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Testimony:
Before the Committee on Banking, Housing, and Urban Affairs, U.S.
Senate:
United States Government Accountability Office:
GAO:
For Release on Delivery:
Expected at 2:00 p.m. EDT:
Wednesday, September 22, 2010:
National Flood Insurance Program:
Continued Actions Needed to Address Financial and Operational Issues:
Statement of Orice Williams Brown, Director:
Financial Markets and Community Investment:
GAO-10-1063T:
GAO Highlights:
Highlights of GAO-10-1063T, a testimony before the Committee on
Banking, Housing, and Urban Affairs, U.S. Senate.
Why GAO Did This Study:
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.
What GAO Found:
While Congress and FEMA intended that NFIP be funded with premiums
collected from policyholders rather than with tax dollars, the program
is, by design, not actuarially sound. NFIP cannot do some of the
things that private insurers do to manage their risks. For example,
NFIP is not structured to build a capital surplus, is likely unable to
purchase reinsurance to cover catastrophic losses, cannot reject high-
risk applicants, and is subject to statutory limits on rate increases.
In addition, its premium rates do not reflect actual flood risk. For
example, nearly one in four property owners pay subsidized rates, “
full-risk” rates may not reflect the full risk of flooding, and NFIP
allows “grandfathered” rates that allow some property owners to
continue paying rates that do not reflect reassessments of their
properties’ flood risk. Further, NFIP cannot deny insurance on the
basis of frequent losses and thus provides policies for repetitive
loss properties, which represent only 1 percent of policies but
account for 25 to 30 percent of claims. NFIP’s financial condition has
improved slightly due to an increase in the number of policyholders
and moderate flood losses, and since March 2009, FEMA has taken some
encouraging steps toward improving its financial position, including
making $600 million in payments to Treasury without increasing its
borrowings. However, it is unlikely to pay off its full $18.8 billion
debt, especially if it faces catastrophic loss years.
Operational and management issues may also limit efforts to address
NFIP’s financial challenges and meet program goals. Payments to write-
your-own (WYO) insurers, which are key to NFIP operations, represent
one-third to two-thirds of the premiums collected. But FEMA does not
systematically consider actual flood insurance expense information
when calculating these payments and has not aligned its WYO bonus
structure with NFIP goals or implemented all of its financial controls
for the WYO program. GAO also found that FEMA did not consistently
follow its procedures for monitoring non-WYO contractors or coordinate
contract monitoring responsibilities among departments on some
contracts. Some contract monitoring records were missing, and no
system was in place that would allow departments to share information
on contractor deficiencies. In ongoing GAO work examining FEMA’s
management of NFIP, some similar issues are emerging. For example,
FEMA still lacks an effective system to manage flood insurance policy
and claims data, despite investing roughly 7 years and $40 million on
a new system whose development has been halted. However, FEMA has
begun to acknowledge its management challenges and develop a plan of
action.
Addressing the financial challenges facing NFIP would likely require
actions by both FEMA and Congress that involve trade-offs, and the
challenges could be difficult to remedy. For example, reducing
subsidies could increase collected premiums but reduce program
participation. At the same time, FEMA must address its operational and
management issues. GAO has recommended a number of actions that FEMA
could take to improve NFIP operations, and ongoing work will likely
identify additional issues.
What GAO Recommends:
In past work, GAO recommended, among other things, that FEMA take
steps to help ensure that premium rates are more reflective of flood
risks; strengthen its oversight of NFIP and insurance companies
responsible for selling and servicing flood policies; and strengthen
its internal controls and data quality.
View [hyperlink, http://www.gao.gov/products/GAO-10-1063T] or key
components. For more information, contact Orice Williams Brown at
(202) 512-8678 or williamso@gao.gov.
[End of section]
Chairman Dodd, Ranking Member Shelby, and Members of the Committee:
I appreciate the opportunity to participate in today's hearing on the
National Flood Insurance Program (NFIP) and the challenges that the
Federal Emergency Management Agency (FEMA) faces in administering it.
As you know, NFIP is a key component of the federal government's
efforts to minimize the damage and financial impact of floods and is
the only source of insurance against flood damage for most residents
in flood-prone areas. GAO placed NFIP on its high-risk list in March
2006, not only because of the program's potential to incur billions of
dollars in losses and the many financial challenges it faces, but also
because of operational and management challenges within FEMA, many of
which we have identified in previous reports to Congress.
As of August 2010, NFIP owed approximately $18.8 billion to the
Department of the Treasury (Treasury), primarily as a result of loans
the program received to pay claims from the 2005 hurricane season.
NFIP borrowed additional funds from Treasury to make interest payments
on this debt and is unlikely ever to be able to repay the entire
amount. These revenue shortfalls reflect both the devastating effects
of catastrophic hurricanes and structural weaknesses in the way the
program is funded. Our previous reports identified many of these
weaknesses, including subsidized premium rates, rate-setting methods
that do not reflect the actual risk of losses due to flooding, and
claims arising from a small, but growing number of repetitive loss
properties.[Footnote 1] We have also previously identified management
issues, particularly with respect to FEMA's oversight of write-your-
own (WYO) insurers. We are currently conducting a comprehensive review
of NFIP management and other ongoing challenges that FEMA faces in
administering the program as well as a review of the NFIP mapping
program.
My testimony today will revisit and update the challenges we
identified in previous reports, specifically (1) NFIP's financial
challenges, (2) FEMA's operational and management challenges relating
to NFIP, and (3) actions needed to address these challenges. My
statement is based largely on completed work on the oversight of the
WYO program, the financial impact of subsidized premium rates, and the
rate-setting process for flood insurance premiums. We performed our
work in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives.
We believe that the evidence we obtained provides a reasonable basis
for our findings and conclusions based on our audit objectives.
Summary:
Congress and FEMA intended that the NFIP's operating expenses and
flood insurance claims would be paid with premiums collected by the
program rather than with tax dollars. But the program is, by design,
not actuarially sound, for several reasons. First, NFIP does not
operate like private insurance companies. For example, FEMA is not
structured to build a capital surplus, is likely unable to purchase
reinsurance to cover high or catastrophic losses, cannot accept or
reject applicants to help manage risk, and is subject to statutory
limits on rate increases. Second, many property owners pay premium
rates that do not reflect the full, long-term risk of flooding. Almost
25 percent of property owners pay subsidized premium rates, and even
"full-risk" premium rates may not reflect the actual risk of flooding.
