Why is Flood Insurance Important in Florida? “For the nation’s insurance companies, the August 2005 landfall of Hurricane Katrina, and subsequent flooding caused thousands to flee their homes, is shaping up to be the costliest domestic natural disaster in U.S. history.Robert Hartwig, chief economist at the Insurance Information Institute, said Hurricane Katrina could force the largest payout of federal flood insurance in history — in the ballpark of $3 billion, according to a CNN/Money report.