[infecto]

I don't think your example is completely logical and is pretty biased sounding opinion from "someone who did work in insurance".

"Because most land with residential development floods" - no i don't think its exactly that. Most land with residential development floods is not true. Now what is true is that most land in a flood zone does indeed have a high chance of flooding. Flood zones are a fairly known and accurate data set that anyone can look at. Heck most of the online realtor sites will show you a flood map with the property. This is the same problem for individuals that live in CA in known fire zones. These type of properties are impossible to underwrite because everyone in pool is high risk. You either need to build a home that is fireproof or accept the risk and potential for total loss. The fed's flood insurance and the state levels fire program are just allowing people to continue to live in unsustainable areas or with properties that have not taken the precautions to prevent loss.