Further, NFIP allows some property owners to continue to pay rates
that do not reflect reassessments of their properties' flood risk
("grandfathered rates"). Finally, NFIP must continue to insure
repetitive loss properties, which represent only 1 percent of flood
insurance policies but account for 25 to 30 percent of claims. FEMA
has taken some encouraging steps toward improving its financial
position, including making nearly $600 million in payments to the U.S.
Treasury since March 2009 without increasing its borrowing. In
addition, according to FEMA data, as of June 2010 it has also
increased its amount of collected premiums by approximately 24 percent
since December 2006 and the NFIP policy base by more than 24 percent
since 2004, when FEMA began its FloodSmart program.[Footnote 2]
Several operational and management issues may limit FEMA's progress in
addressing NFIP's financial challenges and achieving the program's
goals. For example, WYO insurers play a key role in NFIP operations
and payments to them represent from one-third to two-thirds of
premiums received. But in previous reports we found that, among other
internal control weaknesses, FEMA did not systematically consider
actual flood insurance expense information when determining payments
to WYO insurers, had not aligned its WYO bonus structure with NFIP's
goals, and had not implemented many of its planned financial controls
for the WYO program.[Footnote 3] Further, contractors other than WYO
insurers are responsible for performing key NFIP functions, such as
collecting NFIP data and marketing the program. However, we have also
found problems with oversight of these contractors. Specifically, FEMA
did not consistently follow its procedures for monitoring contractors,
did not always coordinate contract monitoring responsibilities among
various agency departments on some of the contracts we reviewed,
lacked contract monitoring records, and did not have a system in place
that would allow various departments to share information relating to
contractor deficiencies. Further, preliminary results of our ongoing
work reveal that FEMA continues to lack an effective system to manage
flood insurance policy and claims data, despite having invested
roughly 7 years and $40 million in a new system whose development has
been halted because it did not meet user needs and was not ready to
replace the legacy system.
Addressing the financial and operational challenges facing NFIP would
require actions from both Congress and FEMA. We recognize that any
such actions would involve significant trade-offs and that some
financial challenges would be difficult to remedy. For instance,
possible reform options to make premium rates more reflective of long-
term flood risks include eliminating, reducing, or targeting premium
subsidies based on need. But taking any of these steps would raise
rates and potentially reduce participation in NFIP. FEMA and Congress
could also address the impact of repetitive loss properties by
expanding mitigation efforts to target those properties that are at
highest risk.[Footnote 4] However, doing so would include actions such
as elevation, relocation, and demolition that would be costly to
taxpayers and could take years. Congress could also amend laws
regarding coverage for homeowners who refuse to mitigate, and
streamline the various mitigation grant programs within FEMA. In our
past work, we also identified a number of management challenges that
FEMA would have to address, including improvements to oversight of WYO
insurers and its payments to them, updating the NFIP rate-setting
process, fully applying internal controls, and strengthening oversight
of contractors, among others.
Background:
The National Flood Insurance Act of 1968 established NFIP as an
alternative to providing direct assistance after floods.[Footnote 5]
NFIP, which provides government-guaranteed flood insurance to
homeowners and businesses, was intended to reduce the federal
government's escalating costs for repairing flood damage after
disasters. FEMA, which is within the Department of Homeland Security
(DHS), is responsible for the oversight and management of NFIP. Since
NFIP's inception, Congress has enacted several pieces of legislation
to strengthen the program. The Flood Disaster Protection Act of 1973
made flood insurance mandatory for owners of properties in vulnerable
areas who had mortgages from federally regulated lenders and provided
additional incentives for communities to join the program.[Footnote 6]
The National Flood Insurance Reform Act of 1994 strengthened the
mandatory purchase requirements for owners of properties located in
special flood hazard areas (SFHA) with mortgages from federally
regulated lenders.[Footnote 7] Finally, the Bunning-Bereuter-
Blumenauer Flood Insurance Reform Act of 2004 authorized grant
programs to mitigate properties that experienced repetitive flooding
losses. Owners of these repetitive loss properties who do not mitigate
face higher premiums.[Footnote 8]
To participate in NFIP, communities agree to enforce regulations for
land use and new construction in high-risk flood zones and to adopt
and enforce state and community floodplain management regulations to
reduce future flood damage. Currently, more than 20,000 communities
participate in NFIP. NFIP has mapped flood risks across the country,
assigning flood zone designations based on risk levels, and these
designations are a factor in determining premium rates. NFIP offers
two types of flood insurance premiums: subsidized and full-risk. The
National Flood Insurance Act of 1968 authorizes NFIP to offer
subsidized premiums to owners of certain properties. These subsidized
premium rates, which represent about 35 to 40 percent of the cost of
covering the full risk of flood damage to the properties, account for
about 22 percent of all NFIP policies as of September 2010. To help
reduce or eliminate the long-term risk of flood damage to buildings
and other structures insured by NFIP, FEMA has used a variety of
mitigation efforts such as elevation, relocation, and demolition.
Despite these efforts, the inventories of repetitive loss properties
and policies with subsidized premium rates have continued to grow. In
response to the magnitude and severity of the losses from the 2005
hurricanes, Congress increased NFIP's borrowing authority from the
Treasury to $20.775 billion. As of August 2010, FEMA owed Treasury
$18.8 billion, and the program as currently designed will likely not
generate sufficient revenues to repay this debt.
NFIP's Financial Challenges Have Increased the Federal Government's
and U.S. Taxpayers' Financial Exposure from Flood Losses:
By design, NFIP is not an actuarially sound program, in part because
it does not operate like many private insurance companies. As a
government program, its primary public policy goal is to provide flood
insurance in flood-prone areas to property owners who otherwise would
not be able to obtain it. Yet NFIP is also expected to cover its
claims losses and operating expenses with the premiums it collects,
much like a private insurer. In years when flooding has not been
catastrophic, NFIP has generally managed to meet these competing
goals. In years of catastrophic flooding, however, and especially
during the 2005 hurricane season, it has not.
