If you go to the FEMA website, they have lots of info on floodplains and what "100 year floodplain" really means--they even use a new term for it.
http://www.fema.gov/nfip/
Me, I wouldn't buy anything in a floodplain, unless it is on the coast (have to take the good with the bad), but that's me. And you're right, people can live there for years and never have a flood, but you can also have flooding three years in a row.
The flood insurance requirement is really to protect the lender, not the borrower. If you own your house outright, there isn't even a requirement to have fire insurance, but most people do. So you wouldn't have to have flood, either, but many choose to.
As long as there is a mortgage on it (and I don't think even if you were 90% paid off you could get out of the requirement), you will have to have it, and it will probably be paid out of an impound account. If he does put enough down to avoid the impound accounts, and pays premiums himself, if he cancels the policies they will notify the mortgage holder, and they can probably call the note due and payable immediately, which is not a good thing.
I take it he is buying because it is next door to you? If he does buy it, there is nothing to prevent him from taking some preventive measures to shore up the property--planting more trees to help prevent soil erosion, making sure any creek drain pipes are clear and not dammed up by beavers, etc. I think a lot of small places get flooded because people don't take care of these things--heck, even in the city people are too lazy to kick a few leaves out of the way of the storm drains and the streets get flooded sooner rather than later.
Good luck!