FEMA nixes community flood insurance; GAO agrees


 The Federal Emergency Management Agency (FEMA) submitted a report to Congress previously about a new type of flood policy that could cover entire communities rather than individual homeowners, but it decided that the proposed type of coverage wouldn’t work.

This week, the Government Accountability Office (GAO) finished a review of FEMA’s proposal and signed off on FEMA’s results.

The conclusion from GAO: “FEMA concluded that it should not conduct further related research or implement community-based flood insurance (CBFI). Specifically, it concluded that the challenges (of insuring whole communities) outlined in the study outweigh any potential benefit when considered against limited community interest.”

Under a CBFI policy, FEMA would have calculated an aggregate cost for covering an entire community’s flood losses, giving cities the option to buy a blanket policy that covered all buildings. In turn, the communities would charge all homeowners for flood insurance through higher taxes, as an added cost on utility bills or in another way.

FEMA was directed to conduct the study and submit a report to Congress under the Homeowners Flood Insurance Affordability Act of 2014 (HFIAA). FEMA presented the report to Congress in March 2016.

The GAO analysis of FEMA’s report, “Flood Insurance: Review of FEMA Study and Report on Community-Based Options,” can be read on the GAO’s website.

According to GAO, FEMA “used reasonable objectives and methodology for its study on community-based flood insurance (CBFI).”

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