NFIP's operations differ from those of most private insurers in a
number of ways. First, it operates on a cash-flow basis and has the
authority to borrow from Treasury. As of August 2010, NFIP owed
approximately $18.8 billion to Treasury, primarily as a result of
loans that the program received to pay claims from the 2005 hurricane
season. NFIP will likely not be able to meet its interest payments in
most years, and the debt may continue to grow as the program may need
to borrow to meet the interest payments in some years and potential
future flood losses. Also unlike private insurance companies, NFIP
assumes all the risk for the policies it sells. Private insurers
typically retain only part of the risk that they accept from
policyholders, ceding a portion of the risk to reinsurers (insurance
for insurers). This mechanism is particularly important in the case of
insurance for catastrophic events, because the availability of
reinsurance allows an insurer to limit the possibility that it will
experience losses beyond its ability to pay. NFIP's lack of
reinsurance, combined with the lack of structure to build a capital
surplus, transfers much of the financial risk of flooding to Treasury
and ultimately the taxpayer.
NFIP is also required to accept virtually all applications for
insurance, unlike private insurers, which may reject applicants for a
variety of reasons. For example, FEMA cannot deny insurance on the
basis of frequent losses. As a result, NFIP is less able to offset the
effects of adverse selection--that is, the phenomenon that those who
are most likely to purchase insurance are also the most likely to
experience losses. Adverse selection may lead to a concentration of
policyholders in the riskiest areas. This problem is further
compounded by the fact that those at greatest risk are required to
purchase insurance from NFIP if they have a mortgage from a federally
regulated lender. Finally, by law, FEMA is prevented from raising
rates on each flood zone by more than 10 percent each year. While most
states regulate premium prices for private insurance companies on
other lines of insurance, they generally do not set limits on premium
rate increases, instead focusing on whether the resulting premium
rates are justified by the projected losses and expenses.
NFIP's Premium Rates Do Not Reflect the Full Risk of Flooding:
As we have seen, NFIP does not charge rates that reflect the full risk
of flooding. NFIP could be placed on a sounder fiscal footing by
addressing several elements of its premium structure. For example, as
we have pointed out in previous reports, NFIP provides subsidized and
grandfathered rates that do not reflect the full risk of potential
flood losses to some property owners, operates in part with unreliable
and incomplete data on flood risks that make it difficult to set
accurate rates, and has not been able to overcome the challenge of
repetitive loss properties.[Footnote 9] Subsidized rates, which are
required by law, are perhaps the best-known example of premium rates
that do not reflect the actual risk of flooding. These rates, which
were authorized from when the program began, were intended to help
property owners during the transition to full-risk rates. But today,
nearly one out of four NFIP policies continues to be based on a
subsidized rate. These rates allow policyholders with structures that
were built before floodplain management regulations were established
in their communities to pay premiums that represent about 35 to 40
percent of the actual risk premium. Moreover, FEMA estimates that
properties covered by policies with subsidized rates experience as
much as five times more flood damage than compliant new structures
that are charged full-risk rates. As we have pointed out, the number
of policies receiving subsidized rates has grown steadily in recent
years and without changes to the program will likely continue to grow,
increasing the potential for future NFIP operating deficits.
Further, potentially outdated and inaccurate data about flood
probabilities and damage claims, as well as outdated flood maps, raise
questions about whether full-risk premiums fully reflect the actual
risk of flooding. First, some of the data used to estimate the
probability of flooding have not been updated since the 1980s.
Similarly, the claims data used as inputs to the model may be
inaccurate because of incomplete claims records and missing data.
Further, some of the maps FEMA uses to set premium rates remain out of
date despite recent modernization efforts. For instance, as FEMA
continues these modernization efforts, it does not account for ongoing
and planned development making some maps outdated shortly after their
completion. Moreover, FEMA does not map for long-term erosion, further
increasing the likelihood that data used to set rates are inaccurate.
FEMA also sets flood insurance rates on a nationwide basis, failing to
account for many topographic factors that are relevant to flood risk
for individual properties. Some patterns in historical claims and
premium data suggest that NFIP's rates may not accurately reflect
individual differences in properties' flood risk. Not accurately
reflecting the actual risk of flooding increases the risk that full-
risk premiums may not be sufficient to cover future losses and add to
concerns about NFIP's financial stability.
As mentioned earlier, we are currently reviewing FEMA's flood mapping
program. Specifically, we are trying to determine the extent to which
FEMA ensures that flood maps accurately reflect flood risk and the
methods FEMA uses to promote community acceptance of flood maps. We
plan to issue this report in December 2010.[Footnote 10]
Further contributing to NFIP's financial challenges, FEMA made a
policy decision to allow certain properties remapped into riskier
flood zones to keep their previous lower rates. Like subsidized rates,
these "grandfathered" rates do not reflect the actual risk of flooding
to the properties and do not generate sufficient premiums to cover
expected losses. FEMA officials told us that the decision to
grandfather rates was based on considerations of equity, ease of
administration, and goals of promoting floodplain management. However,
FEMA does not collect data on grandfathered properties or measure
their financial impact on the program. As a result, it does not know
how many such properties exist, their exact location, or the volume of
losses they generate. FEMA officials stated that beginning in October
2010 they would indicate on all new policies whether or not they were
grandfathered. However, they would still be unable to identify
grandfathered properties among existing policies. As FEMA continues
its efforts to modernize flood maps across the country, it has
continued to face resistance from communities and homeowners when
remapping properties into higher-risk flood zones with higher rates.
As a result, FEMA has often grandfathered in previous premium rates
that are lower than the remapped rates. However, homeowners who are
remapped into high-risk areas and do not currently have flood
insurance may be required to purchase it at the full risk rate.
In reauthorizing NFIP in 2004, Congress noted that repetitive loss
properties--those that have had two or more flood insurance claims
payments of $1,000 or more over 10 years--constituted a significant
drain on NFIP resources. These properties account for about 1 percent
of all policies but are estimated to account for up to 30 percent of
all NFIP losses. Not all repetitive loss properties are part of the
subsidized property inventory, but a high proportion receive
subsidized rates, further contributing to NFIP's financial risks.
While Congress has made efforts to target these properties, the number
of repetitive loss properties has continued to grow, making them an
ongoing challenge to NFIP's financial stability.
