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S. HRG. 111–853 

REAUTHORIZATION OF THE NATIONAL FLOOD 

INSURANCE PROGRAM 

HEARING 

BEFORE THE

COMMITTEE ON 

BANKING, HOUSING, AND URBAN AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

ON 

EXAMINING COMPREHENSIVE FLOOD INSURANCE REFORMS AND THE 

REAUTHORIZATION OF THE NATIONAL FLOOD INSURANCE PROGRAM 

SEPTEMBER 22, 2010 

Printed for the use of the Committee on Banking, Housing, and Urban Affairs 

( 

Available at: http://www.fdsys.gov/ 
COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS 

CHRISTOPHER J. DODD, Connecticut, Chairman 

TIM JOHNSON, South Dakota 

JACK REED, Rhode Island 

CHARLES E. SCHUMER, New York 

EVAN BAYH, Indiana 

ROBERT MENENDEZ, New Jersey 

DANIEL K. AKAKA, Hawaii 

SHERROD BROWN, Ohio 

JON TESTER, Montana 

HERB KOHL, Wisconsin 

MARK R. WARNER, Virginia 

JEFF MERKLEY, Oregon 

MICHAEL F. BENNET, Colorado 

RICHARD C. SHELBY, Alabama 

ROBERT F. BENNETT, Utah 

JIM BUNNING, Kentucky 

MIKE CRAPO, Idaho 

BOB CORKER, Tennessee 

JIM DEMINT, South Carolina 

DAVID VITTER, Louisiana 

MIKE JOHANNS, Nebraska 

KAY BAILEY HUTCHISON, Texas 

JUDD GREGG, New Hampshire 

EDWARD SILVERMAN, Staff Director 

WILLIAM D. DUHNKE, Republican Staff Director 

BETH COOPER, Professional Staff Member 

BRETT HEWITT, Professional Staff Member 

PAUL REVESZ, GAO Detailee 

JIM JOHNSON, Republican Counsel 

DAWN RATLIFF, Chief Clerk 

LEVON BAGRAMIAN, Hearing Clerk 

SHELVIN SIMMONS, IT Director 

JIM CROWELL, Editor 

(II)
C O N T E N T S 

WEDNESDAY, SEPTEMBER 22, 2010 

Page 

Opening statement of Chairman Dodd .................................................................. 1 

Prepared statement .......................................................................................... 37 

Opening statements, comments, or prepared statements of: 

Senator Bunning ............................................................................................... 3 

Prepared statement ................................................................................... 39 

Senator Schumer .............................................................................................. 4 

Senator Tester .................................................................................................. 6 

Senator Shelby 

Prepared statement ................................................................................... 38 

Senator Johnson 

Prepared statement ................................................................................... 39 

WITNESSES 

Richard J. Durbin, Senator from the State of Illinois .......................................... 6 

Prepared statement .......................................................................................... 40 

Roger F. Wicker, Senator from the State of Mississippi ...................................... 7 

Prepared statement .......................................................................................... 41 

Orice Williams Brown, Director of the Office of Financial Markets and Community Investment, Government Accountability Office .................................... 11 

Prepared statement .......................................................................................... 44 

Responses to written questions of: 

Senator Reed .............................................................................................. 106 

Sally McConkey, Vice Chair, Association of Floodplain Managers ..................... 22 

Prepared statement .......................................................................................... 85 

Responses to written questions of: 

Senator Reed .............................................................................................. 121 

J. Nicholas D’Ambrosia, Vice President of Training and Recruiting, Long 

& Foster ................................................................................................................ 24 

Prepared statement .......................................................................................... 95 

Responses to written questions of: 

Senator Reed .............................................................................................. 127 

Stephen Ellis, Vice President, Taxpayers for Common Sense ............................. 26 

Prepared statement .......................................................................................... 102 

ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD

Prepared statement submitted by Senator Mark Pryor of Arkansas .................. 130 

Letter submitted by Adam Kolton, Senior Director, Congressional and Federal 

Affairs, National Wildlife Federation ................................................................. 131 

(III)

(1) 

REAUTHORIZATION OF THE NATIONAL 

FLOOD INSURANCE PROGRAM 

WEDNESDAY, SEPTEMBER 22, 2010 

U.S. SENATE, COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS, Washington, DC. 

The Committee met at 2:08 p.m., in room SD–538, Dirksen Senate Office Building, Hon. Christopher J. Dodd, Chairman of the 

Committee, presiding. 

OPENING STATEMENT OF CHAIRMAN CHRISTOPHER J. DODD 

Chairman DODD. The Committee will come to order. Let me welcome all of our guests here in the—I was going to say we are almost awash in humanity here for this hearing. It is not quite a full 

room. 

Senator Shelby will be here shortly. I gather from my good friend 

Jim Bunning that there has been a Republican Conference meeting, and Roger, you pointed out the same, so I presume they will 

be coming in, but we will get underway. I have got an opening 

statement to make, and Senator Bunning does. I think Senator 

Schumer, as well, wanted to make an opening statement when he 

comes, and we will get to you very quickly. In fact, if they don’t 

come in, we will just go to Jim and I and then we will go right to 

you. I know you have got other issues. Senator Johnson, Tim, is 

here with us. Tim, thanks for being with us. 

Let me start, if I can, and first of all, I welcome, as I said, everyone here this afternoon for the hearing on the reauthorization of 

the National Flood Insurance Program, NFIP. I want to thank 

Roger Wicker, our colleague from Mississippi. Roger has talked to 

me on the floor on numerous occasions about this issue, how important it is to his State. I promised him we would get a hearing on 

all of this. There is a lot of interest in the subject matter from a 

variety of different perspectives. I am very aware of the Mississippi 

perspective and their interest in the subject matter. I am sure 

Roger is going to talk about it and others are. 

We actually passed a bill out of this Committee, I think last year, 

pretty overwhelmingly, and then it passed on the floor pretty overwhelmingly. The House didn’t, and now the House has acted on a 

bill. I am not sure whether or not we are going to respond to that 

or not. So we are kind of each getting it done at different times, 

and unfortunately, not the same time, so this afternoon’s hearing 

is an important one. 

NFIP, the Flood Insurance Program, is a very important program, providing a range of benefits, as we all know, to deal with 
2 

the often overlooked but serious threat, floods, that cause more 

damage and create more economic losses than any other type of 

natural disaster. It may come as a surprise for those who are not 

well versed in the subject matter, and while the topic may bring 

Hurricane Katrina’s Gulf Coast devastation to mind, the truth is 

that floods can happen anywhere, and they do. 

Parts of my own small State of Connecticut were ravaged by 

flooding this spring, and back in the 1950s, before a lot of flood control programs, the entire Naugatuck Valley, the central part of 

Connecticut where a lot of the early days of the Industrial Revolution occurred, the Naugatuck River overflowed and swamped one 

community after another all along that flood plain. 

Flood insurance provides critical assistance to 5.5 million families and businesses, insurance to help them recover from flood damages and mitigation assistance to help them avoid damages in the 

future. It also provides a framework of responsible floodplain management, requiring safer, more environmentally sound development 

that limits Americans’ flood risks. Together, these measures have 

saved taxpayer money by limiting the amount of emergency disaster assistance necessary in the wake of flood events. 

Despite these many benefits, the program faces some serious 

challenges that threaten its ability to carry out its mission. The 

hearings before this Committee in previous Congresses revealed a 

number of issues in need of reform. Perhaps foremost is NFIP’s financial condition, which threatens the program’s long-term viability. Due to increased borrowing to pay claims for catastrophic disasters in 2005 and 2008, the Flood Insurance Program faces almost 

$19 billion in debt to the Treasury, a sum that isn’t likely to ever 

be repaid. Subsidized rates for nearly 25 percent of policy holders 

do not reflect the actuarially sound rates sufficient to cover expected claims. 

Another key issue is ensuring that citizens and the Federal Government understand their risks. Despite mandatory purchase requirements for properties in flood hazard areas, only about half of 

all property owners in those areas actually participate in the program, increasing their potential exposure to devastating losses. 

On top of this, until recently, FEMA had been using outdated 

paper-based flood maps to assess risks. These and other concerns 

caused the GAO to place the program on its High-Risk List in 

2006. 

In the last Congress, Senator Shelby and I worked together on 

flood insurance reform legislation to put the National Flood Insurance Program on a stronger footing for the future. That bipartisan, 

fiscally responsible legislation would have provided comprehensive 

Flood Insurance Program reforms to address these pressing issues 

that I have raised and talked about this afternoon and would have 

reauthorized the program for 5 years. It would have relieved the 

Flood Insurance Program’s debt while requiring actuarially sound 

premium rates. 

We worked with Senator Jack Reed on the provisions to 

strengthen FEMA’s mapping capabilities to inform citizens of their 

risks and actuarially set premium pricing. I know that Senator 

Reed was disappointed not to be here today, but is to be com-
3 

mended for his work on these provisions and improving the mapping provisions. 

In recent years, we have heard a number of proposals to improve 

insurance options and delivery for so-called ‘‘multiperil’’ events 

such as those involving both wind and water, for example, and for 

lowering the cost of insuring against catastrophic natural disasters. 

Our legislation also called for the creation of a National Commission on Natural Catastrophic Risk Management and Insurance to 

provide expert recommendations to the Congress on these very 

complex topics. 

In 2008, the Senate adopted this legislation by an overwhelming 

92 to 6 vote on the floor of the Senate. Unfortunately, we did not 

reach agreement with the House. Since that time, the program has 

been operating under a series of shorter-term extensions. And 

while our comprehensive reauthorization discussions continue, I 

have been working with my colleagues to ensure that the program 

remains in force. 

Last night, the Senate approved a 1-year extension of the Flood 

Insurance Program. A multiyear reform bill is preferable, obviously, to an extension, in my view. However, such an extension 

will, in my view, provide necessary program and market stability 

to homeowners, lenders, and insurers while the Congress further 

considers the next steps for the reform of the Flood Insurance Program. 

The purpose of today’s hearing is to return to this discussion of 

comprehensive flood insurance reform, something all of us agree is 

absolutely essential. We are going to hear from our distinguished 

colleagues, and we have been joined by Senator Durbin, who has 

had a long interest in this subject matter, and I have talked with 

him about mapping issues. I mentioned already, Chuck, that you 

had some opening comments, and Senator Schumer and I had a 

conversation the other evening about a similar set of issues in New 

York. And I suspect we are going to hear from a growing number 

of constituencies about the mapping issues that I only initially 

heard from Dick Durbin, who raised the issue initially about Illinois, but obviously a growing problem across the country. 

Before I turn to our panelists, Senator Shelby isn’t here, but Jim, 

why don’t I turn to you for a couple of opening comments you have, 

and then I will go to Senator Schumer. I will then go to you. I don’t 

know if you have any opening comments, Tim, but if not, then we 

will go to our two colleagues who are here. 

STATEMENT OF SENATOR JIM BUNNING 

Senator BUNNING. Mr. Chairman, thank you for holding the 

hearing. 

One of my proudest accomplishments in the U.S. Senate was authorizing the 2004 law that reauthorized the National Flood Insurance Program. Senator Johnson was my Ranking Member at that 

time, and Senator Sarbanes was very important in getting that bill 

completed and through the U.S. Senate because he added some 

very, very significant things that gave those people that had a 

problem the right of appeal. 

Chairman DODD. Yes. 
4 

Senator BUNNING. Now, it took us many years and many holds 

of people to get it done, but we finally got the Vice President of the 

United States and the head of FEMA held to get it done, and we 

thank you for your help. 

We worked very hard, as you did with Senator Shelby, in a bipartisan way, including incentives for communities and homeowners to mitigate flood risk when properties have a history of serious and repeated flood damage, and we provided long-term certainty for the program for property owners, communities, and leaders. Thankfully, my bill ensured that the Flood Insurance Program 

was in place before the Katrina disaster hit. 

Unfortunately, the law I wrote expired in September of 2008, and 

since then, as you said, Mr. Chairman, we have extended the program only for short periods of time, and with the latest extension 

of 1 year. But we need to get a permanent law in place, and that 

is why we are here today to listen to the suggestions of our colleagues in the Senate, and I want to make sure that we do this before we get out, because I want something to say before I leave this 

Congress at the end of the year, and I hope you do, too. 

Chairman DODD. I do, too. 

Senator BUNNING. So I look forward to the input of Senator Durbin and Senator Wicker and all of my colleagues on the Committee. 

Thank you. 

Chairman DODD. Thank you very much. 

Tim, do you have anything? 

Senator JOHNSON. No, I will pass. 

Chairman DODD. OK. Chuck Schumer. 

STATEMENT OF SENATOR CHARLES E. SCHUMER 

Senator SCHUMER. Thank you, and first, I want to thank you, 

Mr. Chairman, not only for holding this hearing, but for lending an 

understanding ear to the problems, numerous, that we have in 

New York. I want to thank Senator Shelby, Senator Bunning, and 

my colleagues Senator Durbin and Senator Wicker for testifying. 

Now, National Flood Insurance is an important program that has 

impacted people all across the country. But as I have witnessed 

firsthand in my home State of New York, it is not without its 

flaws. As the Senate debates reforms to the program, it is important we examine the facts on the ground in places like Nassau 

County on Long Island and in Western and Central New York, as 

well. 

Requiring homeowners in Flood Hazard Zones to purchase flood 

insurance is a necessary goal and one in which the Federal Government certainly has a role to play. But flood insurance is expensive 

for families, often very, very expensive. So we must do everything 

we can to ensure that as FEMA modernizes its flood maps, it is accurately assessing what areas are truly at risk of flooding. 

Unfortunately, we are coming to find at home in New York that 

the various technologies used by FEMA to draw the flood maps are 

exhibiting real flaws and vulnerabilities to error, resulting in thousands and thousands of New Yorkers being required to purchase 

expensive new insurance even though they live in an area that 

hasn’t seen a serious flood for over a century. Let me explain. 
5 

Flawed aerial and GIS survey data in places like Long Island 

have resulted in updated flood zones that have ensnared tens of 

thousands of residents who never planned or expected to have to 

pay for costly flood insurance. In the area of Valley Stream, for instance, in Nassau County, some 5,000 homeowners were added to 

a High Risk Flood Zone. Longtime residents of Valley Stream that 

have been through hurricanes and tropical storms dating back to 

the 1950s are shaking their heads in confusion and desperation, 

asking why Valley Stream, since they have never reported a drop 

of flooding. 

Last week, I visited Valley Stream Village Hill to meet with local 

officials and community residents. They presented me with an artifact of the past, the Village Board meeting minutes after the devastating 1932 hurricane known as the Long Island Express. While 

the minutes highlighted some downed trees and wind damage, 

there wasn’t a single report of flooding in areas now in the High 

Risk Flood Zone. 

It has also been reported that more than 50 percent of the Long 

Island residents that have appealed FEMA’s flood map determination have won. In other words, they proved that the mapping technology was inaccurate, but it cost them an arm and a leg to even 

have to appeal. 

Alarmingly, even FEMA officials on the ground themselves have 

admitted that the mapping technology is flawed. This is one of the 

reasons I requested a GAO report in 2009 to assess the accuracy 

of the technology that FEMA deploys in its mapping, and I look forward to seeing GAO’s results later this year. 

I have personally witnessed the impact that these flawed flood 

maps have on people’s lives. I have sat in the homes of New Yorkers in different parts of my State who are already struggling to 

tread water in these challenging economic times and now have the 

Government telling them they have to pay new insurance premiums in excess of $2,000 a year. 

Mr. Chairman, I truly believe that before we go any further with 

the reauthorization of the Flood Insurance Program, we need to 

apply the brakes and fix these problems. I agree with the testimony of my friend and colleague, Senator Durbin, that we should 

work to pass a moratorium on the mandatory purchase requirement for 5 years until technological and implementation issues can 

be resolved. This will give affected homeowners ample notice and 

a thorough explanation of the mapping process and how it impacts 

their lives so they are not caught by surprise. I believe Congress 

should still offer residents in high-risk areas flood insurance and 

make them aware of potential risks, but we certainly should not 

mandate it before the new technology and data are proven accurate. This moratorium would give the Congress and FEMA more 

time to work out kinks in the mapping process and technology and 

ensure we implement the program in an accurate, effective, and responsive way. 

In conclusion, Mr. Chairman, the House wisely, in my opinion, 

passed such a moratorium. Their flood insurance bill championed 

by my colleagues in the House, Representatives McCarthy and 

Maffei, both from parts of New York that have had trouble with 

flood zones, with the FEMA flood mapping, includes a 5-year delay 
6 

followed by a 5-year phase-in of the flood insurance purchase requirement. I encourage the Senate to include the House-passed 

moratorium in the final flood insurance reauthorization bill, and 

Chairman Dodd, as I mentioned to you on the phone, I would like 

to work with you to see if we could pass such a moratorium in the 

Senate, where I believe there is rising support for such a policy. 

Thank you. 

Chairman DODD. Senator, thank you very, very much. 

We have been joined by Senator Tester from Montana. Thank 

you, Jon, for joining us. We are going to turn to our two colleagues 

for any comments, unless you had a quick opening comment, Jon, 

you wanted to make. 

STATEMENT OF SENATOR JON TESTER 

Senator TESTER. It will be ultra-quick. First of all, thanks to my 

two friends in the Senate for being here. 

I think the Flood Insurance Program really falls into two areas, 

number one, affordability, and sustainability for the program. Both 

need to work. That is all. Thanks. 

Chairman DODD. That is about a succinct a description of the 

hearing there ever was. I appreciate that. 

Dick, we are delighted to have you before the Committee. I will 

have you testify and give us your comments, and then Roger, we 

will hear from you. I thank you both for being here. 

STATEMENT OF RICHARD J. DURBIN, SENATOR FROM THE 

STATE OF ILLINOIS 

Senator DURBIN. Thanks, Chairman Dodd and Members of the 

Committee. I might say to Senator Tester, that was very un-Senatorial of you. 

[Laughter.] 

Senator DURBIN. I think Senator Schumer, my colleague, has 

really summarized the State of New York’s situation, comparable 

to my State of Illinois. I am from downstate, from an area of great 

rivers, Mississippi, Illinois, and others, born and raised in that 

area, and I have seen my share of flooding in the past. What came 

as kind of a surprise to us was in 2007, in came FEMA and informed us that they were about to take a new assessment of the 

levees and new floodplain mapping. 

The first thing they did was said, we will do the Illinois side of 

the river first. We will get to Missouri later—the same watershed. 

Well, it created an economic dissonance, a disadvantage on the Illinois side that we were going to have ours mapped first and the cost 

imposed while those on the other side—well, we fixed that. Thank 

you for helping us fix that, Chairman Dodd. That provision at least 

applies to the entire watershed now. Wait until they have completed it until you move forward. 

But the point that Senator Schumer made is one that is included 

in the House Reauthorization Act, which I hope we will consider. 

In this area, they took a look at all these levees by the Mississippi 

River and they said, yes, we need to repair them and make them 

better. So we will impose on our local residents a new sales tax and 

generate in the three counties affected $10 million a year to start 

repairing the levees. In 5 years, we will get it done. So it isn’t as 
7 

if they are walking away from the challenge. They are accepting 

the challenge and they are paying with local funds to do it. So we 

are suggesting at least while they are doing this construction, do 

not impose these new mandates on them. Give them this 5-year 

window to take the money raised locally with whatever we can 

bring in federally and do our best to upgrade the levees. 

We estimate, as Senator Schumer said, this could cost $2,500 a 

year. Imagine hitting a family in the midst of recession with that 

kind of a bill, trying to hang on to their homes and now more than 

$200 a month in a new flood insurance requirement. 

The second part of the bill, which Senator Schumer also alluded 

to, was in the second 5 years, let us phase it in. Now, I think that 

is a reasonable way to go. We have got self-help going on locally. 

We have got people committed to getting the job done and done 

right. And we are trying to phase it in in a reasonable, affordable 

way, I might way, Senator Tester, so that we ultimately have a 

sustainable program. But we can’t drop this in a matter of months 

or even a year or two on everyone and say, take it or leave it. I 

think that is fundamentally unfair and unreasonable. Up to 30,000 

new properties could be affected with this requirement for new 

flood insurance. 

Now, I say to people who ask me in this region, if you can afford 

it, buy it. Buy it now. Protect yourself. Just as you have fire insurance, if you can afford it, buy it. It is smart advice, and if I owned 

a home in my area, I would do my best to buy it. Some people just 

can’t. They can’t afford it. And so that is what we are up against. 

We are trying to come up with a reasonable alternative that will 

take care of it. 

I would just conclude by saying that I think that, in summary, 

your Committee’s version of flood insurance—as you craft your 

Committee’s version of flood insurance legislation, include language 

to achieve the following goals. Ensure FEMA updates flood maps 

on a watershed basis. Delay the effective date for mandatory purchase of flood insurance for areas that have been newly mapped in 

a floodplain. Phase in flood insurance rates for newly mapped areas 

over 5 years so we have got a window here where this is happening 

in a gradual way. Require FEMA, State, and local governments to 

undertake extraordinary outreach to homeowners so that they understand the real risk that could be involved here, the potential of 

it. And offer discounted rates to newly mapped properties to increase the number of homeowners who are into the habit and custom of buying flood insurance. 

Thanks for the opportunity to address the Committee. 

Chairman DODD. Thank you very much, Senator. I appreciate 

your efforts and your interest in the subject matter. 

Senator Wicker, we welcome you to the Committee. 

STATEMENT OF ROGER F. WICKER, SENATOR FROM THE 

STATE OF MISSISSIPPI 

Senator WICKER. Thank you very much. Mr. Chairman, could I 

ask that my full statement be included in the record. 

Chairman DODD. That is true on all statements and documentation and so forth that you would like the Committee to have, we 

will include in the record. 
8 

Senator WICKER. Thank you very much. I was reminded the 

other day by Al Goodman, the Mississippi State Floodplain Manager, that major flood disasters have often led to changes in the 

law. For example, Hurricane Agnes in 1972 resulted in the Flood 

Disaster Protection Act of 1973. Flooding on the Mississippi River 

in 1993 prompted the National Flood Insurance Reform Act of 

1994. The Flood Insurance Reform Act of 2004 was influenced by 

Hurricanes Andrew and Isabel. 

Unfortunately, 5 years after Hurricane Katrina, that major event 

has not prompted a reform in the law, and I would submit to this 

Committee that in order to talk about hurricane insurance, we 

have to talk about wind and water insurance. One of the best 

things Congress could do for the vast coastal areas of this country, 

not just my State of Mississippi but all of the Gulf Coast States, 

including the States represented on this panel, is to resolve the nuances associated with insuring against hurricanes, and that involves insuring against flood and wind. 

For all practical purposes, private insurance coverage for wind 

damage is no longer available in the Gulf Coast area since Hurricane Katrina. Before the storm, the wind peril was typically insured by basic hazard insurance policies, with the exception of 

those living right on the beach. Today, in most of Coastal Mississippi, individuals have to purchase wind coverage through the 

State-run Wind Pool. State Wind Pools were originally designed to 

be the insurer of last resort. However, in recent years, State Wind 

Pools have unfortunately become the rule, not the exception. 

Now, as you know, in 2008, I attempted to address this problem 

by offering an amendment that would have added wind coverage to 

the National Flood Insurance Program on a voluntary and actuarially sound basis. This multiperil concept has passed the House of 

Representatives but failed in the Senate. 

I would simply point out to my colleagues, I still support the 

multiperil debate, although I understand the arguments against it. 

Let me emphasize that it would be voluntary and that the requirement would be that it be actuarially sound. If that resulted in the 

wind portion of the premiums being too high, then so be it, but that 

was what my amendment contained. 

The major concern we have in Mississippi is that it takes two 

kinds of insurance to cover a hurricane, flood insurance through 

the NFIP and very expensive wind insurance through either the 

Wind Pool, or if you can get it, private coverage. After Hurricane 

Katrina, many property owners were forced to go to court to decide 

who was responsible for the damage, wind or water, even if they 

had all of the necessary insurance policies. Other property owners 

had not purchased flood insurance because they relied on Federal 

Zone Maps. When their property was damaged by storm, the wind 

insurance adjustors denied claims, ruling that the damage had 

been caused by water alone. 

Now, I recently introduced the Coordination of Wind and Flood 

Perils Act. This legislation, S. 3672, addresses some of the lessons 

learned following the wind versus water dispute that occurred after 

Katrina. Individuals who had all of the appropriate insurance, 

wind and water policies, were in many instances caught in the mid-
9 

dle and forced to go to court to watch the insurers fight among 

themselves before they could be indemnified for their loss. 

The legislation I have introduced, S. 3672, would remove the 

property owner from this debate and put the burden where it belongs, on the insurers. The insurance industry already coordinates 

benefits for other types of losses. If there is a dispute under my legislation, the damages would be split evenly between the insurers 

so the property owner would be compensated in a timely manner. 

Then the insurers would appear before an arbitration panel and 

the panel’s decision would be binding. 

Now, Mr. Chairman and Members of the Committee, there are 

a few other lessons learned from Katrina and observations I would 

like to make about NFIP. 

Number one, after Hurricane Katrina, we learned that flood hazard risk in many coastal areas of Mississippi and many parts of the 

country was not accurately reflected by FEMA’s flood insurance 

maps. As a result, property owners outside the flood zones had no 

NFIP coverage. With only wind insurance coverage, these individuals were not properly insured for a hurricane. Since property owners rely heavily on this information, I hope Congress can work with 

FEMA to ensure that these maps are accurately updated for all 

residents. 

Number two, FEMA and many banks do a poor job of enforcing 

the flood insurance requirement. Now, we have had testimony 

about this from Senator Schumer today, but under the Flood Disaster Protection Act of 1973, the purchase of flood insurance is 

mandatory in flood zones if the consumer is using a federally regulated lender. However, there is a breakdown with the enforcement 

of this requirement. According to CRS, at least eight Federal agencies are responsible for enforcing this requirement. 

Recently, the Wharton School of the University of Pennsylvania 

surveyed insurance coverage among property owners impacted by 

flood in Vermont. The study revealed that 45 percent of the victims 

of the flood who were required to have insurance did not purchase 

it. With regard to private insurance, lenders do a much better job 

of enforcing insurance requirements. If a homeowner stops his payment, stops paying his premium, the bank will purchase insurance 

for him and bill the homeowner. The Chair himself today has 

pointed out that some 50 percent of the people who are required 

to have flood insurance somehow do not have flood insurance, and 

the Wharton study documents this, too. Regulators and lenders 

routinely fail to enforce the mandate enacted in the Flood Disaster 

Protection Act. I hope the Committee will further investigate this 

issue and report its findings. Why are hazard insurance requirements enforced so well by lenders and the flood insurance requirement enforced so poorly? 

