it in a claim to the insurance company.
7. Insurance company approves the claim payment, and forwards it to CSC for processing.
8. CSC processes the claim and cuts a check from NFIP funds to cover the payment.