Despite Its Financial Challenges, NFIP Has Experienced Some Positive
Developments:
According to FEMA, expanded marketing efforts through its FloodSmart
campaign have contributed to an increase in NFIP policies. This
program was designed to educate and inform partners, stakeholders,
property owners, and renters about insuring their homes and businesses
against flood damage. Since the start of the FloodSmart campaign in
2004, NFIP has seen policy growth of more than 24 percent, and as of
June 2010, had 5.6 million policies in force. Moreover, according to
FEMA, despite the economic downturn, both policy sales and retention
have grown. In addition, NFIP's collected premiums have risen 24
percent from December 2006 to June 2010. This increase, combined with
a relatively low loss experience in recent years, has enabled FEMA to
make nearly $600 million in payments to Treasury with no additional
borrowing since March 2009. FEMA has also adjusted its expense
reimbursement formula. While these are all encouraging developments,
FEMA is still unlikely to ever pay off its current $18.8 billion debt.
FEMA's Operational and Management Issues May Further Limit Progress in
Achieving NFIP Goals:
We have identified a number of operational issues that affect NFIP,
including weaknesses in FEMA's oversight of WYO insurers, and
shortcomings in its oversight of other contractors, as well as new
issues from ongoing work. For example, we found that FEMA does not
systematically consider actual flood insurance expense information
when determining the amount it pays WYO insurers for selling and
servicing flood insurance policies and adjusting claims. Instead, FEMA
has used proxies, such as average industry operating expenses for
property insurance, to determine the rates at which it pays these
insurers, even though their actual flood insurance expense information
has been available since 1997. Because FEMA does not systematically
consider these data when setting its payment rates, it cannot
effectively estimate how much insurers are spending to carry out their
contractual obligations to FEMA. Further, FEMA does not compare the
WYO insurers' actual expenses to the payments they receive each year
and thus cannot determine whether the payments are reasonable in terms
of expenses and profits. When GAO compared payments FEMA made to six
WYO insurers to their actual expenses for calendar years 2005 through
2007, we found that the payments exceeded actual expenses by $327.1
million, or 16.5 percent of total payments made. By considering actual
expense information, FEMA could provide greater transparency and
accountability over payments to the WYO insurers and potentially save
taxpayers' funds.
FEMA also has not aligned its bonus structure for WYO insurers with
NFIP goals such as increasing penetration in low-risk flood zones and
among homeowners in all zones that do not have mortgages from
federally regulated lenders. FEMA uses a broad-based distribution
formula that primarily rewards companies that are new to NFIP, and can
relatively easily increase their percentage of net policies from a
small base. We also found that most WYO insurers generally offered
flood insurance when it was requested but did not strategically market
the product as a primary insurance line. FEMA has set only one
explicit marketing goal--to increase policy growth by 5 percent each
year--and does not review the WYO insurers' marketing plans. It
therefore lacks the information needed to assess the effectiveness of
either the WYO insurers' efforts to increase participation or the
bonus program itself. For example, FEMA does not know the extent to
which sales increases may reflect external factors such as flood
events or its own FloodSmart marketing campaign rather than any effort
on the part of the insurers. Having intermediate targeted goals could
also help expand program participation, and linking such goals
directly to the bonus structure could help ensure that NFIP and WYO
goals are in line with each other.
Finally, FEMA has explicit financial control requirements and
procedures for the WYO program but has not implemented all aspects of
its Financial Control Plan. FEMA's Financial Control Plan provides
guidance for WYO insurers to help ensure compliance with the statutory
requirements for NFIP. It contains several checks and balances to help
ensure that taxpayers' funds are spent appropriately. For an earlier
report, we reviewed 10 WYO insurers and found that while FEMA
performed most of the required biennial audits and underwriting and
claims reviews required under the plan, it rarely or never implemented
most of the required audits for cause, reviews of state insurance
department audits, or marketing, litigation, and customer service
operational reviews.[Footnote 11] In addition, FEMA did not
systematically track the outcomes of the various audits, inspections,
and reviews that it performed. We also found that multiple units had
responsibility for helping ensure that WYO insurers complied with each
component of the Financial Control Plan; that FEMA did not maintain a
single, comprehensive monitoring system that would allow it to ensure
compliance with all components of the plan; and that there was no
centralized access to all of the documentation produced. Because FEMA
does not implement all aspects of the Financial Control Plan, it
cannot ensure that WYOs are fully complying with program requirements.
In another review, we found that weak internal controls impaired
FEMA's ability to maintain effective transaction-level accountability
with WYO insurers from fiscal years 2005 through 2007, a period that
included the financial activity related to the 2005 Gulf Coast
hurricanes. [Footnote 12] NFIP had limited assurance that its
financial data for fiscal years 2005 to 2007 were accurate. This
impaired data reliability resulted from weaknesses at all three levels
of the NFIP transaction accountability and financial reporting
process. At the WYO level, WYO insurer claims loss files did not
include the documents necessary to support the claims, and some
companies filed reports late, undermining the reliability of the data
they did report. Second, contractor-level internal control activities
were ineffective in verifying the accuracy of the data that WYO
insurers submitted, such as names and addresses. Lastly, at the agency
level, financial reporting process controls were not based on
transaction-level data. Instead FEMA relied primarily on summary data
compiled using error-prone manual data entry.
FEMA's Oversight of Non-WYO Contractor Activities Is Also Lacking:
Also in a previous report, we pointed out that FEMA lacked records of
monitoring activities for other contractors, inconsistently followed
its procedures for monitoring these contractors, and did not
coordinate contract monitoring responsibilities for the two major
contracts we reviewed.[Footnote 13] At FEMA, a Contracting Officer's
Technical Representative (COTR) and staff (referred to as "monitors")
are responsible for, respectively, ensuring compliance with contract
terms and regularly monitoring and reporting on the extent to which
NFIP contractors meet standards in performance areas specified in the
contracts. Internal control standards for the federal government state
that records should be properly managed and maintained. But FEMA
lacked records for the majority of the monitoring reports we requested
and did not consistently follow the monitoring procedures for
preparing, reviewing, and maintaining monitoring reports.
Further, FEMA offices did not coordinate information and actions
relating to contractors' deficiencies and payments, and in some cases
key officials were unaware of decisions on contractors' performance.