Of course, rates should be actuarially sound and meaningful. 

Premium reductions should be offered for mitigation improvements. 

I hope this Committee will study the work done by the Wharton 

School in this area. These scholars proposed linking NFIP policy to 

the mortgage, which would create a long-term insurance policy tied 

to the length of the mortgage and to the property itself. Having a 

long-term policy tied to the property is one way to limit NFIP cancellations. This proposal would also give meaningful premium re-
10 

ductions for mitigation improvements. If a property owner knows 

they can save money year after year by strengthening their homes 

above the building code requirements, they will have a powerful incentive to do so. 

One final proposal that I would commend to this Committee is 

the Travelers Coastal Wind Zone Plan. This proposal would create 

an independent Federal commission to establish standards for the 

wind peril in coastal areas. The Travelers plan allowed insurance 

companies to purchase reinsurance from the Federal Government 

to cover losses resulting from extreme events. In addition, like the 

Wharton plan, the Travelers plan calls for meaningful premium reductions for property owners who mitigate by improving their 

homes. 

I would simply summarize and say this, Mr. Chairman. There 

are many things here that are long-term that are going to take 

time. Two things ought to be fairly easy. There ought to be a way 

to figure out how to enforce the mandate for property insurance, 

and there ought to be a way to allow insurers to coordinate benefits. Those are two simple things that could be done relatively 

quickly, perhaps before the end of the year. 

Earlier this year, the Sun Herald, a Mississippi Coast newspaper, wrote in an editorial, ‘‘Better protection for all Americans 

living within harm’s way of a hurricane would be Katrina’s greatest legacy.’’ I agree. Five years after Katrina, Congress still has an 

opportunity to make sure affordable wind and water coverage can 

be provided to the millions of Americans in coastal areas of our 

country. 

Thank you, Mr. Chairman. 

Chairman DODD. Thank you, Senator Wicker, very, very much. 

And let me thank you, Senator Durbin, as well. 

I do not know if any of my colleagues have any questions for our 

two colleagues here. If not, we appreciate very much your testimony. 

Dick, I thank you because you were the first one to bring up the 

whole mapping issue to me a couple years ago, I guess it was. And 

there are more and more Members doing so. You heard Senator 

Schumer talk about it in New York. But it is not just the two 

States. And so I appreciate that very, very much, and it is obviously an issue. 

I am going to turn to Senator Shelby to make some opening comments. 

Senator SHELBY. No, no. I do not want to interrupt that. I would 

just like for my opening statement to be made part of the record. 

Chairman DODD. Absolutely. 

Senator SHELBY. Then I will my turn. 

Chairman DODD. OK. Very good. 

Thank you both very, very much. 

Let me introduce our panelists quickly here, panel two, and then 

we will ask them to make some brief opening comments, if they 

would. In fact, I will introduce all of them, panel two and panel 

three. 

Our first witness in panel two is Ms. Orice Williams Brown. She 

is Director of the Office of Financial Markets and Community Investment at the U.S. Government Accountability Office. Ms. Brown 
11 

has overseen the preparation of numerous reports on the financial 

and operational health of the National Flood Insurance Program, 

and we are very honored to have you, Ms. Brown, with us this 

afternoon. 

Our third panel will include Ms. Sally McConkey. I hope I pronounced that correctly. 

Ms. MCCONKEY. Yes, Senator. 

Chairman DODD. I did. Thank you. Ms, McConkey is a senior 

professional scientist at the Illinois Department of Natural Resources State Water Survey. She is also the current Vice Chair of 

the Association of State Floodplain Managers and will be testifying 

on behalf of that organization this afternoon. 

Next we will hear from Mr. Nicholas D’Ambrosia—I hope I pronounced that correctly as well—who currently serves as the Vice 

President of Recruiting and Training for the Long & Foster real estate company, a very well known company. We all see Long & Foster signs everywhere. He is also the Vice Chair of the Maryland 

Real Estate Commission. Mr. D’Ambrosia is testifying on behalf of 

the National Association of Realtors. 

And our final witness today will be Mr. Steve Ellis, who is Vice 

President of Programs at Taxpayers for Common Sense, where he 

oversees programs and serves as a media and legislative spokesperson. Mr. Ellis also served as a Coast Guard officer for 6 years, 

earning both the Coast Guard Commendation Medal and the Coast 

Guard Achievement Medal. And I am presuming by that you spent 

some time in New London, Connecticut. Is that correct? 

Mr. ELLIS. Yes, Senator. 

Chairman DODD. So you are going to claim some local interest 

I have in that. It is a great school, too. Anyway, we are delighted 

you are here. You know something about the water, obviously. 

I welcome all of our witnesses and, Ms. Brown, we will begin 

with you. And let me just says on behalf of all of the witnesses, 

whatever documentation or supporting evidence you would like to 

have as part of this hearing record will be so included. And if you 

could try and keep your remarks down to about 5 minutes, I would 

appreciate it so we can get to some questions. Thank you. 

STATEMENT OF ORICE WILLIAMS BROWN, DIRECTOR OF THE 

OFFICE OF FINANCIAL MARKETS AND COMMUNITY INVESTMENT, GOVERNMENT ACCOUNTABILITY OFFICE 

Ms. WILLIAMS BROWN. Good afternoon. 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. 

As you know, GAO placed NFIP on its high-risk list in March 

2006, after the 2005 hurricane season exposed the potential magnitude of longstanding structural issues on the financial solvency 

of the program, and brought to the forefront a variety of operational and management challenges. FEMA continues to owe the 

U.S. Treasury $18.8 billion from these losses and interest expenses, 

which it is unlikely to be able to repay under the program’s current 

design. 

My statement today is based on GAO’s past and ongoing work 

and focuses on NFIP’s financial condition, its operational and man-
12 

agement challenges, and possible actions that could be taken to address them. While the structural issues were well known, the management challenges have become more evident in the past several 

years. We have made recommendations addressing virtually every 

aspect of the program. For example, we have recommended that 

FEMA take action to improve NFIP’s management of data quality, 

the rate-setting process, oversight of the insurers that sell flood insurance, the expense reimbursement process, its contractor oversight, and its claims processes. 

While preliminary results of our ongoing review of FEMA’s management reveal that many of these problems are ongoing, FEMA 

has for the first time begun to acknowledge that it faces a number 

of challenges and has displayed a willingness to engage in a dialog 

with GAO about them. While acknowledgment of a problem is an 

important first step, we also expect to see FEMA take actions necessary to meaningfully address these challenges. 

We are currently completing a comprehensive review of NFIP 

that builds on our past work and plan to issue a report early next 

year. We hope this report will help provide a road map for identifying root causes and addressing many of these outstanding issues. 

However, we also recognize that many of the challenges facing 

the program will require congressional action. Moreover, we understand that this is no small issue, given the complexities of the program and the often competing public policy goals, including having 

rates that accurately reflect risk, encouraging participation, and 

limiting cost to the taxpayer. 

For example, while many premium rates for properties are subsidized by law and rate increases are capped for a number of reasons, including offsetting the cost of catastrophe relief, these decisions involve tradeoffs that have to be balanced with the goals of 

NFIP. Specifically, while mitigation is viewed as vital to limiting 

the Government’s exposure, charging rates that do not reflect risk 

may hamper mitigation efforts by encouraging property owners to 

build in harm’s way and not adequately mitigate. Moreover, the 

current NFIP structure increases the likelihood that the program 

will have to borrow from Treasury when losses exceed premiums 

collected, thereby exposing taxpayers to greater financial risk. 

Part of this conversation must include a dialog about the appropriate role of Government in paying for losses from natural catastrophes, which in 90 percent of the cases include flooding. The 

other part deals with who should pay for losses; that is, Congress 

must decide how much of the cost associated with flooding the Government should pay versus property owners. 

In closing, I would like to note that while the $18.8 billion that 

NFIP owes Treasury may not seem large by today’s standards, it 

is significant compared to NFIP’s annual premium revenue, which 

is just over $3.2 billion. This debt may also continue to grow unless 

Congress and FEMA take action to begin to address some of the 

program’s operational and structural issues. 

Finally, one option to maintain subsidies but improve the financial stability of NFIP would be to rate all policies at the full risk 

rate and to appropriate the subsidized amount to the program. 

This structural change would remove the financial burden on NFIP 
13 

by making the subsidy explicit and make the actual flood risk more 

transparent to the property owner. 

Thank you. This concludes my oral comments, and I am prepared 

to answer any questions. 

Chairman DODD. That was excellent testimony. I really appreciate it. As you know, many of us up here have a great deal of respect for the GAO. They do great, great work, and I do not know 

if you ever get the kind of credit you deserve for the tremendous 

focus—you get to do what a lot of us would probably like to do, and 

that is, you get to focus on a subject matter and dedicate your professional lives to really understanding it fully. And you obviously 

do in this area, so we are very grateful to you for your work and 

that of your staff and others that have worked with you to produce 

not only your testimony today but your assessment and analysis. 

You mentioned, obviously, a wide range of actuarial and managerial problems at NFIP, and we have all heard about them. We 

heard Senator Bunning going back to 2004 working on this issue, 

and Senator Shelby and I did last year, and the House has. We 

have just had a lot of interest. In every one of our States, as I 

pointed out earlier, this is the one subject matter that all of us, regardless of where you live, with the exception of—I am not even 

sure I should say probably Nevada. Maybe even out there at certain times of the year, it may be actually subject to the same kind 

of problems. But the problem is including an unfortunate but necessary step to cancel the program’s debt, and that is one of the 

issues. 

I wonder if you could give us a sense of what the most important 

steps might be to help to get the program on track toward financial 

soundness and off the high-risk list. And, second, GAO has been reviewing the Flood Insurance Program for a few years. What 

progress has FEMA made, in your view, if any, on implementing 

the GAO recommendations in recent years, particularly regarding 

their premium rate structure and ensuring that participating insurance companies are compensated at reasonable rates? 

Ms. WILLIAMS BROWN. I will start with your first question dealing with getting off the high-risk list. FEMA has taken one of the 

important steps to start that process and to start a dialog, and that 

is, acknowledging that there are issues that need to be addressed 

and beginning to take steps and having a conversation internally 

as well as with the GAO about what they need to do. 

There are a number of structural issues that we have highlighted, including oversight of the WYOs, contractor oversight, data 

quality issues, as well as the rate-setting process. So I think from 

FEMA’s perspective they would need to address those issues. From 

a legislative perspective, it would involve dealing with the structural issue that really continues to impact the financial soundness 

of the program, and that has to do with subsidized rates. 

Chairman DODD. Well, you have sort of answered the second 

question in a way. You heard Senator Durbin and Senator Schumer and others—and I do not want to put words in their mouths, 

but proposing a delay or a phased-in approach for setting insurance 

rates for homeowners in the new high-risk flood zones. Clearly, this 

is going to lessen the impact on these homeowners, and obviously 

at a time like that, I think all of us are very sympathetic. I think 
14 

Senator Durbin and Senator Schumer talked about a $2,500 tax or 

fee the people would be paying, and obviously at a time when you 

are trying to hold your families together financially, that 200 bucks 

a month can be devastating. So we understand that. 

But there are downsides to such an approach. What might be the 

impact on the fund and the general taxpayer? Because everyone 

else ends up subsidizing this to some degree, so we are all paying 

for it, which is one of the things we have got to consider in all of 

this. It is not just the person who is in the floodplain but all of us 

because the subsidies are paid through tax dollars to support those 

efforts. Further, are there any unintended consequences for homeowners’ perception of risk with such an approach in your view? 

Ms. WILLIAMS BROWN. I would agree with all of the above. I 

think we have pointed out in our past work that the challenge with 

subsidized rates, it impacts not only the program but it does also 

give homeowners that live in high-risk areas a false sense of security. But there is a tradeoff that we have also acknowledged in our 

work, and that is, by increasing rates you also risk fewer people 

participating in the program, and that is something that has to be 

balanced. 

One of the things that FEMA has attempted to do as they are 

remapping, they have a program, a grandfathering program, that 

allows a homeowner who currently lives in an area and they purchase flood insurance, if they are remapped into a higher-risk area, 

they have the possibility of retaining that lower-risk rate. And according to FEMA, their rationale for this is to balance the issue of 

someone had been living in an area, they had been complying with 

the standards for that particular zone, they are remapped and they 

are faced suddenly with the potential for higher insurance rates 

and allowing them to keep that lower rate. 

So, you know, it creates a new set of subsidized properties, but 

that is the tension that they are trying to balance. 

Chairman DODD. I am going to turn to Senator Shelby right 

away, but I wonder if you might comment—and maybe you did and 

I did not pick up on it in your testimony. Obviously, listening to 

Senator Schumer as well talk about the case in New York on Long 

Island where all of a sudden for the first time they are being 

mapped as being in a floodplain area where there is no—and I am 

relying on his testimony, no historical evidence they have ever had 

any problems, at least not within the historical memory of the community, and all of a sudden being drawn into a map. And I appreciate the fact that FEMA has done a much better job than was the 

previous case in the mapping, and I appreciate very much the work 

they are doing. 

But I often get the impression that what—sort of get both sides 

of this question, sort of hedging in that I get the feeling that FEMA 

is kind of reaching maybe a little further—this is just a general observation on my part—to put areas more in a floodplain area to reduce the cost, increase the obligation of the homeowner in that 

area to pick up the cost. The other side, of course, wants just the 

opposite to happen in a sense. There seems to be a calling for some 

neutral observers here to help draw these maps in some ways so 

you can sort of at least have an opportunity to have some debate, 

because it is not a perfect science in these maps. 
15 

Do you have any comment on that? 

Ms. WILLIAMS BROWN. The only comment that I can make is that 

in 2004, GAO looked at the mapping process and found issues at 

that time with the mapping process. FEMA did a midcourse adjustment so they really focused on true remapping and not just updating and digitizing outdated maps. 

We are currently in the process of looking at the status of the 

map modernization effort, specifically looking at the quality of the 

maps that are being used, and also looking at the community outreach effort. 

One issue based on our previous work, the remapping process 

really relies on a partnership between FEMA and the communities, 

and the communities have a role in some ways in driving the quality of the information that is collected that goes into the remapped 

areas. And one of the points that FEMA has made historically is 

that communities that invest lots of money in maps and good technology—North Carolina is one example—they tend to produce higher-quality topography information, and that is a key piece of information that goes into the mapping process. 

So, you know, it is definitely a challenge, and as you say, it is 

that tension of communities do not want to be mapped into higher 

areas. And FEMA is looking for trying to make sure that they are 

capturing maps that accurately reflect the—— 

Chairman DODD. Well, it might be helpful—because I can just 

see this—Jim Bunning and I will be leaving, but I can see this is 

a growing issue. 

Ms. WILLIAMS BROWN. Absolutely. 

Chairman DODD. And you do not have to have a Ph.D. in political science to know that if you end up with what I would call the 

perfect storm of members coming here on behalf of their communities, just as Senator Schumer did on behalf of his and Senator 

Durbin on behalf of his, any effort to try and deal with this is going 

to collapse. And so we better understand this issue and get around 

it or figure out a way to resolve it in ways that do not end up sort 

of delaying what we must confront, and that is having a National 

Flood Insurance Program. 

I do not expect this to be—it is not your job. 

Ms. WILLIAMS BROWN. Absolutely. 

Chairman DODD. I am using your presence here to make that 

point. 

Senator Shelby. 

Senator SHELBY. Thank you, Mr. Chairman. 

I want to pick up on Senator Dodd’s area of questions dealing 

with mapping. It seems to me that mapping is the key to an overall 

sound actuarial program. Without proper mapping and updated 

maps, where is the program going? Do you have a comment? 

Ms. WILLIAMS BROWN. I would agree mapping is key. It is critical 

to the rate-setting process. They need accurate maps to appropriately determine risks to the program and set rates accordingly. 

So mapping is key. 

Senator SHELBY. But isn’t there evidence of what areas are subject to flooding? You know, historically, they have got maps on all 

this. Maybe they are not up-to-date, but there is evidence of where 

the tide comes in, you know, where it goes out, rivers, hurricane, 
16 

whether it is on the east coast or it is on the gulf coast. There is 

data there if you can put it all together, and it looks like with all 

of the software that we have today, that that could be put together 

if there is the political will to do it. 

Ms. WILLIAMS BROWN. I think, you know, the data is key, and 

coming up with really good topographic information to go into the 

mapping process is key. And the other challenge is the topography 

is constantly changing. Areas are being developed, erosion is taking 

place. So the mapping process really becomes a never-ending process. Maps are going to have to constantly be revisited and reevaluated. 

Senator SHELBY. Well, once you get the basic mapping process up 

to speed—you know, we know things more than evolve. They 

change fast. But it would be a lot easier to build on layers of what 

you have. But we are not there yet, are we? 

Ms. WILLIAMS BROWN. In terms of where they are with the mapping, I would say that the map modernization process is still very 

much underway in terms of where FEMA is. I think the current 

statistics that we have, FEMA tracks their progress generally by 

the percent of population covered and also the miles of streams covered. In our report on rate setting that we issued in 2009, we 

tracked the amount by effective maps that are in place, and I think 

as of 2008, 4 percent were effective maps, and the 90-plus percent 

really reflected maps that were in some stage of the process, but 

not finalized. 

Senator SHELBY. But on mapping, in the area of mapping, would 

you say, again, that the key to having a meaningful, substantive, 

actuarially sound Flood Insurance Program, we have got to have 

mapping right? 

Ms. WILLIAMS BROWN. Mapping definitely has to be part of it. 

The mapping has to be right. 

Senator SHELBY. Without the mapping data, the program will always be suspect, to say the least. 

Ms. WILLIAMS BROWN. It raises a question. 

Senator SHELBY. That is right. It is my understanding that the 

National Flood Insurance Program’s goal of fiscal solvency—Senator Dodd alluded to that—is defined as charging premiums that 

will generate enough revenue to cover a historical average loss 

year. How does the NFIP, the National Flood Insurance Program, 

rate-setting policy compare to that of private sector insurers? In 

other words, ma’am, how does the private sector definition of the 

term ‘‘actuarially sound’’ compare with the NFIP’s, the National 

Flood Insurance Program’s construct of generating enough premiums to cover ‘‘a historical average loss year’’? Is there a disconnect here? 

Ms. WILLIAMS BROWN. There is definitely a difference between 

the Flood Insurance Program and how private insurers operate. 

One has to do with the issue of NFIP operating on a cash-flow 

basis. That means that their goal is to bring in enough premiums 

to cover losses on a year-to-year basis, and they do not do any reserving. Private insurers—— 

Senator SHELBY. No reserve for the future? 

Ms. WILLIAMS BROWN. No. And private insurers do not operate 

that way. Reserving is a key based on risk in the future. The Na-
17 

tional Flood Insurance Program also holds onto all of the risk that 

it is exposed to; that is, they do not reinsure. Private insurers commonly hold onto some portion of the risk that they are exposed to, 

but they reinsure the majority of the risks that they face. 

And the other big difference is that the National Flood Insurance 

Program basically takes all comers to their program. So regardless 

of the risk level, if you want to purchase flood insurance and your 

community is participating in the Flood Insurance Program, you 

can get a flood insurance policy. Private insurance companies do 

not do that. They factor in risk, your loss history, and they use that 

information to determine whether or not they will underwrite a 

policy for you. 

Senator SHELBY. Ms. Brown, Ms. Williams Brown, GAO, which 

you represent, highlighted in its ongoing work examining FEMA’s 

management of the National Flood Insurance Program, FEMA does 

not have an effective system to manage flood insurance policy and 

claims data although investing roughly 7 years and $40 million on 

a new system whose development has been halted. 

Why were the investments made in these critical operational systems subsequently halted? Was it because they were not doing the 

job, they were flawed at the outset or what? That is a lot of money 

and a lot of years. 

Ms. WILLIAMS BROWN. Yes. The particular project in question 

was called NextGen, and this particular system was to replace 

their existing data management system. And they basically were 

unable to shut down the old system and rely on the new system. 

There were questions of quality, and there were questions of 

whether or not it actually was performing as intended. 

Senator SHELBY. Ms. Brown, I know the Chairman has been generous with my time here, but to sum it up, would it be fair to say, 

one, this program is broken, it is not actuarially sound? It is not 

going to be actuarially sound unless we do massive reforms starting with mapping and getting into something that is actuarially 

sound. 

Ms. WILLIAMS BROWN. Based on the work that we have ongoing, 

we believe that, yes, the program needs to face some structural 

overhaul. In terms of the operations of the program, there are significant improvements that need to be made, and we do acknowledge that FEMA, you know, in the 5 years that I have been working on it, I am for the first time seeing an acknowledgment that 

there are significant improvements that need to be made in the operation and management of the program. 

Senator SHELBY. One last comment, if you would, Mr. Chairman. 

Some of my colleagues want to add wind damage to all of this. 

Have you seen some actuarial studies on what that could possibly 

cost the taxpayer? 

Ms. WILLIAMS BROWN. We looked at the implications of adding 

wind to this program, and we found that there would be—that 

FEMA would face significant challenges given the current condition 

of the Flood Program. 

Senator SHELBY. An astronomical problem. 

Ms. WILLIAMS BROWN. Potentially. 

Senator SHELBY. Sure. Thank you, Mr. Chairman. 

Chairman DODD. Thank you very much. 
18 

Senator Tester. 

Senator TESTER. Thank you, Mr. Chairman and Ranking Member Shelby. I am going to kind of follow on some of the same lines 

here. 

The GAO has been really focused on the integrity of the National 

Flood Insurance Program. An integral component, as Senator Shelby has pointed out, is the accuracy and validity of the maps. In 

Montana, because the Army Corps has said they are not going to 

certify anymore, we have got some experience that FEMA and our 

Army Corps are not always on the same page, specifically as it results to the areas behind the levees. Have you examined ways for 

FEMA and the Army Corps to be able to work together better? 

Ms. WILLIAMS BROWN. On this specific issue, no. 

We have looked at other mitigation programs and have recommended that there be better interagency coordination. GAO has 

been mandated to do a study looking at an interagency task force 

that was supposed to be set up earlier this year. That includes 

FEMA, the Army Corps and USGS, to specifically deal with communities’ challenges involving levees, and we are supposed to then 

go in and look at how that process is functioning and report on that 

on a periodic basis. 

Senator TESTER. OK. Would that oversight look into—what do I 

want to say—the standards of which FEMA is requiring levees to 

be versus the standards by which Army Corps is, and determining 

if they are the same? 

Ms. WILLIAMS BROWN. We have not started that body of work, 

but I would imagine yes. 

Senator TESTER. OK. You talked a little bit in your previous answer about communities. Have you been able to determine whether 

FEMA has worked with communities to help mitigate the economic 

impact of the new maps? 

Let me give an example. A town by the name of Miles City, 

southeastern Montana, was a third in a floodplain. The maps came 

back, and now two-thirds of the town is in a floodplain. That is a 

big hit, as other people have mentioned here this morning. 

Have you been able to work with FEMA on ways to mitigate, 

and, if you have, what recommendations have you given them? 

Ms. WILLIAMS BROWN. Well, the work that we currently have 

going on, looking at the mapping, one specific objective deals with 

outreach to the communities, but one program that FEMA currently put in place to try to deal with some of the economic impacts 

of being remapped is the grandfathering program. And we have 

looked at the grandfathering program, and the recommendation 

that we have made did not deal with how FEMA dealt with the 

communities, but it really had to do with how FEMA was managing that program internally in that they were not able to track 

how many communities were actually being grandfathered. 

Senator TESTER. OK. I can give you lots of examples, and you 

know all these things, being in the position you are, but for example, if you are thrown into a floodplain your flood insurance rates 

tend to go through the roof. Is it within your purview or do you 

plan on making recommendations to FEMA in cases like that, how 

they can deal with communities in a way that does not drive families into bankruptcy? 
19 

Ms. WILLIAMS BROWN. The purposes of the grandfathering program is that if you are in the zone that you are in, if you are remapped into a higher risk zone, you are able to maintain that 

lower premium. 

Senator TESTER. For how long? 

Ms. WILLIAMS BROWN. It stays with the property. 

Senator TESTER. Forever? 

Ms. WILLIAMS BROWN. So it does not end, as long as—— 

Senator TESTER. It depends? If the ownership transfers, then it 

would transfer? 

Ms. WILLIAMS BROWN. Yes. 

Senator TESTER. OK. All right, thank you. 

You had spoken in your opening statement about a report that 

you are working on, on the accuracy of FEMA’s flood mapping efforts. 

Ms. WILLIAMS BROWN. Yes. 

Senator TESTER. I think we are all interested in that. Is there 

anything from that analysis you could share with us today? 

Ms. WILLIAMS BROWN. I cannot. It should be issued the end of 

the year. 

Senator TESTER. OK. Last, we talked a little bit about the private sector with Senator Shelby, and I was curious. Is the risk so 

great that the private sector will not touch this, or is there insurance available in the private sector that is affordable, outside of 

this? 

Ms. WILLIAMS BROWN. Generally, the Flood Insurance Program 

is really it when it comes to flood insurance. There is some coverage available for properties that are valued above the $250,000 

limit, and they want excess flood insurance coverage. We did find 

some cases that there is that type of coverage available. 

Senator TESTER. And so you are talking about a basic policy that 

would be covered by NFIP and an additional policy that would be 

covered by the private sector. 

Ms. WILLIAMS BROWN. Correct. 

Senator TESTER. OK. Thank you very much. 

Thank you, Mr. Chairman. 

Chairman DODD. Thank you, Senator. 

Senator Bunning. 

Senator BUNNING. Thank you, Mr. Chairman. 

Ms. Brown, in your testimony, you mentioned several ways in 

which some property owners are subsidizing other property owners 

in the Flood Insurance Program. Can you briefly list the different 

ways in which homeowners in risky areas can avoid paying premiums that truly reflect the actual risk that they have? 

Ms. WILLIAMS BROWN. One would be to be a pre-FIRM property, 

meaning that the house was built—— 

Senator BUNNING. Grandfathered. 

