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it is administered by the private insurance companies but underwritten by the federal government. It is FEMA money that is being paid out, not from the coffers of the insurance companies. (The companies receive per policy fees for their administrative work, the premiums are sent to the government)

Also flood insurance is handled differently than home insurance. A policy holder selects their building coverage up to a maximum of $250,000 and pays accordingly to what they selected, modified by the mapped flood zone they live in. Coverage is available for personal item (up to $100k IIRC) but is at an additional cost.

Part of the problem is many flood maps had not been updated in decades, even when the old flood zone definitions were superseded by new designations. This has left many homes either paying too little or far too much for their actual risk. The process of updating the maps is compounded by climate change altering the zones nearly as fast as they are recategorized.