In particular, our review of monitoring reports for one contract
revealed a lack of coordination between the COTR and the contracting
officer. As a result, FEMA could not ensure that the contractor had
adhered to the contract's requirements and lacked information critical
to effective oversight of key NFIP data collection, reporting, and
insurance functions. Given NFIP's reliance on contractors, it is
important that FEMA have in place adequate controls that are
consistently applied to all contracts. Consistent with our findings in
prior work, the DHS inspector general has also identified weaknesses
in FEMA's internal controls and financial reporting related to the
NFIP.[Footnote 14]
Our ongoing work reviewing FEMA's management of NFIP identifies a
number of steps that FEMA has taken that are designed to improve the
agency's oversight of contractors. These efforts include the
implementation of an acquisition review board and the creation of a
handbook for COTRs. While these are positives steps, not enough time
has passed to evaluate their effectiveness.
FEMA Continues to Lack an Effective System to Manage Flood Insurance
Policy and Claims Data:
To manage the flood policy and claims information that it obtains from
insurance companies, NFIP's Bureau and Statistical Agent (BSA) relies
on a flood insurance management system from the 1980s that is
difficult and costly to sustain and that does not adequately support
NFIP's mission needs. This system consists of over 70 interfaced
applications that utilize monthly tape and batch submissions of policy
and claims data from insurance companies. The system also provides
limited access to NFIP data. Further, identifying and correcting
errors in submission requires between 30 days and 6 months and the
general claims processing cycle itself is 2 to 3 months.
To address the limitations of this system, NFIP launched a program in
2002 to acquire and implement a modernization and business improvement
system, known as NextGen. As envisioned, NextGen was to accelerate
updates to information obtained from insurance companies, identify
errors before flood insurance policies went into effect, and enable
FEMA to expedite business transactions and responses to NFIP claims
when policyholders required urgent support. As such, the system would
support the needs of a wide range of NFIP stakeholders, including FEMA
headquarters and regional staff, WYO insurers, vendors, state hazard
mitigation officers, and NFIP state coordinators.
As part of our ongoing review of FEMA's management of NFIP, we found
that despite having invested roughly $40 million over 7 years, FEMA
has yet to implement NextGen. Initial versions of NextGen were first
deployed for operational use in May 2008. However, shortly thereafter
system users reported major problems with the system, including
significant data and processing errors. As a result, use of NextGen
was halted, and the agency returned to relying exclusively on its
mainframe-based legacy system while NextGen underwent additional
testing. In late 2009, after this testing showed that the system did
not meet user needs and was not ready to replace the legacy system,
further development and deployment of NextGen was stopped, and FEMA's
Chief Information Officer began an evaluation to determine what, if
anything, associated with the system could be salvaged. This
evaluation is currently under way, and a date for completing it has
yet to be established. DHS and the Office of Management and Budget
recently designated this effort as high-risk.
Our ongoing review of FEMA's management of NFIP includes identifying
lessons learned about how NextGen was defined, developed, tested, and
deployed, including weaknesses in requirements development and
management, test management, risk management, executive oversight, and
program office staffing that have collectively contributed to
NextGen's failure. In completing its evaluation and deciding how to
proceed in meeting its policy and claims processing needs, FEMA could
benefit by correcting these weaknesses. In the interim, the agency
continues to rely on its outdated legacy system, and thus does not
have the kind of robust analytical support and information needed to
help address the reasons that NFIP remains on GAO's high-risk list of
federal programs.
Addressing NFIP's Challenges Would Require Actions from FEMA and
Congress:
To address the challenges NFIP faces, FEMA would have to address its
own operational and management challenges. Further, legislative reform
would be needed to address structural issues. However, as you know,
addressing many of these issues involves public policy trade-offs that
would have to be made by Congress. In July 2010 the House of
Representatives passed the Flood Insurance Reform Priorities Act,
which if enacted would make a number of changes to NFIP.[Footnote 15]
Moreover, part of this process requires determining whether NFIP is or
should be structured as an insurance program and how much liability
the government can and is willing to accept. For example, if Congress
wants to structure NFIP as an insurance company and limit borrowing
from Treasury in future high-or catastrophic loss years, NFIP would
have to build a capital surplus fund. Our prior work has shown that
building such a fund would require charging premium rates that, in
some cases, could be more than double or triple current rates and
would take a number of years without catastrophic losses to implement.
Additionally, while private insurers generally use reinsurance to
hedge their risk of catastrophic losses, it is unclear whether the
private reinsurance market would be willing to offer coverage to NFIP.
In the absence of reinsurance and a surplus fund, Treasury will
effectively continue to act as the reinsurer for NFIP and be the
financial backstop for the program.
Premium Rates Could Be Made More Reflective of Flood Risk:
Making premium rates more reflective of flood risk would require
actions by FEMA and Congress. Because subsidized premium rates are
required by law, addressing their associated costs would require
congressional action. As previously reported, two potential options
would be to eliminate or reduce the use of subsidies over time, or
target them based on need. However, these options involve trade-offs.
For example, eliminating or reducing the subsidies would help ensure
that premium rates more accurately reflect the actual risk of loss and
could encourage mitigation efforts. But the resulting higher premiums
could lead some homeowners to discontinue or not purchase coverage,
thus reducing participation in NFIP and potentially increasing the
costs to taxpayers of providing disaster assistance in the event of a
catastrophe. Targeting subsidies based on need is an approach used by
other federal programs and could help ensure that those needing the
subsidy would have access to it and retain their coverage. Unlike
other agencies that provide--and are allocated funds for--traditional
subsidies, NFIP does not receive an appropriation to pay for
shortfalls in collected premiums caused by its subsidized rates.
However, one option to maintain the subsidies but improve NFIP's
financial stability would be to rate all policies at the full-risk
rate and to appropriate subsidies for qualified policyholders. In this
way, the cost of such subsidies would be more transparent, and
policyholders would be better informed of their flood risk. Depending
on how such a program was implemented, NFIP might be able to charge
more participants rates that more accurately reflect their risk of
flooding. However, raising premium rates for some participants could
also decrease program participation, and low-income property owners
and renters could be discouraged from participating in NFIP if they
were required to prove that they met the requirements for a subsidy.
FEMA might also face challenges in implementing this option in the
midst of other ongoing operational and management challenges.
NFIP's rate-setting process for full-risk premiums may not ensure that
those premium rates reflect the actual risk of flooding and therefore
may increase NFIP's financial risk. Moreover, FEMA's rate-setting
process for subsidized properties depends, in part, on the accuracy of
the full-risk rates, raising concerns about how subsidized rates are
calculated as well. To address these concerns, we have identified
actions that FEMA could take. For example, we recommended that FEMA
take steps to help ensure that its rate-setting methods and the data
it uses to set rates result in full-risk premium rates that accurately
reflect the risk of losses from flooding. In particular, we pointed
out that these steps should include verifying the accuracy of flood
probabilities, damage estimates, and flood maps, and reevaluating the
practice of aggregating risks across zones.