Ms. WILLIAMS BROWN. Grandfathered properties. 

The other would be kind of the new generation of grandfathered 

properties. Those are homeowners who are living in communities, 

they have purchased a flood insurance property, their community 

is remapped into a higher risk zone, and they are able to retain 

that premium. 

Senator BUNNING. For how long? 
20 

Ms. WILLIAMS BROWN. It stays with the property. There is not 

a limit currently. 

Senator BUNNING. That is FEMA’s present recommendations? 

Ms. WILLIAMS BROWN. Well, that is FEMA’s current policy. 

Senator BUNNING. Interpretation? 

Ms. WILLIAMS BROWN. Yes. 

Senator BUNNING. All right. How would you grade the bill the 

Senate passed in the last Congress and the bill that recently 

passed the House in terms of improving the relationships between 

the premium property owners pay and their actual risk? 

Ms. WILLIAMS BROWN. Well, we note—— 

Chairman DODD. I am listening very carefully. Go ahead. 

Senator BUNNING. Yes, I hope so. 

[Laughter.] 

Ms. WILLIAMS BROWN. We note that both of them would address 

the issue of some sort of phase-in for the pre-FIRM, or the originally grandfathered, properties. 

We also have looked at the house version in terms of recommendations that we made and how it would address those. One 

example has to do with properties that are subject to wind and 

flood damage, and this would give FEMA access to the wind file as 

well as the flood file, which is something that we had recommended. 

Senator BUNNING. Are you telling me that GAO would recommend that wind—— 

Ms. WILLIAMS BROWN. No. 

Senator BUNNING. ——and water go together? 

Ms. WILLIAMS BROWN. No, no, no. 

Senator BUNNING. Please do not tell us that. 

Ms. WILLIAMS BROWN. No, no. What we recommended, we looked 

at the issue of wind versus water, post-Katrina, and we found that 

for adjusters that do a flood adjustment they get no information 

about whether or not the private insurance company paid anything 

on a wind claim, and they had no information or access to the information on the possible wind portion. 

Senator BUNNING. Ms. Brown, do you have any indication that 

FEMA has taken seriously GAO’s recommendation to do more detailed risk rating within an area, within a certain area, like Long 

Island? 

Ms. WILLIAMS BROWN. We have made a number of recommendations, and as of our most recent kind of broad-based conversation 

with FEMA we have roughly 30 recommendations that remain 

open. All of our recommendations dealing with rate-setting continue to be open recommendations. 

Senator BUNNING. Somebody already asked you the question 

about actual flood maps, so I will proceed to the next one. Your testimony discussed a growing trend of Write-Your-Own companies 

who managed a flood policy for the Government keeping more and 

more of the claim payments that are supposed to go to property 

owners, despite the fact that the companies bear no risk of loss 

themselves. In your opinion, has FEMA taken this issue seriously 

or made any attempt to ensure that the payment it makes to those 

companies bears a direct relationship to the costs that they are actually incurring? 
21 

Ms. WILLIAMS BROWN. The one area that there has been movement on this issue has to do with the claims portion of what the 

WYOs receive. So this would begin to address the Katrina phenomenon, and that is because of—— 

Senator BUNNING. That was a $22 billion phenomenon. 

Ms. WILLIAMS BROWN. Yes. The high number of claims resulted 

in the WYOs keeping a significant portion of the premiums that 

they collected because it is based on an average of 3.3 percent of 

the claims filed, so that portion. FEMA has changed the formula 

somewhat to hopefully the WYOs do not end up with that huge 

windfall if there is a catastrophic flood event. 

But the other portion of the expense that the WYOs are reimbursed for is roughly 30 percent; that still remains in effect. So 

they still have the 30 percent, and they get another portion on top 

of that, as well as a possible bonus. And we have also made recommendations that they reevaluate their bonus program. 

Senator BUNNING. FEMA needs to do a little recalculating. 

Ms. WILLIAMS BROWN. Well, yes. And we have suggested that 

they made decisions about how to reimburse the WYOs early on in 

the history of the program, and they have not leveraged the years 

of data that have occurred since then in terms of actual flood-related expenses for the WYOs, in determining how much the WYOs 

need to be reimbursed based on their actual expenses. 

Senator BUNNING. Last question, some of my colleagues up here 

think that we should have a phased-in version over five, possibly, 

Senator Durbin said, 10 years. Five, Senator Schumer, maybe five 

plus five more. In fact, if we do that, if the Congress does it that 

way, you are absolutely correct that this program will fall into an 

abyss and never pay for itself, and the Government will be on the 

hook for more than the 18 plus billion dollars it presently is. 

Unless we can quantify the risk in the areas where the most 

flooding takes place—that all has something to do with mapping— 

we cannot get this program on a sound financial basis. Is that accurate? 

Ms. WILLIAMS BROWN. I would say that addressing the subsidy 

issue is critical to the future solvency of the program. 

Senator BUNNING. Thank you. 

Chairman DODD. Thank you, Senator, very much. 

Ms. Brown, I am going to ask you just to stay at the table. Senator Jack Reed, who is very involved in this issue, is making his 

way over. So rather than excusing you, I will ask you to kind of 

sit here while I invite our other two witnesses to come on up and 

be at the table, and I have introduced them already. 

Welcome to the Committee once again. It is Sally McConkey and 

Nick D’Ambrosia and Stephen Ellis, so if you will join us and if you 

will just maintain a seat up there some place. I thank all of you 

for being with us. 

I think I notice that all of you were sitting here during all of the 

testimony, including from Senator Durbin and Senator Wicker, as 

well as the testimony of Ms. Brown as well. So you have had the 

opportunity to hear sort of the drift. 

And let me also offer to you the same I did the others here. Full 

testimony as well as documentation and other evidence will be included as part of the record. 
22 

I will begin in the order that I have introduced you, Ms. 

McConkey, and so if you could try and limit it to about 5 minutes 

apiece it would be helpful. 

STATEMENT OF SALLY MCCONKEY, VICE CHAIR, ASSOCIATION 

OF FLOODPLAIN MANAGERS 

Ms. MCCONKEY. All right. Thank you. The Association of State 

Floodplain Managers thanks you, Chairman Dodd and the Committee Members for their attention to the need to reauthorize and 

reform the National Flood Insurance Program, and we really appreciate your holding this hearing. 

The Association of State Floodplain Managers and its 29 chapters represent over 14,000 State and local officials, and other professionals, who are engaged in all aspects of floodplain management and hazard mitigation. So we have a real interest in looking 

at the National Flood Insurance Program. 

And I would also like to note that actually I am with the Illinois 

State Water Survey at the University of Illinois, and the program 

that I manage actually creates the maps for the State of Illinois. 

We are under contract with FEMA, and we do the mapping for the 

State of Illinois. 

Today we have been requested to address why the NFIP needs 

to be reauthorized, benefits of the program and what reforms to the 

program are most important for Congress’s consideration. 

As already noted, the Flood Insurance Program was created in 

order to provide flood insurance when there was a gap, that it was 

not being provided by private insurance company. But also it is 

noted there are really three strong tenets to the program: It is the 

identification of the flood-prone areas, it is doing mitigation in 

those areas and it is providing that flood insurance, so that we can 

make sure that people can get their lives back together quicker and 

that we are not spending taxpayer dollars that would have been 

destined for disaster relief. 

But in that same spirit we need to keep in mind that as we reform or look at reforms to the National Flood Insurance Program, 

that these are interdependent, and a change to one piece of the 

program is going to have impacts on others, and we need to look 

at it holistically. 

In a larger, even larger context, the Nation needs to formulate 

a coherent policy to address the Nation’s flood risk management 

that considers policies across agencies and programs. 

The Federal Emergency Management Agency is tasked with 

identifying those flood-prone areas which are shown on the Flood 

Insurance Rate Maps, and because of growing concerns about the 

inaccuracy and currency of those maps, map modernization was 

funded to update the maps and use better technology and new flood 

data. So, not unexpectedly, the areas shown as prone to flooding 

have changed. 

And it should be noted really that the assessments done so far 

have shown that while there are many properties newly shown in 

the flood plain there is almost an equal number of properties no 

longer shown in the flood plain, as the maps are improved and the 

accuracy is better. However, we are seeing few challenges to the 

maps when the floodplains shrink. 
23 

Over the last decade, the failure of levees to perform as expected 

and the resulting catastrophic flooding experienced by so many 

have really brought into sharp focus the degraded condition of our 

levees. And FEMA has had the unenviable position of being the 

bearer of the message, the bad news, when they roll out the new 

floodplain maps. A lot of times what is wrong with the maps is the 

fact that people are upset and do not believe that their levees do 

not provide protection anymore. They are not really challenging the 

actual mapping based on those assumptions. 

While the spotlight is on our national flood risk, it is an opportunity to really examine our entire flood risk management policy 

and take real action to reduce that risk, and it needs a solid foundation that has already been established based on data, based on 

engineering and based on science. But the results of many of these 

technical evaluations that have already been done show areas that 

are going to flood, levees that will fail or be overtopped, and we 

need to pay attention. 

The insurance standard of a 1 percent chance event is not a safety standard, and many of the insurance claims actually are for 

properties that are not in mapped flood hazard areas. 

I will offer this one example to show you how this can play out. 

In 1999, the city of Gulf Port, Illinois, not Mississippi, was successful in getting their levee accredited and shown as providing protection from the 1 percent chance flood. In this Midwestern town of 

about 750 people, nearly everyone dropped their flood insurance. 

Then in 2008, when we had the Mississippi floods, their levee 

failed and the town was inundated. It was more than a 100-year 

flood actually. The town was inundated with over 10 feet of water. 

Only 28 people had flood insurance, and the rest were wiped out. 

It devastated the community and actually the county because of 

the tax base that was lost. The financial consequences were huge. 

They still have not quite recovered. 

Yet, in the local news, people were featured and quotes were 

given with the people saying, FEMA said we did not need flood insurance. That is what people perceived. It certainly was not the 

message that FEMA gave them, but it was how they perceived and 

interpreted the language of the floodplain maps because they were 

not required to have flood insurance. Therefore, they thought they 

would not flood. 

Citizens deserve to know and understand their true flood risk, 

and our national experience shows the true costs of flooding. We 

have lost lives, businesses, communities disrupted and growing 

costs to all taxpayers as has been noted, and we need to equitably 

reduce those risks, not ignore them. 

It is essential that the NFIP stay in place to continue providing 

flood insurance, strengthen mitigation programs and identify those 

flood hazard areas, and we really appreciate the Senate’s action 

this week to reauthorize the program for a year. But we do need 

to go further and creatively rethink the NFIP and look at our flood 

loss reduction policies. 

FEMA has already begun a careful assessment, looking at decades of research, holding listening sessions and self-examination, 

and they will be providing recommendations to Congress on how to 

rethink and redo the NFIP. ASFPM supports providing time for 
24 

FEMA to prepare this assessment and careful consideration of 

their recommendations. 

We support development of more effective incentives for flood 

loss reduction in communities, particularly those that are already 

using higher standards. 

We support clear communication, and we see the need for clear 

communication of flood risk to individuals through improved outreach communication and support FEMA’s new risk map outreach 

and mitigation efforts. Delivery of updated floodplain maps that inform citizenry of hazards should not be delayed. 

We do need creative solutions to address the issues of affordable 

insurance through appropriate mechanisms, such as the meanstested vouchers for low income, at-risk citizens, community—based 

flood insurance policies or levee district flood insurance policies. 

ASFPM supports forgiveness of the debt to restore stability to 

the program but urges Congress to consider either clearly stating 

that the NFIP is not intended to cover catastrophic losses or adjusting the program so that it can handle them. 

We believe the current problems confronting the program offer 

real opportunity to adjust and improve our Nation’s efforts to protect our citizens and their property. 

Thank you very much for this opportunity to testify, and I am 

happy to take questions. 

Chairman DODD. Thank you very much. 

Mr. D’Ambrosia. 

STATEMENT OF J. NICHOLAS D’AMBROSIA, VICE PRESIDENT 

OF TRAINING AND RECRUITING, LONG & FOSTER 

Mr. D’AMBROSIA. Chairman Dodd, good afternoon, Members of 

the Committee. Thank you for inviting me to testify today regarding the reauthorization of the National Flood Insurance Program. 

My name is Nick D’Ambrosia. I have been a realtor since 1973. 

I have held numerous positions throughout the realtor organization. Most recently, I served on NAR’s task force to examine how 

to improve access to affordable property insurance, including insurance for flooding. I, today, testify on behalf of the more than 1.1 

million members of NAR who are engaged in all aspects of the real 

estate industry. 

Since September of 2008, Congress has approved 8 short-term extensions of the NFIP. Twice, it has been allowed to expire for several weeks at a time. 

My message today is very simple. We need to reauthorize and 

strengthen this program for the long term. Anything less will continue to undermine the fragile real estate market. 

About a week from today, on September 30th, NFIP authority is 

set to expire again for the 9th time in 2 years. We are pleased that 

last night the Senate passed Senate Bill 3814 to extend the deadline by 1 year, and 1.1 million realtors thank the Senate and the 

Members of this Committee and you, Mr. Chairman. 

We would urge the House to quickly do the same, so that Congress has time to complete work on the long-term reform bill. This 

month-to-month approach has hindered recovering real estate markets and increased uncertainty for the more than five million taxpayers who depend on the NFIP for basic flood protection. 
25 

While we are beginning to see some signs of stabilization, the 

housing market is in a very precarious position, with sales at 15- 

year lows, excess inventories and numerous foreclosures. Commercial property values have fallen 43 percent across the board since 

2007. Our Nation cannot afford further negative shocks to these 

markets. 

The House has already passed its NFIP reform bill, H.R. 5114, 

which makes some difficult reform choices but also reauthorizes the 

program for a full 5 years. 

As the Committee considers legislation, we would ask that you 

consider the following views regarding NFIP reform: 

NAR supports reforms to strengthen the NFIP’s solvency as part 

of long-term reauthorization. Increasing participation would increase funding for the NFIP, help property owners recover from 

flood losses and decrease Federal assistance when uninsured properties flood and suffer loss. To this end, NAR strongly supports provisions for outreach and education to consumers about the availability and importance of flood insurance. Offering additional coverage for living expenses, business interruption and replacement 

cost of contents would attract new participants. 

Maximum coverage limits for residences, nonresidential properties and contents, which have not been adjusted for inflation 

since 1994, should be updated to reflect today’s property values and 

provide fuller coverage. 

NAR strongly supports extending and fully funding the current 

pilot program to mitigate properties which have repeatedly suffered 

insured flood losses. However, we do continue to have concerns 

about how to phase in rates for pre-FIRM properties without a 

demonstrated history of loss. 

I would like to thank you again for the opportunity to share the 

realtor community views on the importance of the NFIP. NAR 

stands ready to work with Members of this Committee, to develop 

meaningful reforms to the NFIP that will help property owners and 

renters prepare for and recover from future losses resulting from 

floods. 

Chairman DODD. Thank you very much, Mr. D’Ambrosia. 

Mr. D’AMBROSIA. Thank you, sir. 

Chairman DODD. I have just gotten a note by the way from Senator Reed’s staff. He will not be able to make it down. He is going 

to submit some questions for you, Ms. Brown. I know he does want 

to speak to you. 

There is large group of constituents from Rhode Island who are 

in town for the day, from the business community, and I know that 

he and his colleague, Sheldon Whitehouse, are meeting with those 

business people all day. I think he had hoped to get away for a few 

minutes and just could not do so, but he wanted you to know he 

is going to submit some questions for you. As I mentioned earlier, 

Jack Reed has been very involved in this issue. 

So I appreciate your sitting at the table, but you are excused if 

you like. Thank you. 

Mr. Ellis, welcome. 
26 

STATEMENT OF STEPHEN ELLIS, VICE PRESIDENT, 

TAXPAYERS FOR COMMON SENSE 

Mr. ELLIS. Thank you, Chairman Dodd. 

Good afternoon. I am Steve Ellis, Vice President of Taxpayers for 

Common Sense, a national nonpartisan budget watchdog. Thank 

you for inviting me here today to testify on reauthorizing the National Flood Insurance Program. 

TCS is allied with SmarterSafer.org on NFIP reform. This coalition represents a broad set of interests, from American Rivers to 

Americans for Prosperity, from the National Association of Mutual 

Insurance Companies to the National Flood Determination Association. I would like to submit for the record SmarterSafer.org’s principles for NFIP reform. 

Will Rogers observed that if you find yourself in a hole, stop digging. Well, NFIP is $18.8 billion in debt to the taxpayer and has 

annual revenues of $3.1 billion. With that in mind, any reauthorization of NFIP must make significant changes to put it on sounder 

financial footing, not dig a deeper hole with loopholes, new insurance lines or undercutting the program’s ability to charge actuarially sound rates. 

Before NFIP was created in 1968, the Presidential Task Force on 

Federal Flood Control Policy wrote, ‘‘For the Federal Government 

to subsidize low premium disaster insurance or provide insurance 

in which premiums are not proportionate to risk would be to invite 

economic waste of great magnitude.’’ Sounds about right. 

To foster increased participation, the NFIP does not charge truly 

actuarially sound rates. Fiscal solvency is defined as charging premiums that will generate enough revenue to cover a historical average loss year. Catastrophic loss years are largely left out of the 

equation, and shortfalls are met by borrowing from the U.S. Treasury, a significant subsidy in and of itself. 

Twenty percent of insured properties predate a community’s involvement in the NFIP, or Flood Insurance Rate Map, and pay only 

35 to 40 percent of their actual full-risk level premium. Repetitive 

loss properties, as has been mentioned, represent only 1 percent of 

the total number of policies, yet account for up to 30 percent of the 

payouts under the program—like a property owner in Houston, 

Texas that has received 1.6 million in payouts for a house that is 

worth $116,000. We need to help these people out, out of harm’s 

way, and at the same time help the taxpayer who is picking up the 

tab. 

NFIP insurance rates are driven by maps of the Nation’s dynamic floodplains. Areas that were previously less likely to flood 

could now be more likely. Levees that were adequate a decade ago 

may provide far less protection due to poor maintenance or increased flood elevations. The maps must be up to date, accurate 

and based on the best available science. FEMA has been modernizing the maps, and in some cases homeowners are facing steep increases in premiums as we have heard earlier today. 

In response, several lawmakers have introduced legislation to either roll back or delay mapping changes and commensurate rate 

increases. The House included it in their NFIP reauthorization. Absent strong scientific evidence of specific inaccuracies, efforts to 

delay and forestall map revisions must stop. Legislation does not 
27 

alter geology. It may be popular to delay map modernization or 

waive building standards, but what makes good politics generally 

makes bad insurance policy. 

Remember, regular homeowners insurance does not cover floods. 

People deserve to know the costs and the risks of where they live, 

and taxpayers deserve to have those who choose to live in harm’s 

way to pick up part of the tab. A better way to ease any sticker 

shock would be to provide for a relatively short phase-in of actuarial rates or other assistance. 

Besides the mapping issue, there are other efforts that would 

take a backhoe to NFIP’s deep financial hole. One is the addition 

of wind insurance. It simply does not make sense to add a whole 

new business line to the already challenged flood insurance program. 

Another related area is the effort to create a new national catastrophe reinsurance program for State-run reinsurers. Private reinsurance, essentially insurance for insurance companies, is widely 

available. However, some States want the Federal Government to 

subsidize reinsurance rates as well. 

The current NFIP model is clearly not sustainable. The subsidies 

have to be phased out, and the program has to move toward actuarial rates. This would help eliminate the cross subsidies that have 

a few homeowners picking up the tab for properties that have enjoyed subsidized premiums for decades. 

There must be a strong commitment to help communities and 

homeowners to reduce their flood vulnerability, eliminate the problem of repetitive loss properties with elevation and relocation programs, increase the availability of accurate information about flood 

risks and ensure adequate enforcement of program rules. Additionally, NFIP should begin to identify pilot areas that the private sector can begin providing flood insurance. 

Last Congress, the Senate adopted important reforms as well: 

mandated insurance in residual risk areas—those in a natural 

floodplain but protected by a levee, flood wall or dam, like those in 

Gulf Port, Illinois, as was mentioned earlier—also charging rates 

sufficient to create a reserve fund for a higher than predicted loss 

years. 

The shaky foundation on which the flood insurance program was 

based has enormous cracks. Congress and the Administration can 

either create even greater cracks by adding new business lines or 

delaying a shift to actuarial rates and updated flood maps, or remake and strengthen that foundation by putting the program on 

more solid financial footing. 

Thank you very much. 

Chairman DODD. Thank you very much, Mr. Ellis. I appreciate 

that. 

Just to pick up on the wind issue, I have listened to Senator 

Wicker and others come to talk about it. I am sympathetic obviously to what they go through, but I do not think there is anything. 

You see the difficulty we have, even having passed a bill last 

year pretty overwhelmingly, and I think people saw the bill as 

being a pretty good piece of legislation. In fact, we had some pretty 

good amendments that were offered that challenged the very foundation of the legislation. That is the obligation of those who choose 
28 

to live in these areas picking up I think it was a dollar a day. I 

think the average premium was about $360 a year, and there was 

still awful resistance even to that idea. They were not exorbitant 

costs, but it was considered enough to at least provide the coverage 

for people in those areas and reducing the exposure to people who 

live in other parts of the Country that are being asked to subsidize 

people’s choices about where they live. 

Let me ask you all a series of questions here if I can, and then 

I will leave the record open for several days as well, so that additional questions may be offered by my colleagues. I think all of you, 

as I said earlier, were here for hearing Senator Durbin’s and Senator Schumer’s remarks regarding the flood mapping, and again 

you heard Senator Shelby and others raise the issue and conversation with Ms. Brown as well on the topic. She was asked about it. 

And I know, as we have discussed, FEMA has been working on this 

to try and get this right. 

I was thinking as you were testifying. I mean today with all of 

us having MapQuest and Google Earth. It’s frightening what you 

can pull up on your BlackBerry, let alone some high powered computer, to hone in on exactly what is occurring in almost anyone’s 

backyard in the Country. So to me the technology of mapping, it 

seems to be, ought to be fairly sophisticated today and fairly accurate based on what you could overlay and lap and historical records 

and the like. 

Now last Congress, of course, we would have authorized more 

funding for a technical advisory council to improve this even further, the mapping. I wonder what your perspective is. 

You sort of shared some, Ms. McConkey, on this already. I gather 

you felt probably and somewhat disagreed with Senator Durbin 

then, unless I misread what you said. I mean he came to me early 

and talked about the mapping problems as he saw them in southern Illinois. What is your take on that? 

Ms. MCCONKEY. The change in three counties—St. Clair, Monroe, and Madison County are the locations where there has been 

most of the focus of attention because of the levee decertification. 

Chairman DODD. Right. 

Ms. MCCONKEY. And the new study that was actually shown was 

a study done by the Corps of Engineers. People really have not 

challenged the discharges or the elevations that the Corps of Engineers came up with. What they were challenging was they did not 

believe their levees were not going to hold against the flood. The 

challenge was the viability of the levees, not the quality of the engineering work. 

Chairman DODD. Unlike New York where they are challenging 

the engineering and the level of the floodplain. 

Ms. MCCONKEY. Correct. That was the point I was making. 

There is a certain amount of debate about coastal analysis that is 

still a little bit more open than riverine analysis, which is a little 

bit better established. 

Chairman DODD. Well, what do you recommend here? Because, 

again, I can see this is a growing problem as you get the kind of 

political influence coming to bear on the decision making, we delay, 

you know, 1-year extensions, 1-year extensions in a lot of this. I am 

anticipating a lot more interest in this as you get these maps com-
29 

ing forward and communities reacting, picking up the phone and 

calling their Congressman and their Senators and coming before— 

either calling me or others and saying you have got to get a moratorium, we cannot afford to do this. Obviously, they have a pretty 

good case today given the economies of scale. 

I would ask all of you to comment on this. I understand your 

point, Mr. Ellis. I agree with you on this. But I wonder if you have 

any practical suggestions on how we might deal with this? 

Ms. MCCONKEY. One thing that I think that is really important 

to point out was the fact—the cause of the analysis, looking at 

those levees down in the Metro East area, we became aware of a 

real flood risk and a public safety issue. And I think the biggest 

question we have before us is how we can deal with the public safety issue. The affordability of the flood insurance is a separate issue. 

The fact that the maps were going to be going effective got everyone’s attention, and I think that a gradual phase-in—not a 5-year 

moratorium but a gradual phase-in of the flood insurance would 

keep that in the public eye, keep the focus and the pressure on 

dealing with the real problem, which is the degradation of the levees, and allow people to adjust and make decisions over time. It is 

important to get that bill in front of them, but it should be phased 

in. 

Chairman DODD. I should have asked you, by the way, he makes 

the case about how you should be basing these maps on watersheds. Do you agree with that? 

Ms. MCCONKEY. The analysis needs to be done based on watersheds, and it was done on a watershed basis. It was just the timing 

of actually coming out with the digital—with the effective flood insurance rate maps, and that was more the timing of the maps of 

the consequence in terms of the equitability issue on when Illinois 

had to start buying flood insurance versus Mississippi—Missouri. 

Chairman DODD. Let me ask either one of you, do either one of 

you want to comment on these questions I have just raised? Yes, 

Mr. Ellis. 

Mr. ELLIS. Sure. Mr. Chairman, I think that also—I think that 

is exactly it. It was more about the fact that the cost of owning a 

home east of the Mississippi River was going to be higher relative 

to the cost of owning a home west of the Mississippi River, and 

that was some of Senator Durbin’s concern and why he wanted to 

look at it rather than from a scientific point of view, just sort of 

relative economics. Because, clearly, the flood protection, you know, 

the issues there are different. I mean, St. Louis has a flood wall. 

There are levees in East St. Louis. 

But then also I think the other point that I wanted to raise about 

Senator Schumer’s comments about, well, there had never been 

flooding here before, well, geology changes. I mean, we are spending millions of dollars every year pumping sand onto Long Island’s 

beaches to try to forestall erosion. So, clearly, the land changes and 

so there are areas that did not use to flood that are going to flood 

now just because of development and other issues. So the idea that 

it never happened or it did not happen when the Long Island Express came through 70 years ago does not really get to the issue 

of the maps. And I think absolutely there is going to be a lot of 

controversy, I think you are absolutely correct, Mr. Chairman, and 
30 

that it is going to only build as the maps come out. But I think 

that the idea that we would basically wait 10 years before people 

would actually be paying the full freight of where they live is doing 

a disservice to those people, one, because there is an economic issue 

of where they can think about what they can do and mitigate and 

other things, and it really brings to bear some of the underlying 

issues of where people choose to live; but also it is doing a disservice to all of us because we are being stuck with that tab when 

it seems likely that there are going to be several floods in these 

areas, wherever they are in the country in that 10-year period that 

they are not actually paying their way. 

