	Background

Floods continue to be the most destructive natural hazard in terms of  damage and economic loss to the nation. Not only do floods cause damage and loss, they can be deadly—flooding  caused the deaths of about 900 people from fiscal year 1992 through fiscal  year 2001. FEMA Has Sought to Minimize Flood- Related Losses Through the National Flood Insurance Program and Various Mitigation Grant Programs

Through the National Flood Insurance Program, FEMA has sought to  minimize flood-related property losses by making flood insurance  available on reasonable terms and encouraging its purchase by people  who need flood insurance protection—particularly those living in flood  prone areas. Flood maps provide the basis for establishing floodplain building  standards that participating communities must adopt and enforce as part  of the program. The program has paid about $12 billion in insurance claims,  primarily from policyholder premiums that otherwise would have been  paid through taxpayer-funded disaster relief or borne by home and  business owners themselves. FEMA also has a variety of grant programs designed to mitigate the effects  of natural hazards, including flooding, on people and property. In addition, FEMA provides funding for mitigation planning  activities and projects before and after floods occur, respectively through  the Pre-Disaster Mitigation Program and the Hazard Mitigation Grant  Program. About 49,000—approximately 1 percent of the 4.4 million buildings  currently insured under the program—have been flooded on more than  one occasion during a 10-year period and have received flood insurance  payments of $1,000 or more for each claim. According to FEMA, repetitive loss properties have accounted for about 38  percent of all program claim costs historically and are projected by FEMA  to cost about $200 million annually. Since 1978, the total cost of these  repetitive loss properties to the program has been about $4.6 billion. For example, in Texas,  since 1978 there have been approximately 45,000 flood claims totaling over  $1 billion for repetitive damage. FEMA has Developed a Strategy and Members of Congress Have Proposed Changes to Address Repetitive Losses

FEMA has developed a strategy to reduce the number of properties  repeatedly flooded that, like congressional proposals, seeks to target  repetitive loss properties with the greatest losses. 253, as passed by the  House, included a pilot program to allow FEMA to use flood insurance  program funds to target “severe” repetitive loss properties for mitigation. 253, based on a  preliminary assessment, they appear to have the potential to reduce the  number and/or vulnerability of repetitive loss properties and, thereby, the  potential to help improve the program’s financial condition. (For state by state details on the total  number of repetitive loss properties, the number of currently insured  repetitive loss properties, the number of currently insured repetitive loss  properties that meet the criteria proposed in the H.R. Such outcome-based  measures could allow FEMA to assess the impact of savings to the  National Flood Insurance Program resulting from its mitigation of  repetitive loss properties. 253  on these properties. Major Management Challenges and Program Risks: Federal Emergency  Management Agency.
Why GAO Did This Study

Floods have been, and continue to be, the most destructive natural hazard in terms of damage and economic loss to the nation. From fiscal year 1992 through fiscal year 2002, about 900 lives were lost due to flooding and flood damages totaled about $55 billion. Some properties have been repeatedly flooded and the subject of federal flood insurance claims. The Federal Emergency Management Agency (FEMA) within the Department of Homeland Security is responsible for assisting state and local governments, private entities, and individuals to prepare for, mitigate, respond to, and recover from natural disasters, including floods. The National Flood Insurance Program (NFIP) is the primary vehicle for FEMA's efforts to mitigate the impact of floods. The Senate Subcommittee on Economic Policy, Committee on Banking, Housing, and Urban Affairs, asked GAO to discuss (1) FEMA's approach to flood mitigation, (2) the effect of repetitive loss properties on the NFIP, and (3) recent actions taken or proposed to address the impact of repetitive loss properties on the NFIP.

What GAO Found

FEMA has taken a multifaceted approach to mitigating, or minimizing the life and property losses and disaster assistance costs that result from flooding. Through the National Flood Insurance Program, FEMA develops and updates flood maps that identify flood prone areas and makes insurance available for communities that agree to adopt and enforce building standards based upon these maps. Since its inception in 1968, the National Flood Insurance Program has paid $12 billion in insurance claims to owners of flood-damage properties that have been funded primarily by policyholders' premiums that otherwise would have been paid through taxpayer-funded disaster relief or borne by home and business owners themselves. Through a variety of grant programs, FEMA also provides funding for mitigation planning activities and projects before and after floods occur. Repetitive loss properties represent a significant portion of annual flood insurance program claims. About 1 percent of the 4.4 million properties currently insured by the program are considered to be repetitive loss properties--properties for which policyholders have made two or more $1,000 flood claims. However, about 38 percent of all program claim costs have been the result of repetitive loss properties, at a cost of about $4.6 billion since 1978. Recent federal actions to reduce program losses related to repetitive loss properties include FEMA's strategy to target severe repetitive loss properties for mitigation and congressional proposals to phase out coverage or begin charging full and actuarially based rates for repetitive loss property owners who refuse to accept FEMA's offer to purchase or mitigate the effect of floods on these buildings. FEMA's strategy and the congressional proposals appear to have the potential to reduce the number and vulnerability of repetitive loss properties and, thereby, the potential to help reduce the number of flood insurance claims.