Similarly, because NFIP allows grandfathered rates for those remapped
into high-risk flood zones, it would also be in the position to
address some of the challenges associated with this practice. FEMA
could end grandfathered rates, but it decided to allow grandfathering
after consulting with Congress, its oversight committees, and other
stakeholders and considering issues of equity, fairness, and the goal
of promoting floodplain management. We recommended that the agency
take steps both to ensure that information was collected on the
location, number, and losses associated with existing and newly
created grandfathered properties in NFIP and to analyze the financial
impact of these properties on the flood insurance program.[Footnote
16] With such information, FEMA and Congress will be better informed
on the extent to which these rates contribute to NFIP's financial
challenges.
Another statutory requirement that could be revisited is the 10-
percent cap on rate increases. As with all the potential reform
options, determining whether such action is warranted would
necessitate weighing the law's benefits--including limiting financial
hardship to policyholders--against the benefits that increasing or
removing such limits would provide to NFIP, Treasury, and ultimately
the taxpayer. However, as long as caps on rate increases remain, FEMA
will continue to face financial challenges.
Solutions for addressing the impact of repetitive loss properties
would also require action by both FEMA and Congress. For example, we
have reported that one option for Congress would be to substantially
expand mitigation efforts and target these efforts toward the highest-
risk properties.[Footnote 17] Mitigation criteria could be made more
stringent - for example, by requiring all insured properties that have
filed two or more flood claims (even for small amounts) to mitigate,
denying insurance to property owners who refuse or do not respond to a
mitigation offer, or some combination of these approaches. While these
actions would help reduce losses from flood damage and could
ultimately limit costs to taxpayers by decreasing the number of
subsidized properties, they would require increased funding for FEMA's
mitigation programs, to elevate, relocate, or demolish the properties,
would be costly to taxpayers, and could take years to complete.
Congress could also consider changes to address loopholes in
mitigation and repurchase requirements that allow policyholders to
avoid mitigating by simply not responding to FEMA's requests that they
do so. FEMA could be required to either drop coverage for such
properties or use eminent domain to seize them if owners fail to
respond to FEMA's mitigation requests. Moreover, Congress could
streamline the various mitigation grant programs to make them more
efficient and effective.[Footnote 18]
FEMA Could Take Further Actions to Help Address Operational and
Management Challenges:
Over the last several years we have made many recommendations for
actions that FEMA could take to improve its management of NFIP. FEMA
has implemented some recommendations, including among other things,
introducing a statistically valid method for sampling flood insurance
claims for review, establishing a regulatory appeals process for
policyholders, and ensuring that WYO insurance agents meet minimum
education and training requirements.[Footnote 19] FEMA has also taken
steps to make analyzing the overall results of claims adjustments
easier after future flood events. The efforts will help in determining
the number and type of claims adjustment errors made and deciding
whether new, cost-efficient methods for adjusting claims that were
introduced after Hurricane Katrina are feasible to use after other
flood events.[Footnote 20] However, as mentioned previously, many of
our other previous recommendations have not yet been implemented. For
example, we have recommended that FEMA:
* Address challenges to oversight of the WYO program, specifically the
lack of transparency of and accountability for the payments FEMA makes
to WYO insurers, by determining in advance the amounts built into the
payment rates for estimated expenses and profit, annually analyzing
the amounts of actual expenses and profit in relation to the estimated
amounts used in setting payment rates, and by immediately reassessing
the practice of paying WYO insurers an additional 1 percent of written
premiums for operating expenses.
* Take steps to better oversee WYO insurers and ensure that they are
in compliance with statutory requirements for NFIP and that taxpayers'
funds are spent appropriately by consistently following the Financial
Control Plan and ensuring that each component is implemented; ensuring
that any revised Financial Control Plan covers oversight of all
functions of participating WYO insurers, including customer service
and litigation expenses; systematically tracking insurance companies'
compliance with and performance under each component of the Financial
Control Plan; and ensuring centralized access to all audits, reviews,
and data analyses performed for each WYO insurer under the Financial
Control Plan.
* Improve NFIP's transaction-level accountability and assure that
financial reporting is accurate and that insurance company operations
conform to program requirements by augmenting NFIP policies to require
contractors to develop procedures for analyzing financial reports in
relation to the transaction-level information that WYO insurers submit
for statistical purposes; revising required internal control
activities for contractors to provide for verifying and validating the
reliability of WYO-reported financial information based on a review of
a sample of the underlying transactions or events; and obtaining
verification that these objectives have been met through independent
audits of the WYO insurers.
* Address contract and management oversight issues that we have
identified in previous reports, including determining the feasibility
of integrating and streamlining numerous existing NFIP financial
reporting processes to reduce the risk of errors inherent in the
manual recording of accounting transactions into multiple systems;
establishing and implementing procedures that require the review of
available information, such as the results of biennial audits,
operational reviews, and claim reinspections to determine whether the
targeted audits for cause should be used; establishing and
implementing procedures to schedule and conduct all required
operational reviews within the prescribed 3-year period; and
establishing and implementing procedures to select statistically
representative samples of all claims as a basis for conducting
reinspections of claims by general adjusters.
* Address challenges to oversight of contractor activities, including
implementing processes to ensure that monitoring reports are submitted
on time and systematically reviewed and maintained by the COTR and the
Program Management Office; ensuring that staff clearly monitor each
performance standard the contractor is required to meet in the
specified time frames and clearly link monitoring reports and
performance areas; implementing written guidance for all NFIP-related
contracts on how to consistently handle the failure of a contractor to
meet performance standards; establishing written policies and
procedures governing coordination among FEMA officials and offices
when addressing contractor deficiencies; and ensuring that financial
disincentives are appropriately and consistently applied.
