The Government Accountability Office, unsurprisingly,
has designated the national flood insurance program
as high-risk, following the unprecedented losses to
the program following hurricanes in 2005 — estimated
at $23 billion.
In testimony before the Senate oversight, government
management and federal workforce subcommittee,
Comptroller General David M. Walker noted that the
losses exceeded the total claims paid out in the
history of the program – $15 billion – and illustrate
the federal government’s exposure to claims coverage
in catastrophic loss years.
Walker said it’s highly unlikely that the NFIP could
generate enough revenue to repay funds borrowed from
the Treasury to cover the claims in 2005, let alone
future claims in catastrophic loss years.
GAO has reported on issues affecting the program for
about 15 years, including compliance with mandatory
purchase requirements, the costly impact of repetitive
loss properties, and most recently, concerns about the
Federal Emergency Management Agency’s $1.5 billion flood
map modernization efforts, as well as its management and
oversight of the NFIP.
FEMA has taken steps to address these concerns by trying
to reduce the number of subsidized and repetitive loss
properties insured by the program, increase
participation in the program, implement requirements
of the Flood Insurance Reform Act of 2004, and improve
program management and oversight, Walker said.
Nonetheless, he said the agency faces long-standing
and complex challenges that make it likely that these
issues will continue.
