Author: U S Government Accountability Offi Gao
Publisher:
ISBN: 9781073756605
Category :
Languages : en
Pages : 62

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GAO-14-297R: Overview of GAO's Past Work on the National Flood Insurance Program

Author: United States Government Accountability Office
Publisher: Createspace Independent Publishing Platform
ISBN: 9781982019143
Category :
Languages : en
Pages : 62

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Book Description
Overview of GAO's Past Work on the National Flood Insurance Program

Author: United States. Congress. House. Committee on Financial Services. Subcommittee on Housing and Insurance
Publisher:
ISBN:
Category : Flood insurance
Languages : en
Pages : 61

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Book Description
Over the past 11 years, GAO has identified a variety of challenges facing the National Flood Insurance Program (NFIP) and has made numerous recommendations to the Federal Emergency Management Agency (FEMA) to improve its administration of the program. FEMA has generally agreed with GAO's recommendations and has taken steps to address them. However, FEMA has not fully addressed all of the issues we have reported on and will need to address provisions in both the Biggert-Waters Insurance Reform Act of 2012 (Biggert-Waters Act) and the Homeowner Flood Insurance Affordability Act of 2014 (2014 Act) that affect many aspects of NFIP, including its finances, rate setting, and participation. Among other things, GAO found the following: 1) Finances. As of December 31, 2013, FEMA owed the Department of the Treasury (Treasury) $24 billion--primarily to pay claims associated with Superstorm Sandy (2012) and Hurricane Katrina (2005)--and had not made a principal payment since 2010. The Biggert-Waters Act requires FEMA to issue a report to Congress by January 2013 on a repayment plan setting forth options to repay FEMA's total debt to Treasury within 10 years. However, as of January 2014, FEMA had not issued such a report. According to FEMA officials, preliminary analysis suggests that under FEMA's planned implementation of the act, the agency will not be able to repay its debt within the 10-year time frame. The officials said the report will contain options for retiring the debt within 10 years, but that most of the options would require congressional action. As required by the act, FEMA is establishing a reserve fund that could help reduce the need for future borrowing from Treasury. However, FEMA is unlikely to initially meet the act's annual targets for building up the reserve, due partly to statutory limitations on annual premium increases. 2) Premium rate setting. FEMA's methodology for determining full-risk premium rates may not fully reflect the actual risk of flood damage as intended. Consistent with recommendations GAO made in 2008, FEMA has initiated actions to improve the accuracy of full-risk rates, including updating data used in the model it uses to set rates. However, these actions are in the preliminary stages. FEMA had begun implementing Biggert-Waters Act provisions to reduce and eventually eliminate most subsidized rates on remaining policies. However, the 2014 Act reinstates some of these subsidies. Phasing out and eventually eliminating subsidies remaining after the 2014 Act poses challenges for FEMA. For example, to appropriately revise rates for policies that were previously subsidized (that is, had discounted insurance premiums), FEMA will need information on the relative risk of flooding and property elevations, which generally had not been required for subsidized policies prior to the Biggert-Waters Act. FEMA is evaluating approaches to obtain this information in response to a recommendation GAO made in a 2013 report. Premium rate increases arising from the act may also pose affordability challenges for some homeowners. The 2014 Act's repeal of certain rate increases in the Biggert-Waters Act will address affordability concerns, but may also reduce program revenues and weaken the financial soundness of the NFIP program. 3) Participation. Overall NFIP penetration rates--the proportion of all properties with flood insurance--are low, according to estimates based on available limited data. In addition, while some homeowners are required to purchase flood insurance for the life of their mortgage loans, information on the extent of compliance with this requirement is limited. As of September 31, 2013, there were more than 5.5 million NFIP policies in force, but several factors have negatively affected program participation. These include inaccurate perceptions about the risk of flooding and the cost of purchasing policies, as well as the inaccurate assumption that flood perils are included in homeowner's insurance policies. FEMA has taken a number of steps to broaden participation in NFIP, including development of a national outreach strategy. In addition, the Biggert-Waters Act includes several provisions to strengthen enforcement of the mandatory purchase requirement and to address some of the factors that limit participation.

Author: Daniel Garcia-Diaz
Publisher:
ISBN: 9781457855702
Category :
Languages : en
Pages : 61

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Book Description
Floods are the most common and destructive natural disaster in the U.S. The Nat. Flood Insurance Program (NFIP), which collected about $3.8 billion in premiums and insured about $1.3 trillion in property in 2013, is administered by the Fed. Emergency Mngt. Agency (FEMA) and is a key component of the federal government's efforts to limit the damage and financial impact of floods. NFIP makes federally backed flood insurance available to property owners in participating communities. Also, through NFIP, FEMA maps floodplain boundaries, and requires participating communities to adopt and enforce floodplain management regulations that mitigate the effects of flooding. However, this program is unlikely to generate sufficient revenue to cover future catastrophic losses or repay billions of dollars borrowed from the Treasury Dept. to cover insurance claims from previous disasters. This report summarizes GAO's work from April 2003 through Feb. 2014 in the following areas: (1) finances; (2) premium rate setting; (3) community and property owner participation; (4) flood mapping; (5) flood mitigation; (6) administration and oversight; and (7) information management. It also discuss program changes required by the Biggert-Waters Act and the 2014 Act. Tables and figures. This is a print on demand report.