Building on our prior work and these recommendations, we are in the
process of conducting a comprehensive review of FEMA's overall
management of NFIP that could help FEMA develop a roadmap for
identifying and addressing many of the root causes of its operational
and management challenges. This review focuses on a wide range of
internal management issues including acquisition, contractor
oversight, information technology (NextGen), internal controls, human
capital, budget and resources, document management, and financial
management. While our work is ongoing, we have observed some positive
developments in the agency's willingness to begin to acknowledge its
management issues and the need to address them. FEMA has also taken
steps to improve our access to key NFIP staff and information by
providing us with an on-site office at one of FEMA's locations,
facilitating our ability to access and review documents. In addition,
in April 2010 FEMA staff initiated a meeting with GAO to discuss all
outstanding recommendations related to NFIP and the actions they
planned to take to address them. We are in the process of obtaining
and evaluating documentation related to these actions.
Recent Proposals Could Provide Some Benefits but Also Raise Concerns:
As part of our past work, we have also evaluated other proposals
related to NFIP. Each of those proposals has potential benefits as
well as challenges.
* In a previous report, we discussed some of the challenges associated
with implementing a combined federal flood and wind insurance program.
[Footnote 21] While such a program could provide coverage for wind
damage to those unable to obtain it in the private market and simplify
the claims process for some property owners, it could also pose
several challenges. For example, FEMA would need to determine wind
hazard prevention standards; adapt existing programs to accommodate
wind coverage, create a new rate-setting process, raise awareness of
the program, enforce new building codes, and put staff and procedures
in place. FEMA would also need to determine how to pay claims in years
with catastrophic losses, develop a plan to respond to potential
limited participation and adverse selection, and address other trade-
offs, including the potential for delays in reimbursing participants,
litigation, lapses in coverage, underinsured policyholders, and
larger- than-expected losses.
* As we have previously reported, private business interruption
coverage for flood damage is expensive and is generally purchased only
by large companies.[Footnote 22] Adding business interruption
insurance to NFIP could help small businesses obtain coverage that
they could not obtain in the private market, but NFIP currently lacks
resources and expertise in this area. Adding business interruption
insurance could increase NFIP's existing debt and potentially amplify
its ongoing management and financial challenges. Insurers told us that
underwriting this type of coverage, properly pricing the risk, and
adjusting claims was complex.
* Finally, we have reported that creating a catastrophic loss fund to
pay larger-than-average annual losses would be challenging for several
reasons.[Footnote 23] For example, NFIP's debt to Treasury would
likely prevent NFIP from ever being able to contribute to such a fund.
Further, such a fund might not eliminate NFIP's need to borrow for
larger-than-expected losses that occurred before the fund was fully
financed. Building a fund could also require significant premium rate
increases, potentially reducing participation in NFIP.
Closing Comments:
FEMA faces a number of ongoing challenges in managing and
administering NFIP that, if not addressed, will continue to work
against improving the program's long-term financial condition. As you
know, improving NFIP's financial condition involves a set of highly
complex, interrelated issues that are likely to involve many trade-
offs and have no easy solutions, particularly when the solutions to
problems involve balancing the goals of charging rates that reflect
the full risk of flooding and encouraging broad participation in the
program. In addition, addressing NFIP's current challenges will
require the cooperation and participation of many stakeholders.
As we noted when placing NFIP on the high-risk list in 2006,
comprehensive reform will likely be needed to address the financial
challenges facing the program. In addressing these financial
challenges, FEMA will also need to address a number of operational and
management challenges before NFIP can be eligible for removal from the
high-risk list. Our previous work has identified many of the necessary
actions that FEMA should take, and preliminary observations from our
ongoing work have revealed additional operational and management
issues. By addressing both the financial challenges as well as the
operational and management issues, NFIP will be in a much stronger
position to achieve its goals and ultimately to reduce its burden on
the taxpayer.
Chairman Dodd and Ranking Member Shelby, this concludes my prepared
statement. I would be pleased to respond to any of the questions you
or other members of the Committee may have at this time.
GAO Contact and Staff Acknowledgments:
Contact points for our Offices of Congressional Relations and Public
Affairs may be found on the last page of this statement. For further
information about this testimony, please contact Orice Williams Brown
at (202) 512-8678 or williamso@gao.gov. This statement was prepared
under the direction of Patrick Ward. Key contributors were Tania
Calhoun, Emily Chalmers, Nima Patel Edwards, Elena Epps, Christopher
Forys, Randy Hite, Tonia Johnson, and Shamiah Kerney.
[End of section]
Related GAO Products:
National Flood Insurance Program: Continued Actions Needed to Address
Financial and Operational Issues. [hyperlink,
http://www.gao.gov/products/GAO-10-631T]. Washington, D.C.: April 21,
2010.
Financial Management: Improvements Needed in National Flood Insurance
Program's Financial Controls and Oversight. [hyperlink,
http://www.gao.gov/products/GAO-10-66]. Washington, D.C.: December 22,
2009.
Flood Insurance: Opportunities Exist to Improve Oversight of the WYO
Program. [hyperlink, http://www.gao.gov/products/GAO-09-455].
Washington, D.C.: August 21, 2009.
Results-Oriented Management: Strengthening Key Practices at FEMA and
Interior Could Promote Greater Use of Performance Information.
[hyperlink, http://www.gao.gov/products/GAO-09-676]. Washington, D.C.:
August 17, 2009.
Information on Proposed Changes to the National Flood Insurance
Program. [hyperlink, http://www.gao.gov/products/GAO-09-420R].
Washington, D.C.: February 27, 2009.
High-Risk Series: An Update. [hyperlink,
http://www.gao.gov/products/GAO-09-271]. Washington, D.C.: January 2009.
Flood Insurance: Options for Addressing the Financial Impact of
Subsidized Premium Rates on the National Flood Insurance Program.
[hyperlink, http://www.gao.gov/products/GAO-09-20]. Washington, D.C.:
November 14, 2008.
Flood Insurance: FEMA's Rate-Setting Process Warrants Attention.
[hyperlink, http://www.gao.gov/products/GAO-09-12]. Washington, D.C.:
October 31, 2008.
National Flood Insurance Program: Financial Challenges Underscore Need
for Improved Oversight of Mitigation Programs and Key Contracts.
[hyperlink, http://www.gao.gov/products/GAO-08-437]. Washington, D.C.:
June 16, 2008.
Natural Catastrophe Insurance: Analysis of a Proposed Combined Federal
Flood and Wind Insurance Program. [hyperlink,
http://www.gao.gov/products/GAO-08-504]. Washington, D.C.: April 25,
2008.
National Flood Insurance Program: Greater Transparency and Oversight
of Wind and Flood Damage Determinations Are Needed. [hyperlink,
http://www.gao.gov/products/GAO-08-28]. Washington, D.C.: December 28,
2007.