Chairman DODD. Mr. D’Ambrosia. 

Mr. D’AMBROSIA. But the reality—I would just like to address 

what was just said, if I may. The reality of the taxpayers being 

stuck, the taxpayers pay one way or the other. If there is no Flood 

Insurance Program, then the taxpayers end up paying once the disaster occurs. And then there is the taking care of the disaster. So 

it is a hard bullet to dodge. You either address it up front and try 

to get as many people into the program to create the funding necessary to do it, or you are going to pay in the end, anyway. 

Chairman DODD. I was thinking as Mr. Ellis was talking, I recall 

being—having spent a little time in Iowa a couple years ago, the 

Missouri River in Kansas and Iowa, and how the Missouri River 

changed course. And there was the debate over—in fact, I think it 

went to the Supreme Court—as to whether or not the boundary between those two States would change because the river changed 

not long ago. 

Mr. ELLIS. Right. 

Chairman DODD. But you are absolutely right about that. These 

things change all the time. And if Al Gore is right at all, in Kansas 

you could be living on the shoreline. 

Let me go back to the issue of the levees and the flood control 

infrastructure issues, and I wonder if you might elaborate—again, 

Ms. McConkey, let me ask you this as well. Can you elaborate on 

the scope of this problem beyond your Illinois perspective, obviously, and some examples of where this need has been effectively 

addressed or examples of where such infrastructure is falling apart 

that you are aware of besides the one you talked about? 

Ms. MCCONKEY. Well, actually, there is—it is a national issue. 

We are seeing a lot of the levees, particularly in California, that 

have been identified as not meeting standards. There are a number 

of levees in Illinois. There are hundreds of cases. And I am a little 

bit stumbling right now to give you a specific one like the Gulfport 

one, but I would point out that there has been—— through the 

Water Act of 2007, the National Committee on Levee Safety was 

convened, and they are—one of the top things they did was to say 

that we need to have an inventory of the levees that are in the Nation and also an inspection of those levees. And that is ongoing 

right now through the Corps of Engineers. 

The problem is extensive. We could find—there is data on the 

number of provisional letters of accreditation that FEMA issued 

whereby when the maps were being done, if the levee owners 

signed that they believed that the levees would provide protection 

from the 1-percent flood, they thought that they would build to pro-
31 

vide the proper documentation, FEMA would grant them provisional accreditation. Many of the new maps rolled out with that 

provisional accreditation, and FEMA will have numbers on the— 

they had 2 years to provide the data, and there are hundreds of 

levee owners that are not—those letters are coming due. It is time 

for them to show the data, and they are not able to do it, and levees are being de-accredited because the information is not there. 

Chairman DODD. But your association—do you have an independent source of information on this, or are you just relying on 

others? 

Ms. MCCONKEY. On the problem—— 

Chairman DODD. Yes, just an idea of a cross-section of the country. You mentioned California specifically, but do you have other 

information about other States? Or do you have to go to the Corps 

of Engineers for that kind of information? 

Ms. MCCONKEY. We do not have any independent information. 

We would be relying on what the Corps has, and looking—actually, 

I serve on the Review Committee for the National Levee Safety 

Committee, so that is really my source of information. But one 

thing that is important, back to my testimony, is that we do need 

to look at these issues of coordination between the agencies with 

the Corps and with the Federal Emergency Management Agency 

and the USGS so that we have coordinated policies that move us 

toward a safer environment and mitigate our flood risk. 

Chairman DODD. Thank you. 

Mr. D’Ambrosia, you mentioned in your testimony education and 

outreach obviously is an important step for FEMA and the communities to take to make sure their residents are aware of the flood 

risks. Do you have any idea what FEMA is currently doing to support this effort and what it could do to make it better? And who 

in your view, an insurance agent, a real estate agent, mortgage 

broker, Government official, who is the best person to convey that 

kind of information? 

Mr. D’AMBROSIA. Well, what you see currently from FEMA is a 

series of commercials telling people about flood insurance and the 

opportunity that the properties have to flood. As far as getting entities from the housing industry involved, the National Association 

of Realtors itself is willing to go ahead and talk and participate in 

those actions. 

As was said earlier today, 50 percent of the people who are in 

floodplains do not have flood insurance for a variety of reasons, either they—— 

Chairman DODD. How realistic would it be, with all due respect, 

to have a real estate agent be reminding a home buyer of some additional costs they are going to have to take? That is not the kind 

of thing you want to raise with a buyer unless it is mandatory 

where you have certain requirements under law that you have got 

to meet. But assuming this is not being followed to the letter with 

as much as 50 percent of the people who are not complying, how— 

and I say this respectfully. But how likely, if you are trying to 

make a sale and get something done here, you say in the middle 

of that, ‘‘By the way, I forgot to tell you. You are going to owe another 200 bucks or 300 bucks a year for this stuff.’’ 
32 

Mr. D’AMBROSIA. Well, Senator, as you mentioned earlier, I sit 

on the Maryland Real Estate Commission, so we make rules all the 

time that real estate agents have to go out and follow and give disclosures and tell people they have to spend extra money. 

You know, part of it comes down to protecting the public, and the 

reality is that without the flood insurance, you know, as was mentioned earlier by Senator Tester, you know, there are only a couple 

private companies out there—Chubb, Lloyd’s of London, I think 

there are two more—that will go ahead and even address flood insurance with people. And usually they are addressing it with highcost homes and more wealthy people. You know, for the person in 

the middle class who lives in a community such as Chesapeake 

Beach, Maryland, where the homes are smaller and they are old 

and have been there for a while, there is nowhere for those people 

to turn when they want to go ahead. 

So if it comes down to that—since there is a paying, anyway, either by all or by people who are buying in the floodplain, there is 

no—things have to be paid for, and if it has to be put forth to people you need this program, it is going to cost you $200, it is always 

better to spread it out over the group of the people rather than to 

concentrate it on a few. Otherwise, you end up in a situation—— 

Chairman DODD. What do you do in Maryland? What do you tell 

people? What does Maryland require? 

Mr. D’AMBROSIA. Well, in Maryland, it depends on the area 

which you are in. Ocean City, of course, and down through the 

coastal regions. Maryland has more coast than any other part of 

the country. So you have a lot of people that are affected by it. It 

is presented to people. It is not required to be presented, but it is 

presented by those sales people in those various areas. 

Chairman DODD. As a regular matter? 

Mr. D’AMBROSIA. As a regular matter, because usually the mortgage companies that are giving the loans in those areas require it. 

Chairman DODD. Yes. Mr. Ellis, you mentioned that the Flood 

Insurance Program was established with the goal of promoting the 

wise use of floodplains, and obviously you are right in that. And 

you and others have noted that communities continue to develop in 

risky areas. I wonder if you have any more recent examples of development that occurred after the inception of a program that may 

have been unwise to build? I can think of some, but do you have 

some that come to mind in your work? 

Mr. ELLIS. Well, you know, actually, not to pick on Louisiana, 

but the whole area of New Orleans East developed after the creation of the program, and actually you can look at it, it kind of 

shows some of the problems with our whole flood protection, flood 

insurance infrastructure where essentially the Army Corps of Engineers built flood protection out in that area, which then induced 

development behind the levee, which is an area that got completely 

destroyed by Hurricane Katrina. That was all in the 1970s, so after 

the development of—after the Flood Insurance Program was instituted, and it also sort of shows that some of the problems that we 

have is that right now, you know, essentially for years we have 

dumbed down our Nation’s flood protection to the 100-year or the 

1-percent flood, because essentially communities knew that if you 

had a levee that gave you 100-year protection, then you did not 
33 

have to buy flood insurance. And so that was always the target, 

was to get something along those lines, when in reality we recognize that it is far less protection than what communities need, and 

that was why one of the things that I complimented you on on your 

bill from last Congress was this idea that you—mandatory in residual risk areas, the areas like Gulfport, Illinois, purchase flood insurance, and it would be less expensive than if you were actually 

in that floodplain. But you are in the floodplain, you just happen 

to have manmade protection. And I think that you can look along 

the Nation’s coastlines, and you can see all the development that 

has occurred there. That is all the floodplain. I mean, I do not 

think you are going to change that. People like to be near the 

water. It is sort of a human instinct. And so it really is then making sure that people know what their true cost is, not just from an 

economic point of view for the taxpayer, but from a human life 

point of view, people knowing that they are moving into harm’s 

way and some of the issues surrounding that. 

Chairman DODD. Well, I agree, and I am glad you pointed out 

what we did last year in the bill. You understand the political difficulty when all of a sudden the Federal Government starts telling 

local communities how to develop land, let alone State and local. 

I mean, you see those problems. But clearly we need to. There is 

no question about it. It is a great disservice to people, and obviously this runs directly, Mr. D’Ambrosia, in the face of builders, realtors, and others, that the last thing they want is big Government. 

Today we all know what is going on politically in the country. But 

to talk about having—because we all end up paying. Asking some 

taxpayer in Nevada or Idaho—I am using those States somewhere 

in the Midwest—to pick up the cost of people who make choices to 

live elsewhere or communities or States that allow property to get 

developed in areas where clearly they are at risk—I mean, these 

are hard calls, but I do not need to tell you the political mine field 

you enter when you start advocating suggestions like that. We need 

leadership out of the real estate community and others to help step 

up on these matters, or it is just going to get out of control. 

Mr. D’AMBROSIA. Senator, if I may, and I totally agree with what 

you just said. The flood insurance does not really spawn the development. The development is going to happen in one way or another. As Mr. Ellis pointed out, people like living by the water. But 

also at one point in time there was a necessity for people living by 

the water—Baltimore, Boston, where because of shipping and everything else, fishing in Maryland—you mentioned Maryland, the 

fishing industry in Maryland. 

What happens, those properties are already there, they are already developed. They are already in place, and there has to be an 

avenue for those people to be able to transfer those properties 

when the need arises. 

Mr. ELLIS. Mr. Chairman, I would just point out that there is an 

existing program, just to challenge Mr. D’Ambrosia on one little bit 

of this, and that is, the Coastal Barrier Resources Act was created 

in 1982 and then expanded in 1980, and essentially it was something where they would deny flood insurance to undeveloped coastal barrier islands, and they worked with the States to identify 

these. And the Fish and Wildlife Service has done a study and has 
34 

looked at property that is right outside the CBRA unit, the Coastal 

Barrier Resources Act unit, and they went inside. And really the 

key subsidy that drives this sort of—that drives the development, 

because you can still build in these areas. You just cannot get any 

Federal subsidies for building or flood insurance, the Flood Insurance Program. And the Fish and Wildlife Service has documented 

that that is one of the key things in these coastal areas that fuel 

development. And it is really amazing. You can look at some of the 

aerial photos of these barrier islands, and you can basically tell exactly where the line is. The really popular areas still will build. 

People will privately insure. But in many cases it is actually—you 

can see that flood insurance is one of the key drivers or enablers 

of development. 

Chairman DODD. I recall, by the way, you mentioned East New 

Orleans, flying in a helicopter just a few days after Katrina, and 

that whole area, it was just stunning. All you could say to yourself 

was, ‘‘How did that ever get developed?’’ 

Mr. ELLIS. And, Mr. Chairman, actually in the 1970s when the 

Corps first proposed this, because it was all supposed to be in response to Hurricane Betsy, their flood protection, then Congressman Livingston was a freshman, and he was on the Committee 

there, and he basically challenged the Corps, saying, ‘‘Well, why 

are you building levees where people are not in New Orleans 

East’’—because they were not there yet—‘‘instead of building higher and stronger levees where people are, in New Orleans.’’ It was 

really because that was the way that the Corps did their analysis, 

and the economic benefit of developing that basically virgin area 

was a much greater benefit to overcome the cost of the project than 

to actually put higher and better levees in New Orleans. 

Chairman DODD. Interesting. Well, listen, I thank you. You have 

been very informative, very helpful, and enlightening as well. I 

would love to tell you I know what is going to happen here. I get 

uneasy about extended moratoriums and not really addressing 

what we need to address. It is kind of a classic response of Congress these days, kicking the can down the road. But the problems 

do not go away. They only get worse. We have a pretty good idea 

what needs to be done. 

The mapping issue is one that has been raised here, and that is 

going to be around. We have got to address that to some degree. 

And I think having phase-ins, even the grandfathering provisions 

we heard from Ms. Brown will help, I think, to ease some of the 

political pressures against this. But I am not sure we can get the 

kind of 92–6 vote again in the Senate, even with that same bill and 

the same make-up of the place. We might have difficulty getting 

there. But I wish we could get beyond the 1-year extensions. Again, 

I am moving on and leaving, and others will have to pick up this 

issue. But I would like to see if it were not possible—and the 

House-passed bill, would you vote for the House-passed bill, Mr. 

Ellis? 

Mr. ELLIS. No, sir, I would not. 

Chairman DODD. So you do not think we ought to try and do 

that. 

Mr. ELLIS. No. I think that the House bill—it has the 5-year— 

I mean, it has essentially what was proposed here, which is 5 years 
35 

waiting on the maps implementation and 5-year phase-in of the 

cost. And that is just way too long. 

Chairman DODD. And I agree with you, but as a practical matter, 

my concern is that that 5 years, we might look back a year from 

now and say, ‘‘You know something? Offer me the 5-year and I will 

take it now,’’ because I am fearful what I am going to get is a 10- 

year proposal and so forth, as more of the mapping issues come up, 

and others, and we might regret not having grabbed what we could 

grab, and then work it over these next 3 or 4 years. That is where 

the tipping points are politically. I do not like them necessarily, but 

in the world that I have to function in here—and this happens to 

me all the time—I have to find out where the tipping points are 

politically before I can get something done. I am not crazy about 

five. 

Mr. ELLIS. Right. 

Chairman DODD. But if it is the only thing I can get versus 1- 

year extensions, inevitably—— 

Mr. ELLIS. Well, I think that—I mean, the Senate has always 

been sort of the bulwark on this issue, and, you know, certainly I 

think that the one thing that the House did better this time was 

that they did not include wind. 

Chairman DODD. They dropped wind. 

Mr. ELLIS. And so that is the one improvement. But I think that 

working with the Senate, actually having more of their imprint on 

the final product will turn out a much better product than what 

the House got, and hopefully the 1-year extension will continue to 

provide a little bit of pressure—not be ridiculous. I agree the 

month-to-month extensions are ridiculous and do not help anybody 

at all. But the 1-year hopefully gives the new Congress enough 

time to sort of build and to come up with something. 

Chairman DODD. There is an old Gaelic expression, ‘‘From your 

mouth to God’s ears.’’ 

Mr. D’AMBROSIA. Senator, if I may, you know, one of the things 

that I mentioned—and Mr. Ellis is correct—when you have those 

lapses and then it takes time to go ahead and get things approved 

and ramped up, everybody reacts differently. Consumers react differently. They lose confidence. They drop out of the market. They 

lose their loan lock. Lenders react differently. You have some lenders who say, ‘‘Oh, we know Congress is going to reapprove this.’’ 

And other lenders say, ‘‘No, no, we are not going to settlement until 

it is in place.’’ 

So it goes ahead, and it causes literally thousands of settlements 

to either be postpone or canceled. And we all know how fragile the 

market is, and I am sorry I am myopic in my focus on housing. 

Chairman DODD. No, no. It is your job. 

Mr. D’AMBROSIA. Housing does drive a lot of what goes on. 

Chairman DODD. So you would be—where do you come down? If 

I just made you a Senator and you got a vote—— 

Mr. D’AMBROSIA. We would be in favor of—— 

Chairman DODD. You would vote it just to get something going. 

How about you, Ms. McConkey? 

Ms. MCCONKEY. We would not be in favor of the 5-year extension. We would like to see what FEMA is going to come up with 

in the next year on their recommendations for a real rethink of the 
36 

NFIP. There are a lot of issues that have come up since those two 

bills were considered by the Houses, and I think FEMA would be 

the best one to make some good recommendations. 

Chairman DODD. Well, you have got some good Members here. 

As I mentioned, Jack Reed has a strong interest in this subject 

matter. You heard Senator Tester here. These Members will be 

back. Senator Shelby has a strong interest in the legislation as 

well, and Tim Johnson, so I am optimistic that the next Congress 

and this Committee can pick this up and move forward with it. 

I cannot thank you enough, all three of you. Sorry we did not 

have more colleagues here, but in the afternoon there are all sorts 

of things going on up here in the last days before the election 

starts, so we do not have as much participation. But this is a subject matter in which there is a tremendous amount of collegial interest, I can tell you, in the Flood Insurance Program. 

So I thank all three of you. We will leave the record open for a 

few days. 

Mr. ELLIS. Thank you very much. 

Ms. MCCONKEY. Thank you very much. 

Mr. D’AMBROSIA. Thank you. 

Chairman DODD. The Committee will stand adjourned. 

[Whereupon, at 4 p.m., the hearing was adjourned.] 

[Prepared statements, responses to written questions, and additional material supplied for the record follow:] 
37 

PREPARED STATEMENT OF CHAIRMAN CHRISTOPHER J. DODD 

I welcome everyone here today for a hearing on the ‘‘Reauthorization of the National Flood Insurance Program,’’ or NFIP. 

The NFIP is an important program providing a range of benefits to deal with an 

often overlooked, but serious, threat. Floods cause more damage and create more 

economic losses than any other type of natural disaster. While the topic may bring 

Hurricane Katrina’s Gulf Coast devastation to mind, the truth is that floods can 

happen anywhere. Parts of my home State of Connecticut were ravaged by flooding 

this spring. 

Flood insurance provides critical assistance to 5.5 million families and businesses—insurance to help them recover from flood damages and mitigation assistance to help them avoid damages in the future. It also provides a framework of responsible flood plain management, requiring safer, more environmentally sound development that limits Americans’ flood risks. Together, these measures save taxpayer money by limiting the amount of emergency disaster assistance necessary in 

the wake of flood events. 

Despite these many benefits, the program faces serious challenges that threaten 

its ability to carry out its mission. 

Hearings before this Committee in previous Congresses revealed a number of 

issues in need of reform. Perhaps foremost is NFIP’s financial condition, which 

threatens the program’s long-term viability. Due to increased borrowing to pay 

claims for catastrophic disasters in 2005 and 2008, the NFIP faces almost $19 billion in debt to the Treasury, a sum it is unlikely to ever repay. Subsidized rates 

for nearly 25 percent of policy holders do not reflect the actuarially sound rates sufficient to cover expected claims. 

Another key issue is ensuring that citizens and the Federal Government understand their risks. Despite mandatory-purchase requirements for properties in flood 

hazard areas, only about half of all property owners in those areas actually participate in the program, increasing their potential exposure to devastating losses. On 

top of this, until recently, FEMA had been using outdated, paper-based flood maps 

to assess risk. 

These and other concerns caused GAO to place the program on its High-Risk List 

in 2006. 

In the last Congress, Senator Shelby and I worked together on flood insurance 

reform legislation to put the NFIP on a stronger footing for the future. 

That bipartisan, fiscally responsible legislation would have provided comprehensive NFIP reform to address these pressing issues, and would have reauthorized the 

program for 5 years. It would have relieved NFIP’s debt while requiring actuarially 

sound premium rates. We worked with Senator Jack Reed on provisions to strengthen FEMA’s mapping capabilities to inform citizens of their risk and accurately set 

premium pricing. 

In recent years we have heard a number of proposals to improve insurance options and delivery for so-called ‘‘multiperil’’ events—such as those involving both 

wind and water, for example, and for lowering the cost of insuring against catastrophic natural disasters. Our legislation also called for the creation of a National 

Commission on Natural Catastrophe Risk Management and Insurance to provide expert recommendations to the Congress on these complex topics. 

In 2008, the Senate adopted this bipartisan legislation by an overwhelming 92– 

6 vote. Unfortunately, we did not reach agreement with the House. Since that time, 

the program has been operating under a series of shorter-term extensions. 

While our comprehensive reauthorization discussions continue, I have been working with my colleagues to ensure that the program remains in force. Last night, the 

Senate approved a 1-year extension of the NFIP. A multiyear reform bill is preferable to an extension. However, such an extension will, in my view, provide necessary program and market stability to homeowners, lenders, and insurers while 

Congress considers the next steps for the reform of the NFIP. 

The purpose of today’s hearing is to return to our discussion of comprehensive 

flood insurance reform. We will hear from distinguished colleagues and experts 

about the status of the NFIP and their prescriptions for reform. 

Before I introduce the panelists, I will turn to Senator Shelby to see if he would 

like to make any opening remarks. 
38 

PREPARED STATEMENT OF SENATOR RICHARD C. SHELBY 

Thank you Chairman Dodd. 

The National Flood Insurance Program remains in serious trouble and is in desperate need of reform. Every aspect of the program must undergo significant revisions. This concern is clearly not partisan, nor is it novel. 

Since early 2006 the GAO has targeted this program as ‘‘high risk’’ because of 

both the massive debt problems plaguing the program and the imbedded structural 

deficiencies. 

During the 109th Congress, this Committee held multiple hearings on ways to improve the Flood Insurance Program. Ultimately, with Chairman Dodd’s leadership, 

this Committee voted unanimously on a piece of legislation that addressed many of 

the program’s core deficiencies. 

For example, the bill immediately eliminated subsidies on vacation homes, businesses, and severe repetitive loss properties, and established a process for the elimination of all subsidies in the future. 

The bill addressed insufficiencies in the current maps by setting forth stringent 

standards that the program must use to complete the map modernization process. 

The bill provided both State and Federal bank regulators with more tools to ensure that homes in a floodplain had the necessary coverage. 

Finally, the legislation created a mandatory reserve fund to provide additional 

funding to help pay future claims without further need to seek contributions from 

the U.S. taxpayer. 

The legislation passed by the Senate during the last Congress is a good starting 

point. There are, however, several other reforms that this Committee must consider. 

First, the GAO is about to complete a number of studies on specific aspects of the 

program, including a thorough examination of the relationship between the program 

and the Write Your Own (WYO) insurance companies. 

We need to have a full understanding of the costs and benefits provided by the 

Write Your Own program. If there is fat in this program, we need to trim it. 

In addition, we need to know more about who is using the flood program to ensure 

that its resources are targeted. The Congressional Budget Office (CBO) has determined that 12 percent of the homes receiving subsidies under the program are 

worth more than $1 million. We need to ensure that the program requires wealthy 

participants to pay their full freight. 

There also has been much attention focused on the mapping for this program. 

The map modernization process has been ongoing within the program for several 

years. These maps are important for two reasons. 

First, they serve as a warning for developers and homeowners about the risk of 

developing or living in a floodplain. 

Second, they ensure that individuals paying into the flood insurance program are 

paying fair prices for coverage. 

Several groups have stated that the program has not given communities the ability to have input in the map making process. 

While I believe that it is important that communities have a voice in this process, 

I am concerned that many who wish to contribute only are attempting to slow down 

the process of modernizing the flood maps. 

Government transparency is crucial, but this process needs to take place rapidly. 

Many of these maps are several decades old and do not accurately outline the costs 

and risks of living within the floodplain. 

Finally, the term ‘‘actuarially sound’’ must be defined in a manner which ensures 

that the premiums cover the costs. 

Once this definition is codified in statute, there will be no question that we intend 

this program must be financially self-sustaining. 

Yesterday, I agreed to allow the program to be extended once again. While there 

needs to be a degree of certainty for policy holders, we are not serving the American 

taxpayer well by continually extending a fundamentally flawed program. 

The National Flood Insurance Program is broken. The sooner we get around to 

fixing it, the better it will be for everyone. 

Thank you Mr. Chairman. 
39 

PREPARED STATEMENT OF SENATOR TIM JOHNSON 

Mr. Chairman, thank you for holding this important hearing regarding the reauthorization of the National Flood Insurance Program (NFIP). 

The goal of the NFIP has always been to enable at-risk property owners in participating communities to purchase insurance as protection against potentially catastrophic flood losses. If such Federal insurance were not available, citizens would 

be exposed to unacceptable risk, and Congress would face ever-escalating requests 

for Federal grants to rebuild uninsured flood-zone properties. Though the NFIP does 

involve costs for the Government and for individuals in flood zones, the program is 

a cheaper alternative to letting flood-zone properties remain uninsured. 

But this program has faced many challenges in recent years, including an expansion in the size of the program, a debt to the Treasury, repetitive lost costs, and 

the reality that the policies may not be priced at their actuarial price. After Hurricane Katrina, this Committee began bipartisan work on legislation to reform and 

reauthorize the NFIP. While the Senate has passed legislation the past two Congresses, differences between with the House and Senate legislation have gone unresolved. Authorization for the NFIP has had to be extended on a short-term basis 

as Congress works to resolve differences over the longer-term reform. 

These short term extensions have led to several temporary terminations of the 

program. These temporary terminations are disruptive, frustrating, and confusing 

to the many people who rely on flood insurance; they also cause uncertainty for 

those Americans trying to buy new homes. They also demonstrate how vital it is 

for Congress to approve a long-term extension and eventual reform of the NFIP, 

which would give certainty to those seeking to purchase flood insurance for their 

homes. I am pleased that last night, the Senate approved an extension for 1 year. 

In addition, I have supported reauthorization and modernization of the NFIP 

many times and continue to be hopeful that long-term reform can be agreed upon 

within the Senate and successfully reconciled with the House of Representatives. 

Now that we have approved a longer-term extension of the NFIP, we can work on 

modernization proposals. While the legislative days are numbered this year, making 

modernization proposals unlikely, I hope my colleagues and I can begin work on a 

modernization proposal that we can take up as soon as possible. 

PREPARED STATEMENT OF SENATOR JIM BUNNING 

Mr. Chairman, thank you for holding this hearing. 

One of my proudest accomplishments in the U.S. Senate was authoring the 2004 

law that reauthorized the National Flood Insurance Program. 

At the time, I chaired this Committee’s Economic Policy Subcommittee. We 

worked in a bipartisan way to improve the program, including incentives for communities and homeowners to mitigate flooding risk when properties have a history 

of serious and repeated flood damage. And we provided long-term certainty for the 

program for property owners, communities, and lenders. 

