Severe Flooding Has Sometimes Resulted in Sustained Losses to the Program

Annual operating losses or net revenues from the National Flood Insurance Program’s operations have varied significantly from year to year. The financial improvement experienced by the program since fiscal year 1995 was primarily due to three reasons. Also, from October 1, 1968, through September 30, 2000, the program paid about $10 billion in insurance claims, primarily from policyholder premiums that otherwise would, to some extent, have increased taxpayer-funded disaster relief. FEMA Has Developed Strategies To Reduce The Impact of Repetitive Flood Losses

Repetitive loss properties have a major disproportionate impact on the National Flood Insurance Program, according to FEMA’s fiscal year 2000 performance report. Related GAO Products

Federal Emergency Management Agency: Status of Achieving Key Outcomes and Addressing Major Management Challenges (GAO-01-832, July 9, 2001).
What GAO Found

Floods have been, and continue to be, the most destructive natural hazard in terms of economic loss to the nation, according to the Federal Emergency Management Agency. From fiscal years 1969 through 2000, the National Flood Insurance Program--a major federal effort to provide flood disaster assistance paid about $10 billion in insurance claims, primarily from premiums collected from program policy holders. This testimony discusses (1) the financial results of the program's operations since fiscal year 1993, (2) the actuarial soundness of the program, and (3) the impact of repetitive losses and FEMA's strategies for reducing those losses.