The increasing supply of flood insurance

But don't get excited about insuring your beach cottage just yet (One Big Insurer ...):

After decades of declining to sell flood insurance, the private insurance industry is tip-toeing into the business, starting with coverage in three inland states, one of the largest insurance companies said yesterday. The focus is on selected homes where risk is low and with premiums that might most appeal to princes and millionaires.

The Chubb Group of Insurance Companies, which caters to wealthy homeowners and ranks eighth in the United States in sales, said it had begun offering the coverage in Arizona, Colorado and Illinois. Chubb said it expected to find a strong market among owners of expensive homes, especially after months of headlines about the devastating flooding from Hurricane Katrina along the Gulf Coast.

By the end of the year, Chubb said, it expects to be selling flood insurance in 15 states, including Florida. But it plans to restrict sales to its existing home insurance customers and only to those whose homes are not sitting along beaches or riverfronts, where the risk of damage and even inundation is high.

It is also staying away from the other gulf states and most of the Atlantic Seaboard.

I'm guessing they'd also be willing to sell flood insurance to homeowners with a zero risk of flood damage.