GAO Scores Flood Program Poor Info

The agency that manages the National Flood Insurance Program must do a better job of providing information concerning properties that are the basis for repeated damage claims over the years, a federal report says.

The study was conducted by the Government Accountability Office at the request of Sen. Richard Shelby, R-Ala., ranking minority member of the Senate Banking Committee, who has insisted that more must be done to reduce repetitive flood program losses.

The GAO report appears to back Sen. Shelby up. The GAO said in the study that over the last 10 years ending in 2006, the NFIP program has shown a “steady” increase in the number of policies in force, as well as the average amount of insurance per policy.

But, it said, because of the way the Federal Emergency Management Agency keeps its data, GAO was not able to determine the actual number of properties acquired through the FEMA mitigation program, which is intended to minimize the damage and financial impact of floods.

Information on completed mitigation projects indicates that about one-third of properties approved for acquisition from 1997 to 2006 were acquired, the report said.

However, this data is limited because it does not include a count of properties acquired in ongoing projects, the GAO said in its report.

“Projects may take several years to complete, and FEMA does not report properties acquired until a project is complete,” the report said.

Furthermore, the report adds, “FEMA collected property acquisition data (for completed projects) in an ad hoc manner because FEMA's grants management system lacks the capability to record acquisition data.”

As a result, FEMA cannot readily determine the extent to which flood-damaged and repetitive loss properties have been acquired through its mitigation programs,” the report said.

The study said the net, cumulative amount paid to settle claims for properties that suffered repetitive losses has also increased in the 1997-2006 period.

Specifically, the report said, the cumulative amount FEMA paid to settle claims filed by people suffering multiple loss during the period more than doubled.

The GAO admitted in the study that a primary reason for that was the 2005 hurricane season, making it “the highest loss year in the history of the program.”

The losses from repetitive claims more than doubled from the $3.7 billion in 1997 to $7.9 billion at the end of 2006.

“Clearly,” GAO said in the study, “repetitive loss properties continue to be a drain” on the NFIP.”

Moreover, the agency said in its study, while the number of policies, etc., was growing, average premiums decreased, total losses fluctuated and the majority of losses were hurricane-related.