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GAO Agrees with FEMA, Recommends Against Community-Based Flood Insurance

The idea of community-based flood insurance was studied by the Federal Emergency Management Agency, which rejected the idea. The Government Accountability Office conducted its own study and agreed, saying that FEMA’s conclusion was reasonable...
August 31, 2016

The idea of community-based flood insurance (CBFI) was studied by the Federal Emergency Management Agency (FEMA), which rejected the idea. The Government Accountability Office (GAO) conducted its own study and agreed, saying that FEMA’s conclusion was reasonable.

FEMA conducted a study on community-based flood insurance (CBFI)—flood insurance that a community would purchase to cover all properties located within it.  FEMA contracted with the National Academy of Sciences (NAS) to conduct the study, and worked with NAS to design a study that would provide a high-level, independent discussion of issues related to CBFI.


In its report to Congress, which contained the study, FEMA concluded that it should not conduct further related research or implement CBFI. Specifically, it concluded that the challenges outlined in the study outweigh any potential benefit when considered against limited community interest. FEMA officials further cited the need to dedicate FEMA’s resources to effective National Flood Insurance Program (NFIP) reform.

Based on the factors cited by FEMA officials, and the consistency of these factors with findings in prior GAO reports on NFIP, GAO determined that FEMA’s conclusion was reasonable. [full GAO report]

 

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