Author: Daniel Garcia-Diaz
Publisher: CreateSpace
ISBN: 9781503375154
Category : Nature
Languages : en
Pages : 62

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Book Description
Floods are the most common and destructive natural disaster in the United States. The National Flood Insurance Program (NFIP), which collected about $3.8 billion in premiums and insured about $1.3 trillion in property in 2013, is administered by the Federal Emergency Management Agency (FEMA). The program is a key component of the federal government's efforts to limit the damage and financial impact of floods. NFIP makes federally backed flood insurance available to property owners in participating communities. Additionally, through NFIP, FEMA maps floodplain boundaries, and requires participating communities to adopt and enforce floodplain management regulations that mitigate the effects of flooding.

Author: U.s. Government Accountability Office
Publisher:
ISBN: 9781974498994
Category :
Languages : en
Pages : 26

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Book Description
"The National Flood Insurance Program (NFIP), established in 1968, provides policyholders with insurance coverage for flood damage. The Federal Emergency Management Agency (FEMA) within the Department of Homeland Security is responsible for managing NFIP. Unprecedented losses from the 2005 hurricane season and NFIP's periodic need to borrow from the U.S. Treasury to pay flood insurance claims have raised concerns about the program's long-term financial solvency. Because of these concerns and NFIP's operational issues, NFIP has been on GAO's high-risk list since March 2006. As of April 2010, NFIP's debt to Treasury stood at $18.8 billion.The Subcommittee asked GAO to discuss (1) NFIP's financial challenges, (2) FEMA's operational and management challenges, and (3) actions needed to address these challenges. In preparing this statement, GAO relied on its past work on NFIP and GAO's ongoing review of FEMA's management of NFIP focused on information technology and contractor oversight issues."

Author: Orice Williams Brown
Publisher:
ISBN:
Category : Flood insurance
Languages : en
Pages : 22

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Book Description

Author: U.s. Government Accountability Office
Publisher:
ISBN: 9781974498925
Category :
Languages : en
Pages : 26

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Book Description
"The National Flood Insurance Program (NFIP), established in 1968, provides policyholders with insurance coverage for flood damage. The Federal Emergency Management Agency (FEMA) within the Department of Homeland Security is responsible for managing NFIP. Unprecedented losses from the 2005 hurricane season and NFIP's periodic need to borrow from the U.S. Treasury to pay flood insurance claims have raised concerns about the program's long-term financial solvency. Because of these concerns and NFIP's operational issues, NFIP has been on GAO's high-risk list since March 2006. As of August 2010, NFIP's debt to Treasury stood at $18.8 billion. This testimony discusses (1) NFIP's financial challenges, (2) FEMA's operational and management challenges, and (3) actions needed to address these challenges. In preparing this statement, GAO relied on its past work on NFIP and GAO's ongoing review of FEMA's management of NFIP, particularly data management and contractor oversight issues."

Author: National Research Council
Publisher: National Academies Press
ISBN: 0309371287
Category : Science
Languages : en
Pages : 232

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Book Description
The National Flood Insurance Program (NFIP) is housed within the Federal Emergency Management Agency (FEMA) and offers insurance policies that are marketed and sold through private insurers, but with the risks borne by the U.S. federal government. NFIP's primary goals are to ensure affordable insurance premiums, secure widespread community participation in the program, and earn premium and fee income that covers claims paid and program expenses over time. In July 2012, the U.S. Congress passed the Biggert-Waters Flood Insurance Reform and Modernization Act (Biggert-Waters 2012), designed to move toward an insurance program with NFIP risk-based premiums that better reflected expected losses from floods at insured properties. This eliminated policies priced at what the NFIP called "pre-FIRM subsidized" and "grandfathered." As Biggert-Waters 2012 went into effect, constituents from multiple communities expressed concerns about the elimination of lower rate classes, arguing that it created a financial burden on policy holders. In response to these concerns Congress passed The Homeowner Flood Insurance Affordability Act of 2014 (HFIAA 2014). The 2014 legislation changed the process by which pre-FIRM subsidized premiums for primary residences would be removed and reinstated grandfathering. As part of that legislation, FEMA must report back to Congress with a draft affordability framework. Affordability of National Flood Insurance Program Premiums: Report 1 is the first part of a two-part study to provide input as FEMA prepares their draft affordability framework. This report discusses the underlying definitions and methods for an affordability framework and the affordability concept and applications. Affordability of National Flood Insurance Program Premiums gives an overview of the demand for insurance and the history of the NFIP premium setting. The report then describes alternatives for determining when the premium increases resulting from Biggert-Waters 2012 would make flood insurance unaffordable.

Author: United States Government Accountability Office
Publisher: Createspace Independent Publishing Platform
ISBN: 9781977569301
Category :
Languages : en
Pages : 38

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Book Description
which is administered by FEMA, provided insurance to help protect over 5.1 million policyholders against flood losses in 2015. The program has struggled financially in its attempts to keep rates affordable and pay for losses from catastrophic flooding. GAO has previously identified a number of challenges to FEMA's rate-setting process, including the lack of updated information in the model and the impact of charging rates that do not fully reflect flood risk. GAO was asked to review FEMA's current rate-setting methods. This report (1) examines FEMA's current methods for setting rates and compares them with practices used by private insurers and (2) identifies steps FEMA has taken to address recommendations from GAO's October 2008 and July 2013 reports. GAO reviewed documentation on the methods FEMA uses to set NFIP rates, and interviewed FEMA officials, risk modeling experts, and insurance industry officials who were selected on the basis of their experience.