The idea was and is twofold: first, it was seen as the only possibility to actually provide such insurance because insurance companies (even together) lack the financial strength to be able to insure risks that are statistically extremely dependent. Something like this flood costs dozens of billions, and it would bankrupt the whole industry.
Secondly, it's in the national interest to promote such schemes that allow for more areas to be used productively.
The National Flood Insurance Act of 1968 established the government-backed flood insurance scheme. It has Ronald Reagan's signature. https://en.wikipedia.org/wiki/National_Flood_Insurance_Act_o...
The idea was and is twofold: first, it was seen as the only possibility to actually provide such insurance because insurance companies (even together) lack the financial strength to be able to insure risks that are statistically extremely dependent. Something like this flood costs dozens of billions, and it would bankrupt the whole industry.
Secondly, it's in the national interest to promote such schemes that allow for more areas to be used productively.