National Disasters: Public Policy Options for Changing the Federal
Role in Natural Catastrophe Insurance. [hyperlink,
http://www.gao.gov/products/GAO-08-7]. Washington, D.C.: November 26,
2007.
Federal Emergency Management Agency: Ongoing Challenges Facing the
National Flood Insurance Program. [hyperlink,
http://www.gao.gov/products/GAO-08-118T]. Washington, D.C.: October 2,
2007.
National Flood Insurance Program: FEMA's Management and Oversight of
Payments for Insurance Company Services Should Be Improved.
[hyperlink, http://www.gao.gov/products/GAO-07-1078]. Washington,
D.C.: September 5, 2007.
National Flood Insurance Program: Preliminary Views on FEMA's Ability
to Ensure Accurate Payments on Hurricane-Damaged Properties.
[hyperlink, http://www.gao.gov/products/GAO-07-991T]. Washington,
D.C.: June 12, 2007.
Coastal Barrier Resources System: Status of Development That Has
Occurred and Financial Assistance Provided by Federal Agencies.
[hyperlink, http://www.gao.gov/products/GAO-07-356]. Washington, D.C.:
March 19, 2007.
National Flood Insurance Program: New Processes Aided Hurricane
Katrina Claims Handling, but FEMA's Oversight Should Be Improved.
[hyperlink, http://www.gao.gov/products/GAO-07-169]. Washington, D.C.:
December 15, 2006.
Federal Emergency Management Agency: Challenges for the National Flood
Insurance Program. [hyperlink,
http://www.gao.gov/products/GAO-06-335T]. Washington, D.C.: January
25, 2006.
Federal Emergency Management Agency: Improvements Needed to Enhance
Oversight and Management of the National Flood Insurance Program.
[hyperlink, http://www.gao.gov/products/GAO-06-119]. Washington, D.C.:
October 18, 2005.
Determining Performance and Accountability Challenges and High Risks.
[hyperlink, http://www.gao.gov/products/GAO-01-159SP]. Washington,
D.C.: November 2000.
[End of section]
Footnotes:
[1] Repetitive loss properties are properties that have had two or
more paid NFIP claims in a 10-year period.
[2] FloodSmart is an integrated mass marketing campaign FEMA launched
in 2004 to educate the public about the risks of flooding and to
encourage the purchase of flood insurance.
[3] See GAO, Flood Insurance: Opportunities Exist to Improve Oversight
of the WYO Program, [hyperlink,
http://www.gao.gov/products/GAO-09-455] (Washington, D.C.: Aug. 21,
2009).
[4] Mitigation involves taking steps to reduce a property's flood
risk--for example, elevating a house above a certain flood level.
[5] Pub. L. No. 90-448, Title XIII, 82 Stat. 476 (1968).
[6] Pub. L. No. 93-234, §102, 87 Stat. 975, 978 (1973).
[7] Pub. L. No. 103-325, 108 Stat. 2255 (1994).
[8] Pub. L. No. 108-264, §§ 102, 104, 118 Stat. 712, 714, 722 (2004).
[9] See GAO, Flood Insurance: FEMA's Rate-Setting Process Warrants
Attention, [hyperlink, http://www.gao.gov/products/GAO-09-12]
(Washington, D.C.: Oct. 31, 2008); and Flood Insurance: Options for
Addressing the Financial Impact of Subsidized Premium Rates on the
National Flood Insurance Program, [hyperlink,
http://www.gao.gov/products/GAO-09-20] (Washington, D.C.: Nov. 14,
2008).
[10] This work is being done at the request of the Chairman of the
Subcommittee on Economic Policy, Senator Sherrod Brown, and Senators
Charles E. Schumer and Jeff Bingaman.
[11] See [hyperlink, http://www.gao.gov/products/GAO-09-455].
[12] See GAO, Financial Management: Improvements Needed in National
Flood Insurance Program's Financial Controls and Oversight,
[hyperlink, http://www.gao.gov/products/GAO-10-66] (Washington, D.C.:
Dec. 22, 2009).
[13] See GAO, National Flood Insurance Program: Financial Challenges
Underscore Need for Improved Oversight of Mitigation Programs and Key
Contracts, [hyperlink, http://www.gao.gov/products/GAO-08-437]
(Washington, D.C.: Jun. 16, 2008).
[14] See Department of Homeland Security, Office of the Inspector
General, Independent Auditor's Report on DHS' FY 2009 Financial
Statements and Internal Control over Financial Reporting, DHS-OIG-10-
11 (Washington, D.C.: Nov. 13, 2009).
[15] H.R. 5114, Flood Insurance Reform Priorities Act of 2010, 111th
Cong., 2nd Sess.
[16] See [hyperlink, http://www.gao.gov/products/GAO-09-12].
[17] See [hyperlink, http://www.gao.gov/products/GAO-09-20].
[18] FEMA has five different mitigation grant programs, each with
different types of requirements, purposes, and appropriations: Flood
Mitigation Assistance (FMA), Repetitive Flood Claims (RFC), Severe
Repetitive Loss Pilot Program (SRL), Hazard Mitigation Grant Program
(HMGP), and Pre-Disaster Mitigation (PDM).
[19] See GAO, Federal Emergency Management Agency: Improvements Needed
to Enhance Oversight and Management of the National Flood Insurance
Program, [hyperlink, http://www.gao.gov/products/GAO-06-119]
(Washington, D.C.: Oct. 18, 2005).
[20] See GAO, National Flood Insurance Program: New Processes Aided
Hurricane Katrina Claims Handling, but FEMA's Oversight Should Be
Improved, [hyperlink, http://www.gao.gov/products/GAO-07-169]
(Washington, D.C.: Dec. 15, 2006).
[21] See GAO, Natural Catastrophe Insurance: Analysis of a Proposed
Combined Federal Flood and Wind Insurance Program, [hyperlink,
http://www.gao.gov/products/GAO-08-504] (Washington, D.C.: Apr. 25,
2008).
[22] See GAO, Information on Proposed Changes to the National Flood
Insurance Program, [hyperlink, http://www.gao.gov/products/GAO-09-
420R] (Washington, D.C.: Feb. 27, 2009).
[23] See [hyperlink, http://www.gao.gov/products/GAO-09-420R].
[End of section]
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