Thankfully, my bill ensured that the flood insurance program was in place before 

the Katrina disaster hit. Unfortunately, the law I wrote expired in September of 

2008, and since then, Congress has extended the program for only short periods of 

time. 

The program has lapsed twice this year, mainly because Congress could not manage deadlines and short-term extensions were held hostage in bills that were controversial. 

Last night, the Senate passed yet another extension of the flood insurance program, this time through September 30, 2011. If Congress does not complete action 

on it, the program will lapse again next week. 

We simply cannot keep kicking the can down the road. It is not fair to property 

owners or to taxpayers. 

There are several issues with flood insurance that are crying for reform. Many 

people covered by the program are not paying premiums that bear any relationship 

to their actual risk of flood damage, and other property owners and taxpayers are 

subsidizing them. Flood maps need to be updated. The program also owes $18.8 billion to the Treasury, with interest, which is not sustainable. 

The Senate passed a bipartisan reauthorization of the program in the last Congress that would make several improvements, but it died from inaction. 

Reform and long-term renewal of the program is long overdue. I hope this hearing 

moves us closer to a more stable and rational flood insurance program. 

Thank you, Mr. Chairman. 
40 

PREPARED STATEMENT OF SENATOR RICHARD J. DURBIN 

Chairman Dodd, Senator Shelby, and Members of the Banking Committee, thank 

you for this opportunity to testify on the importance of the National Flood Insurance 

Program. 

I would like to limit my testimony to one important issue—FEMA’s flood mapping 

program. This program is well underway in Illinois and has affected thousands of 

homeowners and businesses in my State. 

Metro East 

As you know, FEMA is currently updating outdated floodplain maps across the 

country. 

The Metro East St. Louis area was one of the first areas in the country to undergo 

this floodplain map modernization process. The greater Metro East area is home to 

150,000 people and dozens of historic communities, including East St. Louis, where 

I was born and raised. 

In early 2007, FEMA informed the Illinois levee districts in Metro East that their 

levees were not strong enough to be certified against a 100-year flood event. This 

lack of accreditation by FEMA means that tens of thousands of homeowners will 

soon find themselves living in a floodplain. This floodplain designation will also require these property owners to purchase flood insurance. 

FEMA originally decided to update flood maps on the Illinois side of the river 

only. The Missouri side of the river was not scheduled to undergo the new mapping 

process until well after the Illinois side was completed. 

Mapping on a Watershed Basis 

With your help, language was included in the Fiscal Year 2009 Continuing Appropriations bill that aligned the mapping process for both sides of the Mississippi 

river. 

As the Committee develops its bill to reauthorize reform the flood insurance program, I would encourage you to consider directing FEMA to undertake its mapping 

process on a watershed basis. Floodwaters do not stop at county or State lines and 

FEMA should recognize this by mapping watershed by watershed. 

Mandatory Flood Insurance 

Floodplain designations by FEMA will require homeowners to purchase flood insurance. In Metro East Illinois, up to 30,000 new properties will be affected by this 

requirement. These individuals have lived in the same location for many years outside of a floodplain. 

Current law will require most of these homeowners to purchase flood insurance 

immediately after the new flood maps become effective. This could lead to an additional $2,500 per year on each mortgage. This sudden spike in costs is especially 

problematic for many of my constituents in Illinois who have struggled to make 

ends meet in this economy. 

Phasing in the New Expense 

The House-passed flood insurance reauthorization bill includes a provision that 

would delay the mandatory flood insurance purchase requirement for 5 years in 

areas like Metro East, where new flood maps are being implemented. 

This delay would be followed by a 5-year period where insurance rates would be 

phased in incrementally. This additional time would be especially helpful for places 

like Metro East St. Louis, where the local community has developed an aggressive 

plan to upgrade the levees to ensure protection against a 100 year flood event. 

The three counties affected in Illinois have imposed a sales tax that will generate 

$10 million per year to be used on levee upgrades and improvements. The levee rebuilding project is expected to take 5 years and ultimately deliver protection to the 

businesses and homes behind the levees. 

I encourage you to include the House-passed provision in your version of a Flood 

Insurance Reauthorization bill. This provision will give communities time to fully 

understand the new flood risk shown by these modern flood maps while giving temporary relief to homeowners and businesses. 

Outreach and Education Are Critical 

I would encourage you to delay this mandatory requirement only in special circumstances. Temporarily lifting the flood insurance requirement should only be offered to communities that have done extraordinary outreach to provide flood risk 

information to residents in these newly mapped floodplains. 

Homeowners need to understand they are at risk. Levees do not provide 100 percent protection, and having federally backed flood insurance can help you rebuild 
41 

your home and protect your mortgage if a disaster strikes. Even though flood insurance may not be required, it is important homeowners living in floodplains protect 

themselves with insurance. 

Unfortunately, even though flood insurance is required for everyone with a federally backed mortgage, compliance rates are very low in the Midwest. Recent research has shown only 20 percent of properties in a 100-year flood plain in the Midwest carry national flood insurance policies. 

Something needs to be done encourage these homeowners to protect themselves. 

Extensive outreach combined with offering flood insurance at preferred risk rates 

or lower may incentivize more people to carry flood insurance than even mandating 

the purchase itself. 

Senator Wicker has suggested offering long-term flood insurance policies to increase compliance rates. This is an idea advocated for by many academics and I encourage you to give that proposal consideration too. 

Conclusion 

In summary, as you craft your Committee’s version of flood insurance legislation, 

I encourage you to include language to achieve the following goals: 

• Ensure FEMA updates flood maps on a watershed basis; 

• Delay the effective date for the mandatory purchase of flood insurance for areas 

that have been newly mapped into a floodplain; 

• Phase-in flood insurance rates for newly mapped areas over 5 years. 

• Require FEMA, State, and local governments to undertake extraordinary outreach to homeowners to make sure they understand their risk and the consequences of not carrying flood insurance; and 

• Offer deeply discounted rates to newly mapped properties to increase the number of homeowners carrying flood insurance. 

Thank you for the opportunity to address this Committee about this important 

issue. 

PREPARED STATEMENT OF SENATOR ROGER F. WICKER 

Thank you, Chairman Dodd and Ranking Member Shelby. I appreciate your holding this hearing, and I am grateful for the Committee giving me the opportunity 

to appear today as a witness on the reauthorization of the National Flood Insurance 

Program. 

In this year alone, the National Flood Insurance Program (NFIP) has lapsed three 

times, creating uncertainty and unnecessary problems for property owners who rely 

on the NFIP for flood insurance. These lapses drive up the costs of administering 

the program and delay purchases for properties that require flood insurance prior 

to closing. I am glad that the Senate voted last night by unanimous consent to extend the NFIP through September of next year. However, in talking with Mississippians, it is clear that the NFIP needs to be reauthorized on a long-term basis and 

in a way that addresses some of the unique challenges that residents along coastal 

areas face. 

Although it has been 5 years since Hurricane Katrina made landfall, we are still 

rebuilding on the Mississippi Gulf Coast. The storm may have passed but remnants 

of Katrina remain. One of the greatest examples of Katrina’s lingering effects—and 

one of the biggest impediments to our rebuilding efforts—is the lack of affordable 

insurance. Not only is access to affordable insurance a challenge in Mississippi, but 

it is also a problem from Texas, down to the tip of Florida, and on up through the 

New England coastal States. The affordability and availability of wind insurance is 

crucial in any State where there is coastal exposure. 

Last month, there were many speeches commemorating the anniversary of Hurricane Katrina and the incredible progress that many States have made since the destructive storm hit. The numerous ribbon cutting ceremonies of new businesses, 

homes, and developments demonstrated the remarkable work of the Gulf Coast communities in our efforts to rebuild. As we celebrated this progress and the resilience 

of Mississippians, we also recognized that there is more work that needs to be done 

to better prepare us for another Katrina. One of the best things that Congress could 

do for the Gulf Coast region—not just in my State of Mississippi, but in all of the 

Gulf Coast States—is to resolve the nuances associated with insuring against hurricanes. 

For all practical purposes, private insurance coverage for wind damage is no 

longer available in the Gulf Coast area since the aftermath of Hurricane Katrina. 
42 

Before the storm, the wind peril was typically insured by basic hazard insurance 

policies with the exception of those living on the beach itself. Today, in most of 

coastal Mississippi, individuals have to purchase wind coverage through the Staterun windpool. State windpools were originally designed to be the insurer of last resort. However, in recent years, State windpools have unfortunately become the rule, 

not the exception. 

In 2008, I attempted to address this problem by offering an amendment that 

would have added wind coverage to the National Flood Insurance Program on a voluntary basis. This multiperil insurance concept passed the House of Representatives 

last Congress but failed in the Senate. I understand the arguments on both sides 

of the multiperil debate, but I believe using such an approach would address the 

basic flaw in the current insurance system. And that flaw is this: it takes two kinds 

of insurance to cover a hurricane—flood insurance through the NFIP and very expensive wind insurance through either the windpool or private coverage. 

After Hurricane Katrina, many property owners were forced to go to court to decide who was responsible for the damage, even if they had all the necessary insurance policies. Other property owners had not purchased flood insurance because 

they relied on the Federal flood zone maps. When their property was damaged by 

the storm, the wind insurance adjusters denied claims, ruling that the damage had 

been caused by water alone. 

I recently introduced the Coordination of Wind and Flood Perils Act. This legislation, S. 3672, addresses some of the lessons learned following the wind versus water 

dispute that occurred after Hurricane Katrina. Individuals who had all the appropriate insurance—wind and water policies—were, in many instances, caught in the 

middle and forced to go to court to watch the insurers fight amongst themselves before they could be indemnified for their loss. The legislation I introduced would remove the property owner from this debate and put the burden where it belongs— 

on the insurers. The insurance industry already does this for many other types of 

losses. If there is a dispute, the damages would be split evenly between the insurers 

so the property owner would be compensated in a timely manner. Then, the insurers 

would appear before an arbitration panel, and the panel’s decision would be binding. 

There are a few other lessons learned after Katrina and observations I would 

make about the National Flood Insurance Program: 

1. After Hurricane Katrina, we learned that flood hazard risk in many coastal 

areas of Mississippi, and other parts of the country, was not accurately reflected by FEMA’s flood insurance maps. As a result, property owners outside 

of the flood zones had no NFIP coverage. With only wind insurance coverage, 

these individuals were not properly insured for a hurricane. Since property 

owners rely heavily upon this information, I hope the Congress can continue 

to work with FEMA to ensure these maps are accurately updated for all residents. 

2. FEMA and many banks do a poor job of enforcing the flood insurance requirement. Under the Flood Disaster Protection Act of 1973, the purchase of flood 

insurance is mandatory in flood zones if the consumer is using a federally regulated lender. However, there is a breakdown with the enforcement of this requirement. According to the Congressional Research Service, at least eight 

Federal agencies or Government Sponsored Enterprises are responsible for enforcing this requirement. Recently, the Wharton School of the University of 

Pennsylvania surveyed insurance coverage among property owners impacted by 

a flood in Vermont. The study revealed that 45 percent of the victims of the 

flood who were required to have flood insurance did not purchase it. With regard to private insurance, lenders do a much better job of enforcing insurance 

requirements. If a homeowner stops paying his premium, the bank will purchase homeowners’ insurance for him. However, as clearly documented by the 

Wharton study, regulators and lenders routinely fail to enforce the mandate 

enacted in the Flood Disaster Protection Act. I hope the Committee will further 

investigate this issue and report its findings. 

3. Rates should be actuarially sound and meaningful premium reductions should 

be offered for mitigation improvements. I encourage this Committee to study 

the work done by the Wharton School in this area. These scholars propose linking the NFIP policy to the mortgage, which would create a long-term insurance 

policy tied to the length of the mortgage and to the property itself. Having a 

long-term policy tied to the property is one way to limit NFIP cancellations. 

This proposal also would give meaningful premium reductions for mitigation 

improvements. When property owners know they can save money year after 

year by strengthening their homes above building code requirements, they will 

have a powerful incentive to do so. 
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Another proposal I would encourage this Committee to consider is the Travelers 

Coastal Wind Zone Plan. This proposal would create an independent Federal commission to establish standards for the wind peril in coastal areas. The Travelers’ 

plan allows insurance companies to purchase reinsurance from the Federal Government to cover losses resulting from extreme events. In addition, like the Wharton 

plan, the Travelers’ plan calls for meaningful premium reductions for mitigation improvements. 

Al Goodman, the Mississippi State Floodplain Manager, wrote to me this week 

and reminded me that major flood disasters have often led to changes in the law. 

For example, Hurricane Agnes in 1972 resulted in the Flood Disaster Protection Act 

of 1973; flooding on the Mississippi River in 1993 prompted the National Flood Insurance Reform Act of 1994; and the Flood Insurance Reform Act of 2004 was influenced by Hurricanes Andrew and Isabel. 

Earlier this year, the Sun Herald, a Mississippi Gulf Coast newspaper, wrote in 

an editorial: ‘‘ . . . better protection for all Americans living within harm’s way of 

a hurricane would be Katrina’s greatest legacy.’’ I agree. Five years after Katrina, 

Congress still has an opportunity to make sure affordable wind and water coverage 

can be provided to the millions of Americans in coastal areas of our country. 

Thank you. 
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PREPARED STATEMENT OF ORICE WILLIAMS BROWN 

DIRECTOR OF THE OFFICE OF FINANCIAL MARKETS AND COMMUNITY INVESTMENT, 

GOVERNMENT ACCOUNTABILITY OFFICE

SEPTEMBER 22, 2010 
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1 ASFPM comments at the NFIP listening session appended to this testimony. 

PREPARED STATEMENT OF SALLY MCCONKEY 

VICE CHAIR, ASSOCIATION OF STATE FLOODPLAIN MANAGERS

SEPTEMBER 22, 2010 

The Association of State Floodplain Managers (ASFPM) thanks this Committee, 

Chairman Dodd and Ranking Member Shelby, for your attention to the need to reauthorize and reform the National Flood Insurance Program (NFIP). We very much 

appreciate your holding this hearing and appreciate the opportunity to share our 

thoughts on the current status of the NFIP, challenges the program confronts and 

opportunities to improve our Nation’s efforts to reduce flood-related losses. Unfortunately, the extensive work that went into the Flood Insurance Reform Act, passed 

in different forms in the 110th Congress by both the House and Senate did not result in new public law. Many of the elements of that legislation are still highly relevant and in need of resurrection. Beyond that, some other issues have emerged 

that point to the need for further reform ideas. 

Who We Are 

The Association of State Floodplain Managers, Inc. (ASFPM) and its 29 Chapters 

represent over 14,000 State and local officials and other professionals who are engaged in all aspects of floodplain management and hazard mitigation, including 

management, mapping, engineering, planning, community development, hydrology, 

forecasting, emergency response, water resources, and insurance for flood risk. All 

ASFPM members are concerned with working to reduce our Nation’s flood-related 

losses. Our State and local officials are the Federal Government’s partners in implementing flood mitigation programs and working to achieve effectiveness in meeting 

our shared objectives. Many of our State members are designated by their governors 

to coordinate and implement the National Flood Insurance Program, and many others are involved in the administration and implementation of FEMA’s mitigation 

programs. For more information on the Association, our Web site is: http:// 

www.floods.org. 

Need To Reauthorize and Reform the National Flood Insurance Program 

A reauthorization of 2–3 years is important for the stability of the NFIP and the 

associated predictability is important for lenders, the housing industry, home buyers, policy holders and the Write Your Own (WYO) insurance companies which write 

flood insurance policies in partnership with FEMA. Numerous recent periods of hiatus in the NFIP’s authorization have caused confusion, bureaucratic paperwork 

challenges, legal worries, frustration (which has resulted in one major insurance 

company pulling out of the WYO program) and delayed real estate settlements in 

a difficult period for the housing industry. Reauthorizations of several weeks or 

months do not provide stability, confidence and predictability. 

While a longer period of authorization is clearly needed, many important reform 

ideas will need further evaluation and consideration by the Committee. In the 2 

years since the Senate passed its version of H.R. 3121 in the 110th Congress, a 

number of additional issues have emerged. These, largely involving the status of levees and other infrastructure, the issuance of updated flood insurance risk maps and 

the affordability of flood insurance, lead to reform considerations that go beyond the 

reforms of the earlier legislation and may require reconsideration of some of its provisions. 

ASFPM believes that a 2–3 year reauthorization would provide the needed reliability while allowing time for FEMA to complete its ‘‘Re-Thinking the NFIP’’ 

project, including presentation of legislative options and recommendations to the 

Congress, and for the Committee to consider and act on those recommendations. 

A Comprehensive Review of National Flood Insurance Program Accomplishments and Shortfalls Is Needed for Long Term Reform 

ASFPM applauds the constructive examination of the National Flood Insurance 

Program (NFIP) launched by FEMA Administrator Craig Fugate. Administrator 

Fugate has recognized both the value of the NFIP and the need for a new phase 

of program growth and adaptation to changing circumstances. During a Listening 

Session on the future of the NFIP last November, Mr. Fugate challenged over one 

hundred invited participants to think creatively about the overall value of the NFIP, 

what it was intended to achieve, what is has and has not accomplished, and needed 

changes, both small and large. 1 One example to encourage thinking big was whether or not the private sector could now handle and provide flood insurance. Mr. 

Fugate has subsequently charged a FEMA working group with assembling the rec-
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ommendations, analyzing their merits and feasibility, and then developing substantive recommendations for moving the NFIP forward. The working group will 

evaluate not only the suggestions from the recent and additional Listening Sessions, 

but also the recommendations of a multiyear NFIP Evaluation led by the American 

Institutes for Research, the results of several Government Accountability Office 

Studies, Congressional Research Service studies, and other reports. FEMA expects 

to have a number of substantive additional reform proposals ready for Congressional 

consideration within the next 2 years, when we urge your timely consideration. 

The NFIP Challenges for Growth and Adaptation 

The hurricane seasons of 2004 and 2005 involved catastrophic losses well exceeding the average historical loss year, putting the program in debt to the Treasury. 

The debt now stands at $19.6 billion. Due to two mild loss seasons and a favorable 

refinancing of the debt, the NFIP has been able to repay $589 million and the interest. However, full repayment of the debt is not a reasonable expectation because 

mild loss seasons cannot be expected to continue, the Nation’s flood risk is increasing due to development and more intense storms, the interest on the debt will go 

up, and the annual program income is about $3.2 billion. 

The poor condition of much of the Nation’s infrastructure, including levees, dams 

and other flood control structures, as well as stormwater facilities, has become more 

evident. More accurate flood maps now reflect the unreliable flood protection of levees and the effects of development by showing some areas as now in the 100-year 

flood hazard area (and, conversely, by showing many areas as no longer in the 100- 

year flood hazard areas). It is important to note that approximately as many properties are newly shown as out of a Special Flood Hazard Area (SFHA) as are newly 

shown as in the SHFA. The requirement to purchase flood insurance in areas newly 

shown to be at risk of flooding is highlighting concern about affordability of flood 

insurance. By the same token, if the new maps do not become effective, those property owners now shown out of the SFHA will still be required to purchase flood insurance. 

Reflections and Questions 

The Association of State Floodplain Managers concludes that the NFIP has been 

successful in meeting a number of its original objectives, but less so in reducing 

flood losses in the Nation. The NFIP has, for example, required those living at risk 

to obtain flood insurance, sparing taxpayers from paying many millions of dollars 

in disaster relief, and enabling many citizens to more fully restore their lives to normalcy after a disaster. Additionally, the NFIP has prevented some unwise development and promoted some hazard mitigation through local adoption of floodplain 

management ordinances. On the other hand, too many Americans continue to build 

in at-risk locations, including residual risk areas behind flood control structures and 

high risk coastal areas, and collective flood losses for the Nation continue to increase in real dollars. In the first decade of this century, yearly flood losses have 

increased from $6 billion to $15 billion. 

We recommend that Congress consider clarifying the intended objectives of the 

NFIP so that the program can be evaluated accordingly. For example, should the 

NFIP be expected to accommodate catastrophic losses rather than the average historical loss year? If so, are there realistic, affordable program adaptations that can 

achieve that objective? If not, would it be best to clarify that the program is not 

expected to cover truly catastrophic losses? 

Other questions warrant examination. What adjustments are needed for the program to be a more positive factor in reducing flood losses in the Nation? What adjustments are needed to act on better risk identification through improved maps? 

If the NFIP is to be a significant tool in an integrated flood risk management approach, how should it be altered to better support this objective? ASFPM has endorsed the following concepts: 

• Integrate the NFIP with other Federal flood risk programs, including the disaster relief program, Army Corps of Engineers, Environmental Protection Agency (EPA), and Natural Resources Conservation Service (NRCS). 

• Identify cross-program policy conflicts and inappropriate incentives that increase risk. 

• Build State floodplain management program capability and capacity to work 

with the 21,000 participating local jurisdictions. 

• Delegate the floodplain management and mapping elements of the program to 

qualified States, similar to programs managed by the EPA and Department of 

Transportation. 
87 

• Identify incentives and disincentives for State and local governments to make 

the program more effective, since local decisions determine how much development will be placed at risk of flooding. 

• Evaluate the NFIP-funded mitigation grant programs to determine whether 

they are effectively addressing the most high-risk structures. 

Other questions that need to be addressed include: 

• Should the flood maps better display the flood risk so that communities and 

citizens understand that the flood risk does not stop at the line on a map—and 

that considerable risk exists beyond the ‘‘100-year’’ floodplain? (The average 

home is occupied for more than 100 years, virtually assuring that every home 

in the 100 year flood hazard area will flood in its lifetime.) 

• Should insurance be required in residual risk areas behind levees and below 

dams? 

• Should insurance be required in a broader area, such as the 200-year or 500- 

year floodplain? 

• Should critical infrastructure like hospitals, fire and police stations and water 

supply and treatment plants be regulated based on a larger flood, but one the 

Nation experiences somewhere every year, such as the 500-year floodplain? 

• Should flood insurance policies be long-term (20 years or more) and tied not to 

the owner but to the property, regardless of property transfers? 

• Should some noninsurance means be identified, like flood insurance vouchers, 

to assist lower income property owners and renters with the cost of flood insurance? 

Broad Recommendations 

Flood insurance should gradually move toward being actuarially sound to reflect 

actual risk and enable market-based financial decisions about how much risk-related cost to assume. We recognize that there are affordability problems for some 

citizens currently living in at-risk areas; this is more prevalent in older riverine 

areas than in recently developed coastal areas or some newly developed areas behind levees. The de-accreditation of levees and more accurate flood maps have highlighted the affordability issue. We do not support efforts to delay issuance of flood 

maps, withholding accurate information about flood risk from citizens living and 

working in hazardous areas. We suggest that this issue presents challenges, but 

ones that can lead to constructive new growth and adaptation for the NFIP if done 

correctly. 

To actually reduce flood-related loss of life and property in the Nation, we must 

move toward a true flood risk management framework with the Nation’s policies 

and programs. A comprehensive flood risk management program recognizes that: 

• Managing flood risk is a shared responsibility between individual, private sector, community, State, and Federal Government; 

• Flood risk is not isolated to the 100-year flood hazard area but is rather a continuum of risk that crosses lines on a map; 

• Development and other activity outside the 100-year floodplain but in the watershed impacts flood levels—if we only manage activity in that 100-year floodplain, we miss opportunities to save lives and reduce flood damages and impacts; 

• All structural protection measures will fail or be overtopped at some point by 

some flood event; 

• Managing flood risk requires a mix of measures from avoidance to retreat from 

high risk areas to consideration of structural measures. Selection of only one 

structural measure, such as a levee, leads to severe losses in catastrophic 

events. Levee failure, high storm surge and 500-year events have shown the 

need for a mix of approaches including elevation, insurance, and structures; 

• Flood levels will increase in the future because development increases runoff; 

and storms are intensifying; 

• Flood risk will increase as the natural resources and functions of floodplains are 

altered by development since this destroys the natural system that reduces the 

negative impacts of flooding; 

• Flood risk management includes concepts such as identification of flood risk, 

community planning to steer development away from areas of risk, basing flood 

insurance on actual risk, vigorous promotion and support of hazard mitigation 
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actions, and enabling citizens to better recover from disasters by being insured 

to reduce their financial risk. 

The U.S. Army Corps of Engineers has adopted the comprehensive flood risk management approach in many of its programs at the national level, but for this approach to be successful for the Nation, FEMA must also actively promote the concept and integrate its programs for the NFIP, mitigation and disaster relief internally, and integrate them with programs of the Corps and other agencies that impact flood risk. 

Consider a number of interesting ideas to address the affordability problem. The 

long-term goal should be to eliminate premium subsidies: an insurance program 

with subsidies is not an insurance program. We understand the need to assist low 

income people with insurance premiums for some specified length of time, or better 

yet, to assist them with mitigating their property—upon demonstrated need. A program of flood insurance vouchers to assist with purchase of flood insurance issued 

through a means-tested program could be administered by the Department of Housing and Urban Development. An analysis might show it would be less costly for the 

taxpayer to pay for flood insurance vouchers for low income property owners for a 

limited time rather than have the taxpayer continue to pay disaster costs from the 

Disaster Relief Fund every time that a community floods. This would also support 

more rapid postdisaster restoration and community economic stability because everyone would have flood insurance, which can also be applied toward mitigation of 

their property after a disaster. If short term relief is provided using the NFIP— 

through delayed mandatory purchase of insurance, extension of time when policies 

can carry Preferred Risk rates, or phase-in of actuarial rates; it must be recognized 

that none of these are appropriate long term solutions—somebody in the Nation will 

pick up those costs, mostly the Federal taxpayers. In conjunction with such short 

term relief, FEMA should provide general information about actuarial rates so people see what their true risk is, and at the same time, provide substantial information about mitigation actions and how much each action will reduce actuarial premiums in the future. Group flood insurance could be developed by FEMA for 

mapped flood hazard areas and areas mapped as protected by a levee, allowing a 

group policy to be purchased by the levee district or other local taxing entity for all 

residents of the area, thereby keeping costs down. Remember, the more policies 

there are the lower the premiums everyone pays. 

The Nation must carefully balance the issue of who benefits and who pays for development at risk. There are about 130 million housing units in the U.S. Of that 

about 10 or 11 million are in flood hazard areas. Of those in flood hazard areas, 

roughly half carry flood insurance. This means 90 percent of the population does not 

live in identified Standard Flood Hazard Areas, but continues to pay a large amount 

each year for disaster relief for flooding, rebuilding damaged infrastructure in flood 

areas, and may have to cover the $19 billion debt of the NFIP. Yet those same taxpayers obtain few, if any, of the benefits of that development. This points out the 

need to tie program outcomes of the NFIP to these other programs like disaster relief programs and programs of HUD, DOT, USDA and others. 

Perspectives on the National Flood Insurance Program 

FEMA reports that the NFIP has been self-supporting for 20 years. From 1986– 

2005, prior to Hurricane Katrina, income from policy holders covered claims and all 

operating expenses, including salaries and expenses of the Federal employees who 

administer the NFIP and floodplain management programs. From time to time the 

NFIP exercised its authority to borrow from the U.S. Treasury when claims exceeded short-term income. Importantly, the program was praised for its ability to repay 

debts ahead of schedule and with interest. This would seem to be the way Congress 

intended the program to function. The original framers did not require the NFIP 

to set rates for truly catastrophic flooding associated with extreme events like Hurricane Katrina, or to have reserves to cover the fiscal impact such events would 

have on the program. A significant, often unrecognized, and difficult to measure 

benefit of the NFIP is the number of decisions people have made to build on higher 

ground and the damage that doesn’t occur because buildings have been built to resist flood damage. Perhaps the original framers considered it reasonable that taxpayers contribute to payment of claims after extreme events that exceed the NFIP’s 

capacity to pay as part of the bargain for long-term overall improvement in the way 

we manage flood losses—perhaps Congress could clarify this. 

The NFIP has multiple goals, and providing flood insurance in order to minimize 

direct Government subsidy of flood damage is one of the goals. The consequence of 

having fewer people insured against known risks would likely be greater reliance 

on taxpayer funded disaster assistance and casualty loss tax deductions. Striking 

the balance between a fiscally sound NFIP while having premiums that are afford-
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able—but that do not reward or encourage development in high flood risk areas— 

is the challenge now facing Congress and the Nation. 

The National Flood Insurance Program is now 42 years old. It was created in 

1968 by the Congress following several major studies in the 1950s and 60s, after 

which studies concluded that the private sector did not offer insurance coverage for 

flood because only those who had actually flooded would buy policies, contrary to 

a normal insurance model which assumes a broad spreading of risk to cover losses. 

The lack of information showing which properties were likely to flood added to the 

private sector dilemma, which is less of a challenge now that FEMA produces flood 

maps for 21,000 communities. The concepts embodied in the NFIP were designed 

with the idea it would save the taxpayers’ money in disaster relief by requiring 

those living in at-risk locations to pay something to cover their own risk, and to enable them to more fully recover from flood damage than they could with only disaster relief. The assumption was that this would reduce flood losses over time by 

requiring local regulation of development in flood hazard areas as communities voluntarily agreed to participate in the program in order to make flood insurance available to community residents and businesses. 

The NFIP has gone through various stages of growth and adaptation involving 

more, then less, then again more involvement with private insurance companies and 

agents. After its first 5 years, Congress added mandatory purchase of flood insurance in identified flood hazard areas. By 1979, the program moved from the Department of Housing and Urban Development (HUD) to the newly established Federal 

Emergency Management Agency (FEMA). Initially some 70 percent of insured properties had discounted policies because they were ‘‘grandfathered’’ since they were 

built before the flood hazard area was identified. Now about 23 percent of insured 

properties have these discounted rates. Many newly developed properties have been 

built either in safer locations outside the 100-year floodplain or built to NFIP standards (elevated to the 100-year flood level) to mitigate possible flood losses. 

During the 1980s, the goal of making the program self-supporting for the average 

historical loss year was achieved, but the premiums did not provide sufficient income to develop and maintain accurate flood maps for 21,000 communities. There 

were no Congressional appropriations for the program from 1986 until 2003, when 

it was agreed the Nation needed a major map modernization effort requiring appropriated funds. Most of the Nation’s flood maps were found to be 10 to 20 years old, 

not reflective of massive watershed and floodplain development, and therefore not 

accurately representative of actual flood hazards. 

A major report following the Midwest floods of 1993 found that only 10–15 percent 

of damaged properties had flood insurance. This led to another set of improvements 

in the National Flood Insurance Reform Act of 1994, including stricter compliance 

requirements for lenders and new means of encouraging and supporting mitigation 

through the Increased Cost of Compliance insurance coverage, establishment of the 

Flood Mitigation Assistance program and authorization of the Community Rating 

System to make lower premiums available in communities taking significant steps 

beyond national minimum approaches to mitigate risk. The Flood Insurance Reform 

Act of 2004 Act made a number of improvements to insurance agent training and 

consumer provisions, and enhanced and developed programs to address the problem 

of repetitive flood losses. 

Brief Observations on the Previous Senate-Passed Bill 

There are a number of provisions in the flood insurance reform bill passed by the 

Senate in May, 2008 that ASFPM finds helpful and would hope to see included in 

a future reform measure. As noted elsewhere in this testimony, we would recommend that a few provisions of that bill receive further evaluation and perhaps, 

adjustment. Those would include the provision for a 5 year reauthorization, the provision for inclusion of catastrophic loss years in the calculation of average loss years 

and the provision for a catastrophe reserve We would prefer to see a 2–3 year reauthorization and we recommend that the Committee give further consideration to 

whether or not the NFIP should provide coverage of catastrophic losses. 

We appreciate the following provisions in the earlier legislation: (not an all-inclusive list) 

• forgiveness of the current debt to the Treasury 

• increase in cap on annual premium increases to 15 percent 

• phase out of subsidies (discounts) for nonresidential and nonprimary residence 

pre-FIRM structures and also for severe repetitive loss properties where flood 

losses have exceeded property value 
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• substantial section authorizing ongoing mapping program to include additional 

risk information and mapping of areas behind levees, below dams and in the 

500 year floodplain 

• provision for an Office of the Flood Insurance Advocate, but only if a national 

office, thus restricting the establishment of offices in FEMA Regional offices and 

temporary local offices to situations following a flood event 

• increased penalties for lender noncompliance 

• escrow of flood insurance payments 

• notification of flood insurance availability outside of SFHAs during real estate 

transactions (the Committee may also wish to consider a requirement that landlords notify tenants of availability of contents insurance) 

Flood Mitigation Assistance Program [Section 1366 of the National Flood Insurance 

Act of 1968 (42 U.S.C. 4104c)] 

• Add ‘‘demolition and rebuilding’’ as an eligible activity; this not only achieves 

consistency with the NFIP-funded Severe Repetitive Loss grant program, but 

gives another option that makes sense in certain situations (areas other than 

high-risk storm surge and floodway areas). Specifically, for some communities, 

acquisition by fee simple acquisition of land and relocation of the residents may 

not be the best solution, but rather mitigation measures that help improve livability and community integrity may be. Elevation-in-place is a feasible measure for many buildings; however, for many older buildings and certain types of 

buildings, it is more feasible or cost-effective to demolish and rebuild a new 

building, as long as sustainability and resilience are assured along with full 

compliance with floodplain requirements and building codes which address fire 

resistance, energy efficiency, and where appropriate, resistance to other hazards 

such as hail, high winds, and seismic forces. 

• Eliminate the limitation on aggregate amount of insurance by striking subsection (f). 

• Specify that the funds for this program (Section 1367) shall be available until 

expended (currently FEMA imposes a 2-year limitation) and that the funds 

shall be made available without offsetting collections through premium rates for 

flood insurance. 

Severe Repetitive Loss Grant Program [Section 1361A (42 U.S.C. 4102A)] 

• Correct an oversight and modify the definition of ‘‘severe repetitive loss property’’ to include nonresidential properties that have received the same number 

and value of claims. Nonresidential properties make up a disproportionately 

large share of all repetitive loss properties and we must be able to pursue mitigation of these high-loss properties in order to more effectively stem the drain 

on the Fund that is associated with properties that receive multiple claims. 

• Delete 1361 A(g)(3)(A) and (B) so that the purchase price offered would be determined only by the either the fair market value immediately before the most 

recent flood event or the current fair market value. It is complicated, confusing, 

and expensive to have to determine the potential purchase price four ways (and 

the purpose of the grant is not to enrich those who unwisely paid more than 

a property’s market value at the time of purchase or who borrowed more than 

the property is worth). 

Grants for Direct Funding of Mitigation Activities for Individual Repetitive Claims 

Properties [Section 1323 of the National Flood Insurance Reform Act of 1968] 

Current NFIP-supported mitigation grant programs provide cost share funds to 

communities—and thus successful projects depend on community participation. 

ASFPM has long supported community-based mitigation; however, we recognize 

that some repetitive loss properties are in communities that may not have the resources to participate. In order to achieve the goal of reducing the repetitive loss 

drain on the National Flood Insurance Fund, we urge the Committee to: 

• Clarify that FEMA has the authority to work directly with certain property 

owners under this specific program, which was authorized at $10 million each 

year. There are many nonresidential properties that have received millions in 

flood insurance claims. Allowing FEMA to selectively encourage very high-loss 

property owners to consider mitigation will actually implement paragraph (b) 

which calls for prioritizing the worst-case properties to result in the greatest 

savings to the Fund; 
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• Specify that at least two claims shall have been paid in order for a property 

to be eligible; 

• Specify that the funds shall be made available until expended (see, Section 

1310(a)). 

The following also comes from our recommendations on S2284 

Create a New Section To Establish Priorities for NFIP-Funded Mitigation Grant 

Programs. Direct FEMA to develop a mechanism to recognize that mitigation of repetitive loss properties (of which Severe Repetitive Loss properties are a subset), 

and that mitigation by acquisition, are priorities. The former helps reduce the drain 

represented by properties that receive repetitive claims; the latter is the only mitigation activity that permanently avoids future damage, while also providing benefits 

that are difficult if not impossible to quantify. There are examples where FEMA has 

denied funding for homes that have a computed benefit to cost ratio of 0.99. We appreciate that FEMA has been criticized in the past for its policy of approving 

buyouts for homes when the B:C is ‘‘close’’ to 1.0. The required new section would 

fulfill Congressional intent and make implementation easier and more consistent. 

It should also be clarified that mitigation projects that include repetitive loss properties and SRLs are, by definition, in the best interests of the NFIP and therefore 

FEMA should develop a mechanism to recognize this. Report language can suggest 

that FEMA use multipliers applied to the computed benefit-to-cost ratios as proxies. 

Create a new section as follows: 

Sec. 1366A. (a) PRIORITIES FOR MITIGATION ASSISTANCE.—In the administration of the mitigation assistance in Sec. 1323, Sec. 1361A, and Sec. 1366, and notwithstanding the provisions of those sections, the Director shall consider the following to be priorities and in the best interests of the National Flood Insurance 

Fund: 

1. mitigation activities that include repetitive loss structures, as defined in Sec. 

1370(a); and 

2. mitigation activities that include severe repetitive loss structures, as defined 

in Sec. 1361A; and 

3. mitigation activities that include substantially damaged properties, as defined 

in Sec. 1370(a); and 

4. mitigation activities that include acquisition of properties with structures; 

5. mitigation activities that include other such properties as the Director determines are in the best interests of the National Flood Insurance Fund. 

Sec. 1366A. (b) RECOGNIZING PRIORITIES.—The Director shall develop a 

mechanism to recognize explicitly that mitigation activities identified in paragraph 

(a) are priorities. 

Implementation of the Increased Cost of Compliance Coverage as Amended in 

2004. ASFPM urges the Committee to request a report from FEMA on implementation of the changes to Section 1304(b) that were enacted in the Reform Act of 2004. 

This coverage (called ICC) has been part of all policies on buildings in mapped special flood hazard areas since about 1997. Total income associated with premiums for 

ICC greatly exceeds the payments made to qualifying policy holders. 

The Association of State Floodplain Managers appreciates the opportunity to 

share our views, recommendations and concerns with you. We hope these observations, based on our collective experience in working to reduce flood risk in the Nation and in serving as FEMA’s partners in implementing the National Flood Insurance Program, will be helpful as you work to improve the NFIP. We look forward 

to answering any questions you may have and assisting the Committee in any way 

that you find helpful. 
92 
93 
94 
95 

1GAO, ‘‘Information on Proposed Changes to the NFIP’’, Report to Representative Barney 

Frank, Chairman of the House Committee on Financial Services, pp. 18–19. 

PREPARED STATEMENT OF J. NICHOLAS D’AMBROSIA 

VICE PRESIDENT OF TRAINING AND RECRUITING, LONG & FOSTER

SEPTEMBER 22, 2010 

Introduction 

Chairman Dodd, Senator Shelby, and Members of the Committee, on behalf of 

more than 1.1 million REALTORS® who are engaged in all aspects of the residential 

and commercial real estate sectors, thank you for inviting me to testify today regarding reauthorization and reform of the National Flood Insurance Program 

(NFIP). 

My name is Nick D’Ambrosia. A REALTOR® since 1973 and licensed in Maryland, 

Virginia, and the District of Columbia, I am currently Vice President of Training 

and Recruiting for Long & Foster Companies. Long & Foster is the largest independently owned real estate company in the United States operating with 13,000 

sales associates, 2,500 employees and 190 offices across seven States and Washington, DC. I am also Vice Chair of the Maryland Real Estate Commission, where 

I have served as chair and industry member since 2005. For many years, I have 

been active within the National Association of REALTORS® (NAR), holding significant positions at the national and State levels, including President of the Maryland 

Association of REALTORS®, as well as the Prince George’s County Association of 

REALTORS®. I also served as a member of NAR’s Enlarged Leadership Team, Executive Committee, and Board of Directors, as well as numerous NAR standing Committees, task forces and presidential advisory groups. Most recently, I was a member of NAR’s Property Insurance Task Force that was charged with examining how 

access to affordable property insurance for the plethora of natural disasters, including flooding, might be achieved. 

Since September of 2008, Congress has approved eight short-term extensions of 

authority for the NFIP. On two occasions, Congress has allowed authority for the 

program to expire for several weeks at a time. Each time NAR estimates that tens 

of thousands of real estate transactions were delayed if not cancelled. In addition, 

the many shutdowns and short-term extensions have exacerbated uncertainty in 

what are already troubled residential and commercial real estate markets. Earlier 

this year, the House of Representatives passed H.R. 5114, the Flood Insurance Reform Priorities Act, to reauthorize the NFIP for a full 5 years. While this bill makes 

some difficult changes to the program, we would encourage the Senate to take up 

this legislation so that the program may be reauthorized long-term and continue 

writing flood insurance without further market disruption. We also note several efforts underway for a straight year-long NFIP extension, including one to September 

30, 2011, in S. 3607 (Department of Homeland Security Appropriations, FY2011) 

which has been approved by the full Senate Committee. In any event, we would 

urge the Senate not to let the NFIP lapse again which would only further undermine the already fragile confidence in recovering real estate markets. At a minimum, the Senate should pass the year-long extension, as part of must-pass legislation or as a free standing bill. 

The Importance of the NFIP 

In 1968, the Congress established the NFIP because of the lack of available flood 

insurance in the private market and the rising cost of taxpayer-funded disaster relief to flood victims, which, up until that time, had been the only way to pay for 

rebuilding after a flood. Still today, virtually no market exists for flood insurance. 

According to the General Accountability Office (GAO), only four large companies 

provide ‘‘almost all the private flood insurance’’ and only then for owners with ‘‘high 

net worth’’ and properties valued at ‘‘at least $1 million. 1 Most American taxpaying 

families and small business owners would be priced out of what market exists for 

flood insurance were it not for the existence of the NFIP. Without this critical program, most Americans would not have access to a vital protection against loss of 

life and property due to the very real risk of flooding. 

The most common natural disaster in the United States, each year floods are re- sponsible for 140 deaths according to NOAA and on average $6 billion in losses by 

the U.S. Army Corps of Engineers’ estimate. The GAO put it best: 

[B]ecause flooding is so widespread, it presents risks to a large segment of 

the population. For example, we found that between 1980 and 2005, approximately 97 percent of the U.S. population lived in a county that experienced at least one declared flood disaster; about 93 percent lived in counties 
96 

2GAO, ‘‘Natural Hazard Mitigation: Various Mitigation Efforts Exist, but Federal Efforts Do 

Not Provide a Comprehensive Strategic Framework’’, (August 2007), pp. 11–12. 3GAO, ‘‘Natural Disasters: Public Policy Options for Changing the Federal Role in Natural 

Catastrophe Insurance’’, (November 2007), Figure 3. 4Pacific Institute for Research, ‘‘Costs and Consequences of Flooding and the Impact of the 

National Flood Insurance Program’’, (October 2006), p. 28 (hereafter, ‘‘PIR Study’’), p. 36. 5PIR Study. 

6 Ibid., p. 41. 7 CBO, ‘‘Value of Properties in the National Flood Insurance Program,’’ (June 2007), p. 7. 

that had experienced two or more flood disaster declarations; and 45 percent lived in counties that experienced six or more flood disaster declarations. 2

Contrary to critic’s assertions, the NFIP does not represent a cross subsidy from 

the interior of the U.S. to coastal States. While it is true that more than half the 

U.S. population lives within 50 miles of the coast and has access to the NFIP in 

participating communities (as does everyone else in a participating community), everyone benefits from a national flood insurance program. We have appended to this 

testimony a map developed by the GAO presenting the number of flood disaster declarations by county between 1980 and 2005. Areas of the country that have yet to 

experience flooding at a magnitude to warrant a disaster declaration are shown in 

white. As you will note, there is very little white space on the map. Maintaining 

access to affordable flood insurance is, therefore, of critical national interest to the 

whole of the United States, not just its coastal residents. 

By providing flood insurance, the NFIP effectively reduces the amount of Federal 

postdisaster assistance, paid by all taxpayers including those in the interior. For example, of the $88 billion obligated to Gulf Coast States after the 2005 hurricane season, $26 billion went directly to under-insured property owners according to the 

GAO. 3 That is $26 billion in taxpayer-financed rebuilding assistance which would 

not have been necessary had more properties been insured, because then, insurance—and not taxpayer-paid assistance—would have paid for rebuilding those properties. Fortunately, there was an NFIP that was authorized at the time to insure 

approximately half the properties in the floodplains which were in the path of those 

2005 mega-storms. 4 But for the NFIP, the taxpayer-assisted number ($26 billion) 

would have been significantly higher. 

Also, the NFIP reduces flood damage by requiring communities to adopt and enforce strict floodplain management and mitigation regulations as a condition for 

their residents to be able to buy NFIP coverage. Nearly 20,000 communities have 

adopted these rules, averting $16 billion in losses since 2000 alone according to the 

U.S. Department of Homeland Security. Buildings constructed to NFIP standards 

experience 80 percent less damage than those not built to standards. As one program evaluation finds, the NFIP ‘‘has clearly induced savings on flood costs’’ and 

that ‘‘flood insurance has shifted the loss from taxpayers to those who pay the insurance premium.’’ 5 In fact, the NFIP saves taxpayers money as well as property. 

Some have asserted that the NFIP encourages development of ‘‘environmentally 

sensitive areas.’’ Not so. Government-backed insurance is not the deciding factor to 

locate in the floodplain. According to NAR research, neighborhood quality or access 

to parks or beaches is far more likely to drive the decision. Historically, this country 

was built in floodplains along rivers and coastlines. Long before the NFIP was even 

contemplated, New York, New Orleans, Boston, Miami, St. Louis, Pittsburg, Cleveland, Houston, and Washington, DC, were already well established in what today 

FEMA designates as the floodplain. Since then, there have been program reforms 

which prevent development of the most sensitive coastal areas. Under the Coastal 

Barrier Resources Act of 1982, all of these areas are off limits to the NFIP, though 

interestingly, not to privately financed development or insurance. A report released 

in October 2006 that found ‘‘[t]he common belief that the NFIP has stimulated development that increased flood losses is not supported by our findings.’’ 6 Whether 

national flood insurance is available or not, there will continue to be floodplain development; the difference is that the NFIP saves taxpayers money as well as property. 

Others have claimed that the NFIP writes policies in wealthy resort communities, 

but for every policy holder in Hilton Head Island, SC, or Naples, FL, there is one 

in a home on the Red River in North Dakota or a rental property along the Missouri 

River in Iowa. The Congressional Budget Office (CBO) has found no evidence to suggest that the NFIP would cover larger or more luxurious structures, whether inland 

or in a coastal area. 7 Another study on the NFIP found that those in the middleincome brackets were less likely to live in floodplain areas than either of those in 

the highest or lowest income brackets. That study noted that ‘‘low income house-
97 

8PIR Study, p. 43. 

9 Congressional Research Service, ‘‘National Flood Insurance Program: Background, Challenges, and Financial Status’’, (July 2009). 

holds [defined as $10,000–$30,000 per year] live in hazardous areas in order to find 

affordable housing or because they work in water recreation areas and find the least 

expensive housing nearby.’’ 8 If someone is able to afford a multimillion dollar beachfront property or resort development, they are going to look to insurance companies 

willing to write coverage above the $350,000 coverage limits imposed by the NFIP 

(i.e., $250,000/structure and $100,000 for contents). It is the lower and middle class 

families, retirees on fixed incomes and locally owned small-business owners who 

have been priced out of the private market for flood insurance, for which this Federal program is designed. 

NAR Urges Long-term NFIP Reauthorization 

Since September 2008, Congress has adopted eight short-term extensions of statutory authority for the NFIP—all within a few days of the deadline. (This includes 

the current extension to September 30, 2010.) Twice, authority has been allowed to 

expire. Each time, NAR estimates that tens of thousands of real estate transactions 

were either delayed or cancelled. Without flood insurance, federally backed mortgages may not be secured in residential or commercial real estate transactions in 

nearly 20,000 communities across the United States. Because the NFIP did not have 

authority to issue any policies, property owners lost confidence that they would be 

able to renew their existing policy when the time came. While we can quantify the 

cost of delaying real estate closings, the shock to consumer confidence due to the 

many stop-gap extensions is immeasurable. This month-to-month approach has hindered a recovering real estate market and only exacerbated the uncertainty for more 

than five-and-a-half million taxpayers who depend on the NFIP as their main source 

of protection against floods. 

On September 30, 2010, about a week from today, again NFIP authority is set 

to expire. This will be the ninth time in 2 years that the Congress will have to reextend this important program. Recently, the House of Representatives passed H.R. 

5114, the Flood Insurance Reform Priorities Act to reauthorize the NFIP for a full 

5 years. While this bill makes some difficult changes to the program, we would encourage the Senate to take up this legislation so that the program may be reauthorized long-term and continue writing flood insurance without further market disruption. We also note several efforts underway for a straight year-long NFIP extension, 

including one to September 30, 2011, in S. 3607 (Department of Homeland Security 

Appropriations, FY2011) which has been approved by the full Senate Committee. In 

any event, we would urge the Senate not to let the NFIP lapse again which would 

only further undermine the already fragile confidence in recovering real estate markets. At a minimum, the Senate should pass the year-long extension, as part of 

must-pass legislation or as a free standing bill. 

Reforms of the NFIP 

For over four decades, the NFIP has been largely self-supporting, collecting sufficient premiums to cover claims and expenses. In the few years when this was not 

the case, the program was able to pay back the debt with interest according to the 

Congressional Research Service. 9 But then in 2005, Katrina, Wilma, and Rita 

struck and shattered all records including the highest number of Category 5 hurricanes in a season, and the NFIP now owes approximately $19 billion to the U.S. 

Treasury (including the nearly $3 billion for Ike and Midwest floods of 2008). 2005 

was an anomaly. According to the Federal Emergency Management Agency (FEMA), 

which manages the NFIP, this debt is greater than the sum of all previous losses 

since NFIP’s inception in 1968. Accordingly, NAR supports reforms to strengthen 

the program’s long-term fiscal viability. 

At the same time, the housing market continues to be weak as the country recovers from the longest recession since World War II. In the months immediately following the expiration of the homebuyer tax credit, home sales plunged to 15-year 

lows. Below is NAR’s chart of existing home sales. In addition to overall economic 

weakness, including high unemployment, the housing market is plagued by excess 

inventory of distressed properties including foreclosures. While affordability remains 

strong and prices are beginning to show signs of stabilization, the housing market 

is in a precarious position and cannot afford any further negative shocks. 
98 

The commercial real estate market is also struggling amid the greatest liquidity 

crisis since the Great Depression. Due to the economic downturn, commercial property values have fallen 43 percent across the board from their peak in 2007. Often 

it is the owner of America’s small businesses—the very engine of job creation and 

innovation and the backbone of his or her local community—which has suffered 

most. Compounded with nearly $1.4 trillion in commercial real estate loans coming 

due over the next several years, and a very limited capacity to refinance, the sales 

and leasing of commercial properties have been dismal, hindering our Nation’s economic recovery. Failing to reauthorize the NFIP long-term not only exacerbates the 

market uncertainties but also could leave many commercial property owners, many 

of whom are struggling to stay afloat due to high vacancy rates, without access to 

affordable flood insurance. The lack of flood insurance for property owners, in many 

cases, would hold up the sale of commercial properties, further contributing to the 

economic crisis. 

Against this backdrop, NAR would encourage Congress to strike a balance between the following NFIP reforms and real estate affordability, especially for lowerincome homeowners and renters who often live in the Nation’s lower-lying communities: 

Coverage Limits. Additional coverage would attract new NFIP participants. Increasing participation would lead to increased funds for the NFIP, help property 

owners recover from flood losses and decrease future Federal assistance when 

under-insured properties flood and suffer loss. Adding options for living expenses, 

basement improvements, business interruption and the replacement cost of contents 

would help increase protection for home- and small-business owners. Increasing the 

maximum coverage limits for residential properties, nonresidential properties, and 

contents coverage would more accurately reflect increases in property and contents 

values and provide fuller coverage to policy holders. These limits have not been adjusted despite inflation since 1994. 

Education and Outreach. Educating consumers could also increase participation. 

Many consumers may not be aware that flood insurance is available to them or believe that a standard homeowner’s policy would cover flood damage, which is not 

true. Only 50 percent of homeowners in the federally designated floodplain purchase 
99 

10PIR Study, p. 36. 11Multihazard Mitigation Council, ‘‘Natural Hazard Mitigation Saves: An Independent Study 

to Assess the Future Savings from Mitigation Activities, Volume 1—Findings, Conclusions and 

Recommendations’’, National Institute of Building Sciences, Washington, DC. (2005), p. 5. 

flood insurance. 10 NAR would support provisions for outreach, education and information to consumers about the availability and importance of flood insurance. 

Severe Repetitive Loss Properties. NAR strongly supports extending and fully funding the pilot program to mitigate properties which have repeatedly suffered insured 

flood losses. While less than 1 percent of NFIP-backed properties fall into this category, severe repetitive loss properties represent a disproportionate share of payouts 

from—and pose a significant financial burden to—the NFIP. Yet the owners, despite 

repeated losses, have declined a reasonable offer of mitigation funding from FEMA. 

Moreover, research conducted by the Multihazard Mitigation Council of the National 

Institute of Building Sciences has found that each dollar spent on mitigation saves 

society an average of four dollars. 11

Pre-FIRM properties. While NAR strongly supports phasing-in higher rates, proportionate to risk, for properties with a repeated or demonstrated history of loss, 

there is not an equally compelling policy basis to phase-in the rate for all properties 

built prior to the existence of the flood rate maps (pre-FIRM). In the mid-1970s, 

Congress grandfathered these properties in under a rate less than the actuarial (full 

risk) one, because they were built before the flood risk to the community was known 

and could not have retrofitted to NFIP standards immediately or cost effectively. 

Changing the rules in the middle of the game for these property owners would have 

been perceived as unfair and even punitive. 

Unlike the repeated/demonstrated-loss properties, many pre-FIRM properties 

have never filed a claim. Their flood risk has never changed. Yet these owners, who 

have been paying into the NFIP for years, could be expected to immediately pay significantly more under previous legislative proposals. FEMA estimates that if the average pre-FIRM policy were to pay the full actuarial premium, that premium would 

be increased to about two and a half times the current level; some properties could 

see the premium increase more than four-fold. There is a limit to the amount that 

the insurance, or any other expense, may increase before owners are either forced 

to sell their properties, or go without insurance. This would have a particularly severely impact on the cost of home ownership and rents especially in older communities as well as those that rely on tourism. This could lead to additional rounds 

of delinquencies, foreclosures and reduced property tax bases in these communities. 

Rate Structure. Over the years, Congress has considered a range of proposals to 

strengthen the NFIP’s long-term solvency, including increasing the statutory limit 

on the annual rate increase, setting minimum deductibles for claims and phasing 

in actuarial rates on the less than 20 percent that are pre-FIRM properties. While 

we continue to have significant concerns about the affordability of these reforms, we 

would urge the Committee to: 

1. Continue to include comprehensive coverage for all residential and commercial 

properties, including multifamily housing, nonprimary residential and commercial properties; 

2. Spread out any rate increases evenly over the entire base over time so that 

everyone has ample opportunity to adjust to the increases and no one has to 

shoulder the entire increase in a single year. For example, H.R. 5114 (as 

passed by the House) would gradually phase-in the rate over at least a 5-yearperiod that would not begin until 3 years after the date of enactment, rather 

than immediately. In order to preserve the Federal flood insurance program 

into the future, the real estate sector recognizes the need for everyone to shoulder their fair share, even if it means paying a little more; 

3. Separate out multifamily rental properties of 4 or more units from the nonresidential properties and exclude them from the phase-in, due to affordability concerns. For the renter, the apartment or house in which he or she is living is 

the primary residence, but could be considered either a commercial property 

or a nonprimary residence because it is non-owner-occupied. Thus, if the discounted rate were eliminated, tenants would face rent increases that would 

have a dramatic effect on housing affordability, especially in the case of low 

and fixed-income individuals and families; 

4. Not adopt ‘‘back-door’’ or arbitrary rate increases for all NFIP properties, by 

requiring FEMA to recalculate ‘‘average loss year’’ to include catastrophic loss 

years ‘‘in accordance with actuarial principles.’’ By law, rates are already set 

based on actuarial principles (see, 42 USC 4015(b)(2)) so reiterating this does 

not justify the new provision. However, including outlier years in the calcula-
100 

tion of average loss, as this amendment would, will arbitrarily inflate the 

amount a rate would have to cover and therefore the rate itself; and 

5. Study the impact of any rate phase-in on pre-FIRM properties so that the Congress would have a basis to evaluate and adjust the phase-in as necessary. A 

similar study was included in the House passed bill. 

Reserve Fund. We support the concept of establishing a reserve fund to cover the 

higher than average loss years. However, a previous proposal would have required 

FEMA to build up the fund by annually putting in hundreds of millions of dollars 

until an amount numbering in the billions was reached. As a result, the Agency 

would have had to raise rates somewhere in order to meet this annual quota, however it could not have looked to property owners who were already experiencing rate 

increases near the annual limitation. Instead it would have had to look those who 

were voluntarily participating in the program which could undercut future participation. We encourage Congress to ensure that all participants are treated fairly and 

equitably as the reserve fund is created. 

Flood Mapping. Another issue that has been the subject of discussion in recent 

years is requiring the purchase of flood insurance in the 500-year floodplain. Properties in the 500-year floodplain face a less-than-1-percent annual chance of flooding. This idea poses its own set of challenges and concerns from NAR’s perspective, 

and many are similar to concerns faced by the NFIP in administering the current 

program. FEMA has been trying to update the 100-year flood maps, but the process 

itself of digitizing and modernizing is byzantine and slow. Other concerns include 

accurate mapping of the 500-year floodplain, an accurate assessment of the number 

of properties that will be impacted, notification of property owners that they now 

must purchase flood insurance, additional administrative burdens placed on FEMA 

to administer a much larger program, and keeping homes affordable while avoiding 

new and costly insurance requirements. Before imposing this requirement on property owners already hard hit by the recession, NAR would recommend a study to 

assess the costs and impacts of such a new requirement on homeowners and local 

economies. 

Conclusion 

In summary, the NFIP fills a void in the private market for critical insurance protections against flood losses which benefit the Nation as a whole. While the House 

has passed a bill that makes some difficult reforms to the program, it is preferable 

to the current month-to-month stop-gap extension approach which has only undermined confidence and exacerbated uncertainty in recovering real estate markets. We 

would encourage the Senate to take up this legislation so that the program may be 

reauthorized long-term and continue writing flood insurance without further market 

disruption. We also note several efforts underway for a straight year-long NFIP extension, including one to September 30, 2011, in S. 3607 (Department of Homeland 

Security Appropriations, FY2011) which has been approved by the full Senate Committee. In any event, we would urge the Senate not to let the NFIP lapse again 

which would only further undermine the already fragile confidence in recovering 

real estate markets. At a minimum, the Senate should pass the year-long extension, 

as part of must-pass legislation or as a free standing bill. 

Thank you again for the opportunity to share the REALTOR® community’s views 

on the importance of the NFIP. NAR stands ready to work with Members of the 

Committee to develop meaningful reforms to the NFIP that will help protect property owners and renters and help them prepare for and recover from future losses 

resulting from floods. 
101 
102 

1Full list is available at www.smartersafer.org 2Statement of Orice Williams Brown, Director Financial Markets and Community Investment, Government Accountability Office before the Subcommittee on Housing and Community 

Opportunity, Committee on Financial Services, House of Representatives. April 21, 2010. p. 1. 

Available at http://financialservices.house.gov/media/file/hearings/111/brownl4.21.10.pdf 3 Congressional Budget Office. ‘‘The National Flood Insurance Program: Factors Affecting Actuarial Soundness’’, November 2009. p. 1. Available at http://www.cbo.gov/ftpdocs/106xx/ 

doc10620/11-04-FloodInsurance.pdf 4 Congressional Budget Office. ‘‘Preliminary Analysis of the President’s Budget Request for 

FY2011’’, March 5, 2010. Available at http://www.cbo.gov/ftpdocs/112xx/doc11231/ 

frontmatter.shtml. 5P.L. 90-448. 

PREPARED STATEMENT OF STEPHEN ELLIS 

VICE PRESIDENT, TAXPAYERS FOR COMMON SENSE

SEPTEMBER 22, 2010 

Good afternoon, Chairman Dodd, Ranking Member Shelby, Members of the Committee. I am Steve Ellis, Vice President of Taxpayers for Common Sense, a national 

nonpartisan budget watchdog. Thank you for inviting me here today to testify on 

reauthorizing the National Flood Insurance Program (NFIP). 

Taxpayers for Common Sense has advocated for reform of the National Flood Insurance Program since our inception 15 years ago. This time is easily divided into 

two sections. The first 10 years our concerns about the program’s subsidies and underlying risk to taxpayers were met with skepticism from many quarters. But after 

the devastating hurricane season of 2005 and with the nearly $20 billion the program is in debt to the treasury, all have recognized NFIP is fundamentally flawed 

and must be reformed. The question is how. 

TCS is allied with SmarterSafer.org, a coalition in favor of environmentally responsible, fiscally sound approaches to natural catastrophe policy that promote public safety. The groups involved represent a broad set of interests, from American 

Rivers to Americans for Prosperity. From the National Association of Mutual Insurance Companies to the National Flood Determination Association. 1 The depth and 

breadth of the coalition of consumer, taxpayer, environmental and insurance industry groups underscores the importance of reforming NFIP. I would like to submit 

for the record SmarterSafer.org’s principles for reform of the National Flood Insurance Program. 

Stop Digging 

Will Rogers’ observation that ‘‘if you find yourself in a hole, stop digging’’ has become a cliche, but it’s hard to come up with one more applicable to the flood insurance program. 

The National Flood Insurance Program is $18.8 billion in debt to the taxpayer 2

and only has annual revenues of $3.1 billion. 3 Even if you exclude interest payments, it would take more than 6 straight years with no claims to pay the debt 

back. Obviously, this isn’t going to happen. With that in mind, any reauthorization 

of the National Flood Insurance Program must make significant changes to put it 

on sounder financial footing, not dig a deeper financial hole with loopholes, new insurance lines, or undercutting the program’s ability to charge actuarially sound 

rates. 

Taxpayers are staring into a budgetary abyss with predicted average deficits of 

$1 trillion a year over the next 10 years; 4 we cannot afford to bail out the flood 

insurance program again and again. People need to be informed of their flood risk 

and take steps to financially protect their own investments. 

Unintended Consequences 

After years of ad hoc disaster aid being meted out by Congress, the National 

Flood Insurance Program was established in 1968 to create ‘‘a reasonable method 

of sharing the risk of flood losses through a program of flood insurance which can 

complement and encourage preventative and protective measures.’’ 5 The program 

was to make up for a lack of available flood insurance. But even at that time Congress was warned that it was playing with fire. The Presidential Task Force on Federal Flood Control Policy wrote in 1966: 

A flood insurance program is a tool that should be used expertly or not at 

all. Correctly applied it could promote wise use of flood plains. Incorrectly 

applied, it could exacerbate the whole problem of flood losses. For the Federal Government to subsidize low premium disaster insurance or provide 
103 

6 U.S. Task Force on Federal Flood Control Policy. ‘‘A Unified National Program for Managing 

Flood Losses’’, August 1966. p. 17. http://www.loc.gov/law/find/hearings/floods/floods89- 

465.pdf 7Thomas L. Hayes and D. Andrew Neal. ‘‘Actuarial Rate Review’’, Federal Emergency Management Agency. October 1, 2010. p. 5. 8 Congressional Budget Office. Supra Note 3 at 6. 9Frank, Thomas. ‘‘Huge Losses Put Federal Flood Insurance Program in the Red’’, USA 

Today. August 26, 2010. Available at http://www.usatoday.com/news/nation/2010-08-25-floodinsurancelN.htm 10 Hayes and Neal. Supra Note 6 at 22. 11 Brown. Supra Note 2 at 8. 12Frank. Supra Note 8. 

insurance in which premiums are not proportionate to risk would be to invite economic waste of great magnitude. 6

Well, we know which way that story unfolded. Although subsidies were largely 

envisioned to be limited and short-term, they weren’t. And while the program has 

encouraged standards and construction that help reduce flood risks for participating 

communities, the availability of cheap Federal flood insurance over the last several 

decades made it financially attractive to develop in high risk areas. Along with 

other factors, NFIP helped fuel the coastal development boom that increased the 

program’s risk exposure and losses. 

To foster increased participation, the NFIP does not charge truly actuarially 

sound rates, or increase rates based on previous loss experience. The program’s goal 

of fiscal solvency is defined as charging premiums that will generate enough revenue to cover a historical average loss year. 7 That means catastrophic loss years 

are largely left out of the equation. The program covers any fiscal shortfalls by borrowing from the U.S. Treasury, which is a significant subsidy in itself. 

NFIP’s fiscal solvency is further challenged because properties that predate a 

community’s involvement in the NFIP or the applicable flood insurance rate map 

(whichever is later) enjoy significantly subsidized rates, paying only 35–40 percent 

of their actual full-risk level premium. 8 While the initial thought may be that because of their vulnerability these properties wouldn’t be long for this world, a recent 

analysis by USA Today found 1.2 million buildings receive these discounts. 9 FEMA 

puts the percentage of properties in the NFIP receiving subsidized rates as more 

than 20 percent. 10

Furthermore, properties experiencing repetitive losses make up a disproportionate 

amount of the program costs. A repetitive loss property is one that has had two or 

more claims of $1,000 over 10 years. These properties represent only 1 percent of 

the total number of policies, yet account for up to 30 percent of the cost of claims. 11

Properties like one in Wilkinson, MS, that has flooded 34 times since 1978 and received payments worth nearly 10 times the home’s $70,000 value. Or another property owner in Houston, TX, that has received $1.6 million worth of claims for a 

house worth $116,000. 12 We need to help these people out—out of harm’s way—and 

at the same time help the taxpayer who is picking up the tab. 

Maps Lead the Way 

The NFIP is driven by maps. They determine the veritable alphabet soup of what 

flood zone your structure is in: A, V, X, or variants within each category. There’s 

a map for that. Your property could be in the 100-year floodplain or the 500-year 

floodplain; high-risk storm surge zone or special flood hazard areas. Your property 

could predate the flood insurance rate map (FIRM) or otherwise be eligible for significantly subsidized premiums. The maps are key to the program’s success or failure. They must be up to date, accurate and based on the best available science. This 

is why FEMA’s map modernization program is so critical to the long term fiscal viability of the program. 

The Nation’s floodplains are dynamic. Not just from natural forces, but also the 

impacts of development and topographical changes. Areas that were previously less 

likely to flood could now be more likely. Levees that were adequate to provide 100- 

year protection a decade ago may provide far less due to poor maintenance or increased flood elevations due to increased runoff or new development. 

Since 2003, FEMA has been working to update thousands of flood maps. In addition, levees are being reviewed and in some cases decertified for not meeting the 

required level of protection. According to FEMA, the Nation’s special flood hazard 

areas (SFHA) have grown in size by 7 percent. While this revealed more land and 
104 

13Testimony of Craig Fugate, Administrator, Federal Emergency Management Agency, Department of Homeland Security before the Subcommittee on Housing and Community Opportunity, Committee on Financial Services, House of Representatives. April 21, 2010. p. 4. Available at http://www.house.gov/apps/list/hearing/financialsvcsldem/fugatel4-21-10.pdf 14 H.R. 2555 ‘‘Homeowners Defense Act’’, Section 303(g). 

housing is vulnerable to flooding, other areas are less vulnerable. In fact, the number of housing units in SFHAs has seen a net decrease of 1 percent. 13

Not surprisingly, the map modernization effort has been met with some controversy. In some cases, homeowners are facing steep increases in premiums after 

many years of paying the same rate. While the uproar is understandable, it doesn’t 

change the underlying geology or the risk. In some cases property owners that didn’t 

have to purchase flood insurance under existing law now find themselves required 

to do so. But just because it isn’t popular doesn’t mean it’s not the right thing to 

do. What isn’t the right thing to do is ignoring the realities on the ground—literally—and not requiring flood insurance in these instances. Because it means when 

the inevitable floodwaters appear, the homeowner will not be covered by their regular insurance and the taxpayer will be asked to open up their wallet to bail them 

out. In fact in some cases it makes sense to purchase flood insurance even if you 

are not required to do so. 

It may be politically expedient and popular to delay map modernization or waive 

building standards. But what may make good politics generally makes bad insurance policy—and by extension with Federal flood insurance—bad public policy. People deserve to know the cost and risks of where they live. And taxpayers deserve 

to have those who choose to live in harm’s way pick up part of the tab. 

I’m not here to say that FEMA and their maps are infallible. However, absent 

strong scientific evidence of specific inaccuracies, efforts to delay and forestall map 

revisions must stop. Legislation doesn’t alter geology. But that hasn’t prevented various lawmakers from introducing legislation to either roll back or delay mapping 

changes and commensurate rate increases. The House-passed flood insurance reauthorization bill from this summer would delay mandatory insurance for special flood 

hazard zones and mandate a 5-year phase-in of rates. A better way to ease any 

sticker shock would be to provide for relatively short phase-ins of actuarial rates or 

other assistance. 

Don’t Make Matters Worse 

Besides the mapping issue there are other efforts that would take a backhoe to 

NFIP’s deep financial hole. One is the addition of wind insurance, which was wisely—and soundly—rebuffed by the Senate in 2007. It simply doesn’t make sense to 

add a whole new business line to the already challenged flood insurance program. 

FEMA has no experience in pricing wind insurance, and the flood side has proven 

challenging enough. Besides, there are existing private wind insurance providers. 

Part of the whole rationale behind the creation of the NFIP was a lack of private 

flood insurance providers. I recognize that in the aftermath of Katrina there were 

concerns that in some cases insurance companies categorized wind claims as flood 

claims to avoid payouts. That should be investigated and corrected through appropriate mechanisms. But to use those instances to justify a Federal wind insurance 

program is the tail wagging the dog. 

Another related area is the effort to create a new national catastrophe reinsurance program for State-run reinsurers. Again, this would represent a significant 

Federal expansion into the insurance markets with little justification. Reinsurance—essentially insurance for insurance companies—is widely available and used 

to hedge an insurance company’s risk. However, some States do not want to pay for 

the actual risks, but want the Federal Government to subsidize reinsurance rates 

as well. The legislation to create this program asserts that the program would 

charge actuarially sound rates. 14 This makes little sense. If this program’s rates 

were truly actuarially sound, they would exceed the private market’s rates because 

the program would be forced to sell reinsurance to a very narrow pool of high risk 

States, whereas the private market could distribute the risk worldwide. But, remember, the Federal flood insurance rates are supposed to be actuarially sound as 

well. And we already know what happened there. 

Reform the Program 

Enough about what shouldn’t be done, we all know there are big problems, so 

what should be done to reform the National Flood Insurance Program. 

The current model is clearly not sustainable. The subsidies have to be phased out 

and the program has to move toward actuarial rates. This can be done with a maximum of 20 percent year rate increase for properties paying nonactuarial rates. This 
105 

isn’t just about putting the program on more solid fiscal footing and protecting taxpayers. This is also about fundamental fairness within the flood insurance program 

and eliminating the cross subsidies that has a few properties paying full freight and 

picking up the tab for properties that have enjoyed subsidized premiums for decades. 

There must be a strong commitment to help communities and individuals to reduce their flood vulnerability, including stronger standards for floodplain management and mitigation. Congress should end the problem of repetitive loss properties 

with elevation and relocation programs, increase the availability of accurate information about flood risks, and ensure adequate enforcement of program rules. In too 

many cases it appears that communities or property owners have skirted existing 

rules and rebuilt more than 50 percent of the property while retaining subsidized 

rates. 

More than 40 years have passed since the National Flood Insurance Program was 

created. There have been significant advances in insurance pricing, evaluation of 

risk, mapping and imagery. NFIP should work with the private sector to identify 

areas that the private sector can begin providing flood insurance. This shouldn’t 

leave NFIP holding the bag elsewhere and increasing levels of debt, but it is worth 

examining. 

Finally, last Congress this Committee produced commendable legislation to reauthorize the flood program. In addition to some of the proposals previously mentioned 

this legislation mandated insurance in residual risk areas—those in the natural 

floodplain but protected by a levee, floodwall, or a dam. Citizens of New Orleans 

know all too well that even after a levee is built, the risk remains. The legislation 

also created a reserve fund for higher than predicted loss years and directed NFIP 

to charge rates to establish and maintain a balance equal to 1 percent total potential loss exposure in that fund. These are also important elements of NFIP reform. 

Conclusion 

The National Flood Insurance Program is in trouble and is at a crossroads. The 

shaky foundation on which it was based has enormous cracks. Congress and the Administration can either remake and strengthen that foundation by putting the program on more solid financial footing or create even greater cracks by adding new 

business lines or delaying a shift to actuarial rates and updated flood maps. 
106 

1GAO, FEMA Flood Maps: Some Standards and Processes in Place to Promote Map Accuracy 

and Outreach, but Opportunities Exist to Address Implementation Challenges, GAO-11-17 

(Washington, DC, Dec. 2, 2010). 2Detailed flood studies incorporate greater amounts of data or more precise data into a map 

to provide greater granularity of information, for example, by determining base flood elevations 

within a Special Flood Hazard Area, to reduce uncertainty. In contrast, approximate flood studies generally require less precision in flood hazard data. For example, they are used for areas 

that are less subject to development and do not require the establishment of a regulatory base 

flood elevation. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR REED 

FROM ORICE WILLIAMS BROWN 

Q.1. FEMA Map Modernization Efforts. FEMA has indicated that 

by the end of this fiscal year it expects to have preliminary Flood 

Insurance Rate Maps (FIRMs) issued for 92 percent of the Nation’s 

population. 

Can you describe the quality of the maps being produced by 

FEMA? How can they be improved? How many of its ‘‘updated’’ 

maps are based on new data or modeling; how many are simply 

digital maps based on old data? 

A.1. The precise accuracy of a map is difficult to determine, but as 

we reported in December 2010, the quality of data used in developing a map is an important determinant of the map’s accuracy. 

We reported in our December 2010 report that FEMA lacks a way 

to systematically track, at a national level, the types of topographic 

data or level of project detail used in each study, which limited 

their ability to effectively and comprehensively describe the accuracy of flood maps. 1 Thus, FEMA lacks a basis to comprehensively 

describe the quality of the maps being produced or to readily determine how many of its maps are based on new data or modeling and 

how many are digital maps based on old data. However, to help ensure map accuracy, FEMA has implemented and tracks compliance 

of individual mapping projects with three standards for ensuring 

the quality of data used in developing flood maps: FEMA’s Guidelines and Specifications that define technical requirements, product 

specifications for Flood Hazard Maps and related NFIP products, 

and associated coordination and documentation activities; the 

Floodplain Boundary Standard (FBS) designed to ensure the locations of the predicted horizontal (floodplain boundary) and vertical 

(base flood elevation) lines drawn on flood maps are comparable to 

the topographic data that has been selected for the study area; and 

two of three elements of the New, Validated or Updated Engineering (NVUE) data standard that was established to provide a basis 

for assessing the engineering analysis used to develop flood elevations. 

In our December 2010 report, we made five recommendations designed to help FEMA address challenges in ensuring the accuracy 

of flood maps and enhance FEMA’s independent verification and 

validation (IV&V) audit process. Specifically, we recommended that 

FEMA: 

1. Establish separate measures and collect data needed to assess 

compliance with the Floodplain Boundary Standard for detailed and approximate flood studies, 2

2. Establish uniform guidance for the validation of existing engineering data to help FEMA fully implement the NVUE stand-
107 

3Topographic accuracy is a function of detail and age. Detail is important because detailed 

topography has significantly fewer errors than less detailed alternatives and better accounts for 

hydraulic structures—structures that affect water flow—such as buildings, dykes, river banks, 

and roads. Age is important because topography can change over time due to development and 

ecological factors such as erosion. The topographic data used in mapping studies can have significant variances in age and detail, and thus, accuracy. 

ard and provide a basis for mapping partners to validate flood 

hazard data. 

3. Implement probability sampling during the IV&V audit process to the extent that the benefits outweigh the costs, to ensure that the results are generalizable for decision making; 

4. Transfer IV&V duties back to an independent entity to help 

ensure impartiality; and 

5. Adopt a systematic approach to IV&V data collection, so 

FEMA can better track map quality issues, more easily analyze the data, and adopt a corrective action plan. 

In commenting on the draft report, DHS stated that it concurred 

with our recommendations to enhance its efforts to improve the accuracy of maps and identified actions FEMA had taken or plans to 

implement them. DHS similarly concurred with two of our three 

recommendations to enhance its IV&V audit process and identified 

actions FEMA had taken or plans to implement them. DHS did not 

concur with our recommendation that the Administrator of the 

Federal Emergency Management Agency should transfer IV&V duties back to an independent entity to help ensure impartiality. 

However, we continue to believe that the program management 

contractor’s programmatic responsibilities and involvement prevent 

it from having a clearly independent role in validating and 

verifying the results of flood map production activities, because the 

contractor has a vested interest in overall program performance. 

Therefore, we believe that FEMA should transfer independent 

verification and validation duties back to an independent entity to 

help ensure impartiality. 

Q.2. To what extent have funding limitations and program metrics 

affected map quality? 

A.2. Regarding the effect of funding limitations on map quality, we 

reported in December 2010 that FEMA did not generally provide 

funding for mapping partners to acquire new topographic data 

prior to fiscal year 2010, in an effort to conserve resources and 

share responsibilities, according to FEMA officials. 3 In a study 

commissioned by FEMA and issued in 2009, the National Academies of Sciences concluded that the quality of topographic data is 

the most important factor in determining water surface elevations, 

base flood elevations, and the extent of flooding and, thus, the accuracy of flood maps for riverine areas, which account for approximately 95 percent of FEMA’s flood maps. FEMA officials agreed 

that accurate data are essential and that even the best models cannot produce an accurate flood map with inaccurate inputs, but they 

said there is a point of diminishing returns where the cost of developing highly accurate topographic data outweighs its overall benefit. Historically, studies at all risk levels could have used the U.S. 

Geological Survey (USGS) National Elevation Dataset as the best 

available data, if obtaining better quality data was unaffordable, 
108 

according to FEMA officials. Officials from the Association of State 

Floodplain Managers agreed with this characterization of historical 

mapping efforts and said that cost constraints limit local governments and mapping partners’ ability to collect extensive data, a situation that has resulted, in some cases, in poor map quality. 

FEMA officials acknowledged that affordability issues have been 

the main reason high risk areas may rely on USGS data for their 

study. To address this issue, FEMA officials said they planned to 

provide $80 million in funding in fiscal years 2010 through 2013 

to acquire new topographic data. 

Regarding the effect of program metrics on map quality, prior to 

September 2010, FEMA lacked a metric for the quality of topographic data beyond the minimum standards in its Guidance and 

Specifications and delineated floodplains using the ‘‘best available’’ 

existing topographic data for the area being studied. In the absence 

of data provided by the mapping stakeholder or newly developed 

for a flood mapping project, a primary source for topographic data 

was the National Elevation Dataset maintained by the USGS, 

which is over 35 years old on average. FEMA’s historical standards 

for new topographic data required data that is about 10 times more 

accurate than USGS topographic data and required topographic 

data acquired or reviewed within the last 7 years to account for 

changes such as human development. In September 2010, FEMA 

established new standards for the level of topographic detail required to ensure that the maps of those areas at the highest risk 

from flooding have the most accurate topographic data, as suggested by the National Research Council and FEMA’s Risk MAP 

strategy. FEMA published Procedural Memorandum 61 to update 

its Guidelines and Specifications requiring mapping partners to 

align FEMA’s topographic data specifications to levels of risk for 

flooding, as well as account for differing characteristics of elevation 

that can affect the accuracy and precision of base flood elevations. 

This procedural memorandum identifies the specifications of elevation accuracy and precision needed based on FEMA’s previously 

identified risk classes for all 3,146 counties in the United States. 

As the National Academies of Sciences report stated, the level of 

detail used in a study should correspond to the area’s risk. FEMA 

officials stated that they will only be starting new studies in areas 

where there are already existing updated and accurate topographic 

data or in areas that have sufficient need and risk to necessitate 

FEMA’s funding the acquisition of such data. 

In addition, we made several conclusions in our December 2010 

report that led to the recommendations to enhance FEMA’s metrics 

for assessing the quality of flood maps discussed above. Specifically, we concluded that establishing separate measures of compliance for detailed and approximate studies could allow FEMA to 

better use FBS compliance rates as a measure of map accuracy; 

however, the data necessary to accomplish this are presently not 

maintained by the agency. By retaining and analyzing metadata, 

FEMA could report additional information on FBS compliance and, 

thereby, have a potentially better measure of map accuracy. Further, FEMA’s NVUE standard provides a basis for flood mapping 

partners to assess the quality of new, validated, or updated engineering data in revising maps; however, establishing uniform guid-
109 

4The National Digital Orthophoto Programs (NDOP) was chartered in 1993 as a consortium 

of Federal agencies with the purpose of developing and maintaining national ortho-imagery coverage in the public domain by establishing partnerships with Federal, State, local, tribal, and 

private organizations. (see, www.ndop.gov). The National Digital Elevation Program (NDEP) was 

established to promote the exchange of accurate digital land elevation data among Government, 

private, and nonprofit sectors and the academic community and to establish standards and guidance that will benefit all users. (see, www.ndep.gov/NDEP) 5 Height Modernization is a program that uses the Global Positioning System and other new 

technologies to increase the accuracy of elevation measurements that comprise the vertical portion of the National Spatial Reference System. (see, http://oceanservice.noaa.gov/topics/navops/ 

heightmodernization/) 

ance for the validation of existing data could help FEMA ensure 

mapping partners are consistently validating data. This step could 

help FEMA both track and report the accuracy of maps at the national and regional levels and better assess mapping data needs. 

Q.3. Can you discuss the level of coordination that exists among 

FEMA and other relevant agencies, such as the Army Corps of Engineers, NOAA, USGS, and others, in the development of updated 

maps? 

A.3. While we have not assessed the level of coordination that exists among FEMA and other relevant agencies, such as the Army 

Corps of Engineers, NOAA, USGS, and others, in the development 

of updated maps, FEMA’s Risk Mapping, Assessment, and Planning (Risk MAP) Multi-Year Plan: Fiscal Years 2010–2014 discusses FEMA’s views regarding synergies with other Federal agencies. According to the strategy, FEMA has engaged other Federal 

agencies in productive partnerships that benefit each entity and 

works to minimize duplication across the Federal Government: 

• FEMA participates actively in National Digital Orthophoto 

Programs (NDOP) and National Digital Elevation Program 

(NDEP). 4 These groups work to maximize coordination of Federal mapping, focusing on two key data themes of ground elevation data and ortho-imagery (aerial photo base maps). 

• FEMA has an agreement with USGS to fully transfer the management of base map imagery to the USGS to eliminate redundancy and allow FEMA to focus on the production and management of the flood hazard and flood risk layers; FEMA has 

a Memorandum of Understanding with the Census Bureau to 

share its inventory of local GIS data; FEMA has a liaison relationship with National Geodetic Survey to exchange technical 

expertise and align flood hazard mapping and Height Modernization. 5

• FEMA coordinates with (1) the National Weather Service to 

share flood hazard mapping data with the National Weather 

Service Inundation Mapping Program, (2) with the NOAA 

Ocean Service on coastal mapping standards, coastal science 

issues, and participation on the Interagency Working Group on 

Ocean and Coastal Mapping, (3) with USACE and its Flood 

Risk Management Program. 

• FEMA has an agreement with the United States Fish and 

Wildlife Service to help ensure that Coastal Barrier Resource 

Systems that affect the availability of Federal flood insurance 

and other Federal funds are accurately depicted on FIRMs. 
110 

6GAO, Flood Insurance: FEMA’s Rate-Setting Process Warrants Attention, GAO-09-12 (Washington, DC: Oct. 31, 2008). 

Q.4. Do you believe that provisions included in the 2008 Senate 

flood insurance reauthorization bill will improve the quality of 

maps and coordination with other agencies and technical experts? 

A.4. Sections 18 and 19 of the 2008 Senate flood insurance reauthorization bill (S. 2284) should help FEMA improve the quality of 

maps and coordination with other agencies and technical experts. 

• Section 18 reestablishes the Technical Mapping Advisory 

Council. The Council began its work in 1996 and has submitted recommendations to the Director of FEMA in each of its 

Annual Reports. While we have not assessed the specific impact of FEMA’s implementation of the prior Council’s recommendations in annual reports, the intent of the reestablished Council as stated in the draft bill supports FEMA’s Risk 

MAP strategy to continue collaboration with local, State, regional, tribal, national, and other Federal partners. 

• Section 19 calls for FEMA to establish an ongoing map update 

program that will include assessment of the effects of erosion 

and climate change. This provision should help prompt FEMA 

to address our outstanding concerns regarding these issues. 

Specifically, we identified concerns related to these issues in 

assessing FEMA’s rate-setting process for the National Flood 

Insurance Program and in assessing financial risks to Federal 

and private insurers. In assessing FEMA’s rate-setting process 

for the National Flood Insurance Program (NFIP) in October 

2008, we reported that some experts have suggested that incorporating ongoing and planned development, erosion trends, 

and climate change into flood risk modeling would more fully 

capture longer-term flood risk exposure, but FEMA does not 

take these variables into account. 6

FEMA’s policy is to map Special Flood Hazard Areas (SFHAs) 

based on current development conditions. However, as 

floodplains are developed and more ground surfaces are paved 

or made impervious (nonabsorbent), the risks and expected elevations of flooding increase. As the predicted elevation of the 

base flood increases, SFHAs subsequently spread beyond 

mapped boundaries. As a result, in rapidly developing watersheds or where characteristics change significantly due to flood 

control projects or other natural events, some FIRMs may become outdated shortly after their completion. In addition, some 

properties could be constructed without proper protection from 

the flood hazard they may face throughout their life span, and 

others could be uninsured or subject to insurance rates that do 

not accurately reflect flood risk. 

FEMA’s current flood hazard mapping procedures for coastal 

areas incorporate storm-induced coastal erosion but not longterm erosion. While shorelines, dunes, and bluffs can retreat 

during a single storm, long-term erosion at a shoreline is the 

net result of a variety of factors such as sediment losses from 

storms and inundation from sea level rise, averaged over several decades. We recommended that the Secretary of the De-
111 

7GAO, Climate Change: Financial Risks to Federal and Private Insurers in Coming Decades 

Are Potentially Significant, GAO-07-285 (Washington, DC: Mar. 16, 2007). 

partment of Homeland Security direct FEMA to take steps to 

ensure that the data it uses accurately reflect the risk of losses 

from flooding. These steps should include, for example, 

verifying the accuracy of flood probabilities, damage estimates, 

and flood maps; ensuring that the effects of long-term planned 

and ongoing development, as well as climate change, are reflected in the flood probabilities used; and reevaluating the 

practice of aggregating risks across zones. FEMA had not yet 

taken action to address this recommendation. 

In assessing the financial risks to Federal and private insurers 

posed by climate change, we reported that one important implication of Federal insurers’ risk management approach is that they 

each have little reason to develop information on their long-term 

exposure to the potential risk of increased low-frequency, high-severity weather events associated with climate change. 7 According 

to NFIP officials, their risk management processes adapt to nearterm changes in weather as they affect existing data. As one NFIP 

official explained, NFIP is designed to assess and insure against 

current—not future—risks. Over time, agency officials stated, this 

process has allowed their program to operate as intended. However, unlike the private sector, the program has not conducted an 

analysis to assess the potential impacts of an increase in the frequency or severity of weather related events on program operations 

over the near- or long-term. Agency officials identified several challenges that could complicate their efforts to assess these impacts at 

the program level. NFIP officials stated there was insufficient scientific information on projected impacts at the regional and local 

levels to accurately assess their impact on the flood program. We 

recommended that the Secretary of Homeland Security direct the 

Under Secretary of Homeland Security for Emergency Preparedness to analyze the potential long-term implications of climate 

change for the National Flood Insurance Program and report their 

findings to the Congress. FEMA has yet to issue its report to Congress. 

Q.5. Updating a Flood Insurance Rate Map (FIRM) does not necessarily increase the number of properties subject to National Flood 

Insurance Program (NFIP) mandatory purchase requirements. 

Homeowners in special flood hazard areas (SFHAs) may find their 

properties excluded from those areas when an updated flood map 

is adopted. 

Can you compare the number of properties have been added to 

special flood hazard areas (SFHAs) to the number that have been 

removed during the last several years of ‘‘map modernization’’? 

A.5. Because FEMA does not assess the number of properties that 

have been added to SFHAs or the number that have been removed 

as a result of national flood mapping efforts, these data are not collected or reported. FEMA’s mapping efforts are designed to establish the floodplain boundary that describes the SFHA, the area 

where the NFIP’s floodplain management regulations must be enforced and where the mandatory purchase of flood insurance ap-
112 

8 In making loans, federally regulated lenders are required to ensure that property owners 

purchase flood insurance if their mortgages are secured by a structure located in a floodplain. 

Lenders are also required to check the flood hazard status of a property when triggered by statutory tripwires, such as loan renewal or extension. 9Many lenders use flood zone determination companies to determine whether properties require flood insurance as a result of loan origination, loan assumption, or map changes. These 

companies use FEMA flood maps and other data to ascertain if properties are situated in flood 

zones. 10FEMA is required to contact community stakeholders, such as the State coordinating agency and other appropriate community officials, to discuss the intent and nature of the proposed 

flood map study. 44 C.F.R. §66.5. 11FEMA is required to publish the proposed flood elevations in a prominent local newspaper 

at least twice during the 10-day period following the notification of the community chief executive officer. Property owners have 90 days from the second newspaper publication to appeal the 

proposed flood elevations. 44 C.F.R. §§67.4, 67.5. 12Final flood elevations must be published in the Federal Register and copies sent to the community chief executive officer, all individual appellants, and the State-coordinating agency. 44 

C.F.R. §67.11. 

plies; the agency does not determine whether individual properties 

or buildings are within an SFHA. 

Under current notification requirements, federally regulated 

lenders, not FEMA, serve as the primary channel for notifying 

property owners whose mortgaged properties are subject to flood 

insurance requirements. When property owners seek new financing—through purchase or refinance—federally regulated mortgage 

lenders are required to determine if the property is in the floodplain, and, if so, require the purchase of flood insurance. Lenders 

are not required to monitor map changes or to notify property owners with existing mortgages whose properties are identified in a 

floodplain by remapping if they are not aware of the change in status. 8 Nonetheless, if federally regulated lenders become aware of 

flood map changes that affect properties for which they hold mortgages through FEMA notifications or flood zone determination companies, then they must notify the property owner and require the 

purchase of flood insurance. 9 The information that must be provided to property owners is limited to notifying property owners 

that their structure is in a floodplain, providing a definition of a 

flood plain, and requiring the purchase of flood insurance if they 

live in a participating NFIP community. 

Q.6. Can you comment on the public participation in the adoption 

of new maps and how that process can be improved? 

A.6. The ultimate success of FEMA’s flood mapping program depends on the level of community investment and involvement in 

the process. In our December 2010 report, we noted that FEMA relies on local governments to provide it with notification of changing 

flood hazard information and to work with FEMA to collect the information needed to reflect the updated flood hazards on the flood 

maps. As noted in our report. the National Flood Insurance Act of 

1968, as amended, and Federal regulations require that FEMA 

communicate potential changes in flood risk to the public when it 

decides to initiate a flood mapping study and when it is ready to 

release preliminary maps. Specifically, FEMA is required to notify 

local governments at the beginning of the mapping process, 10 and 

it must publish the proposed base flood elevations in the Federal 

Register for public comment and notify the local government of the 

results of the study when FEMA is ready to release preliminary 

maps. 11 When the final map is approved, FEMA publishes another 

Federal Register notice. 12 FEMA is required to maintain docu-
113 

13 44 C.F.R. §§66.3, 67.3. 14Federal law provides that FEMA must encourage local officials to disseminate information 

concerning a flood mapping study widely within the community, so that interested persons will 

have an opportunity to bring all relevant facts and technical data concerning the local flood hazard to the attention of the agency during the course of the study. 42 U.S.C. §4107. 15FEMA is required to contact community stakeholders, such as the State coordinating agency and other appropriate community officials, to discuss the intent and nature of the proposed 

flood map study. 44 C.F.R. §66.5. 

mentation of selected elements of its public notification efforts. 13

Outside of these statutory and regulatory requirements, FEMA has 

historically focused its outreach efforts on local government officials 

and has relied on local officials to inform the community at large 

(i.e., the public) of flood mapping efforts. 14 However, we identified 

areas where FEMA could improve these outreach efforts. For example, FEMA is not ensuring that its mapping partners are complying 

with public notification documentation requirements. Further, 

FEMA is not collecting and analyzing data on appeals and protests 

that could be used to gauge public acceptance of flood maps. 

To address challenges in improving community outreach, we recommended that the Administrator of the Federal Emergency Management Agency: 

1. establish a mechanism to better ensure compliance with the 

documentation requirements of public notification regulations; 

2. collect and analyze data on appeals and protests, including 

those on ineligible appeals, to the extent that the benefits outweigh the costs; 

3. issue guidance to mapping stakeholders to standardize the 

process for analyzing appeals and protests and submitting 

this data to FEMA; 

4. establish performance goals and measures for promoting public acceptance of flood maps; and 

5. develop a reporting structure for regions to use to identify resources needed to conduct flood mapping outreach activities, 

and implement a risk-based approach to allocate outreach resources; and leverage, as appropriate, existing FloodSmart 

marketing resources and expertise to help increase public acceptance of flood maps. 

In commenting on the draft report, DHS stated that it concurred 

with our recommendations to enhance its outreach efforts and identified actions FEMA had taken or plans to implement them. 

Q.7. What responsibilities do FEMA and localities have to inform 

the public about map updates at the outset of the process? What 

is the most important aspect of the flood maps for communities and 

property owners? 

A.7. Federal regulations require that FEMA communicate potential 

changes in flood risk to the public when it decides to initiate a 

flood mapping study. At the beginning of the mapping process, 

FEMA is required to notify local governments. 15 When FEMA is 

ready to release preliminary maps, the agency must publish the 

proposed base flood elevations in the Federal Register for public 

comment and notify the local government of the results of the 
114 

16FEMA is required to publish the proposed flood elevations in a prominent local newspaper 

at least twice during the 10-day period following the notification of the community chief executive officer. Property owners have 90 days from the second newspaper publication to appeal the 

proposed flood elevations. 44 C.F.R. §§67.4, 67.5. 

study. 16 FEMA works with communities to develop new flood hazard data or revise existing data during the flood study process. In 

general, the study process includes the following activities: 

• FEMA holds a scoping meeting with community officials to 

identify where a new flood study is necessary and the type of 

study and extent (number of stream miles) of the study. 

• FEMA undertakes a flood study to identify the flood hazards 

and to develop Base Flood Elevations (BFEs) (hereafter referred to as ‘‘flood elevations’’) and floodways for the areas of 

study identified during the scoping process. In addition, the 

mapping process includes activities such as obtaining the base 

map, incorporating Letters of Map Change, and developing the 

flood hazard database. 

The identification of flood hazards serves many important purposes. Identifying flood hazards creates an awareness of the hazard, especially for those who live and work in flood-prone areas. 

Maps provide States and communities with the information needed 

for land-use planning and to reduce flood risk to floodplain development and implement other health and safety requirements through 

codes and regulations. States and communities can also use the information for emergency management. 

Each time FEMA provides a community with new or revised 

flood hazard data, the community must either adopt new floodplain 

management regulations or amend its existing regulations to reference the new flood map and flood study. In some cases, communities may have to adopt additional floodplain management requirements if a new type of flood hazard data is provided, such as 

a new flood zone. 

Floodmaps are the tool FEMA uses to determine the flood risk 

homeowners face. Prior to the establishment of NFIP, homeowners 

had no mechanism to protect themselves from the devastation of 

flooding and in many parts of the United States unchecked development in the floodplain was exacerbating the flood risk. In addition to providing insurance to property owners, NFIP requires participating communities to enact local floodplain management ordinances that minimize floodplain development and encourage initiatives to reduce flood risk. FEMA’s Web site includes information 

whose purpose is to help homeowners in locating and obtaining 

copies of their perspective floodmaps, how to read them, and how 

to request map changes that may be warranted. 

Q.8. How are property owners informed after updated maps are 

adopted? Do homeowners receive any specific information with regard to their properties and how is that information otherwise 

made available? 

A.8. Federal regulations require that FEMA communicate potential 

changes in flood risk to the public. When the final map is approved, 
115 

17Final flood elevations must be published in the Federal Register and copies sent to the community chief executive officer, all individual appellants, and the State-coordinating agency. 44 

C.F.R. §67.11. 

FEMA publishes a Federal Register notice. 17 When the study is 

completed, FEMA provides the community with a preliminary flood 

map and flood study for review. In addition, FEMA may hold a 

public meeting—often referred to as the ‘‘Final Meeting’’ to explain 

and obtain comments on the preliminary flood map and flood 

study. 

• FEMA provides a 90-day appeal period when new or revised 

flood elevations are proposed. Before the appeal period is initiated, FEMA will publish the proposed flood elevation determinations in the Federal Register and notify the community’s 

chief executive officer of the determination. FEMA will then 

publish information about the flood elevation determinations at 

least twice in a local newspaper. The appeal period provides 

the community and owners or lessees of property in the community an opportunity to submit information on whether the 

flood elevations are scientifically or technically incorrect. 

• At the end of the 90-day appeal period, FEMA resolves all appeals and finalizes the flood map and flood study. 

• FEMA then issues a Letter of Final Determination (hereafter 

referred to as the ‘‘final letter’’), which establishes the final 

flood elevations, and provides the new flood map and flood 

study to the community. The final letter initiates the 6-month 

adoption period. The community must adopt or amend its 

floodplain management regulations during this 6-month period. 

• The flood map and flood study become effective at the end of 

the 6-month period. The effective date is also the date when 

flood insurance rates will be based on the new flood data for 

new construction built after this date. The effective map will 

be the one that will be used by federally insured or regulated 

lenders to determine if flood insurance is required as a condition of a loan. 

Q.9. What factors and data does FEMA consider from communities 

and property owners in deciding whether to adjust maps? 

A.9. According to FEMA, factors and data the agency may consider 

from communities and all local, State, and Federal stakeholders in 

deciding whether to adjust maps includes any available information on Federal, State, or local flood studies, flood control projects, 

bridges, culverts, or developments or flooding concerns, and any efforts to gather topographic mapping or aerial photography, or information on significant floods. 

Q.10. What funding and technical assistance, if any, are provided 

to States and communities to help them develop their own capacity 

to assist in mapping updates? 

A.10. FEMA has established two programs to provide funding and 

technical assistance to States and communities to help them develop their own capacity to assist in mapping efforts, the Cooperating Technical Partners (CTP) Program and the Community Assistance Program. 
116 

• The purpose of the CTP Program is to provide, through a cooperative agreement, funds to better ensure that CTP partners 

can perform program management and technical mapping-related activities. Though there is not a financial matching requirement under the CTP Program except as defined by appropriations language, the potential partner should demonstrate 

its ability to leverage funding received from FEMA. CTP partners that offer significant funding matches will be given priority in allocating funding. FEMA may provide technical assistance, training, and/or data to a CTP partner to support 

flood hazard data development activities. For example, 

fundable program management activities include the development of State and local business plans and/or updates, managing technical mapping activities, conducting outreach, providing training to State and local officials, staffing, conducting 

pilot projects (as defined by the FEMA regional office) and 

mentoring. Additional fundable activities under the CTP program are summarized in the table below. 
117 
118 

• FEMA established the Community Assistance Program to provide funding to States to provide technical assistance to communities that participate in NFIP and to evaluate community 

performance in implementing NFIP floodplain management activities. Among other things, the program is intended to build 

State and community floodplain management expertise and capability, and leverage State knowledge and expertise in working with their communities. FEMA Regional Offices and the 

designated State agency negotiate an agreement that specifies 

activities and products to be completed by a State in return for 

funds. In addition, each State is required to develop a 5-Year 

Floodplain Management Plan (5-Year Plan) describing the activities to be completed using Community Assistance Program 

funding and how the required performance metrics will be met. 

Performance standards that address quality of service are to be 

developed and measured. There is a 25 percent non-Federal 

match for all States receiving Community Assistance Program 

funds. The fundable CAP activities include: 

• Performance measurement/5-Year Plan Updates; 

• State model ordinance research and development; 

• Ordinance assistance; 

• Tracking and reporting floodplain management data; 

• Community assistance visits and community assistance 

contacts; 

• Outreach, workshops, and other training; 

• General technical assistance; 

• Mapping assistance; 

• Coordination with other State programs and agencies; and 

• Assistance to communities in responding to disasters. 

Q.11. The House has adopted language in its NFIP reauthorization 

bill that would establish a 5-year moratorium on the mandatory 

purchase requirement for properties that are mapped into a special 

flood hazard area. 

Will this provision have any effect on properties that are removed from a special flood hazard area as the result of the adoption of an updated flood map? In other words, would the owners of 

these properties be able to drop their flood insurance as the result 

of the new map? 

A.11. Section 6(a)(i)(1) of H.R. 5114 proposes a 5-year delay in the 

effective date of the mandatory purchase requirement specifically 

for properties in areas that were not previously designated as having special flood hazards. As a result, it would not apply to changes 

in premium rates for properties in areas that were previously designated as having special flood hazards but are no longer so designated. 

Q.12. Is there any way to quantify the impact this provision would 

have on the financial standing of the program? 

A.12. The impact of a potential delay in the mandatory purchase 

requirement for newly remapped properties depends on the premiums that would be paid for coverage on those properties and the 

losses they would experience once they enter the program. 
119 

18GAO. Federal Emergency Management Agency: Ongoing Challenges Facing the National 

Flood Insurance Program, GAO-08-118T (Washington, DC: Oct. 2, 2007). 19GAO, Flood Insurance: Extent of Noncompliance with Purchase Requirements Is Unknown, 

GAO-02-396 (Washington, DC: Jun. 21, 2002). 

The nature of NFIP is such that it primarily insures properties 

with the highest risk of loss, such as those in SFHAs that are subject to the mandatory purchase requirement. In addition, many of 

the properties in SFHAs qualify for subsidized premium rates that 

do not fully reflect the risk of loss from flood damage. The potential 

impact of a delay in the mandatory purchase requirement would 

depend on the mix of properties that ultimately ended up in the 

program after the end of the 5-year period and the occurrence of 

flood losses. If that future mix of properties paralleled that currently experienced by the program, where just under 25 percent of 

properties receive subsidized rates, it is possible that adding more 

properties could actually worsen the financial stability of the program. That is, to the extent that floods do not occur in the added 

areas, the property owners there would contribute premiums to 

NFIP but not losses, and thus be a benefit to the program’s financial standing. On the other hand, if they do experience losses, it is 

possible that, because of the properties receiving subsidized premium rates, NFIP could pay out more in damages than it collected 

in premiums. Ultimately, the impact of adding more properties and 

a potential delay in adding these properties would depend on the 

mix of properties added to the program and occurrence of flood 

losses in the areas added. 

Q.13. Despite mandatory participation requirements, many homeowners do not buy or maintain flood insurance. Can you describe 

the reasons for this and do you have any suggestions on how to improve participation in NFIP? 

A.13. While federally regulated lenders are not to make or renew 

loans on properties in participating communities that are in SFHAs 

unless the property is covered by flood insurance, the extent to 

which some homeowners might not purchase such insurance is not 

known and is a subject of disagreement. As we testified in 2007, 

viewpoints differ about whether lenders were complying with the 

flood insurance purchase requirements, primarily because the officials we spoke with did not use the same types of data to reach 

their conclusions. 18 For example, FEMA officials believed that 

many lenders frequently were not complying with the requirements, an opinion that they based largely on estimates computed 

from data on mortgages, flood zones, and insurance policies; limited 

studies on compliance; and anecdotal evidence indicating that insurance was not always purchased when it was required. In contrast, Federal banking regulators, based on their loan reviews during bank examinations, believed that noncompliance with mandatory purchase requirements was very low. As we reported in 2002, 

in neither case did the studies or examinations offer a statistically 

valid projection of the overall participation rate. 19 However, a 2006 

FEMA-commissioned study of compliance with the mandatory purchase requirement estimated that compliance with purchase requirements, under plausible assumptions, was 75 to 80 percent in 

special flood hazard areas for single-family homes that had a high 

probability of having a mortgage. The analysis conducted did not 
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20 RAND Corporation, The National Flood Insurance Program’s Market Penetration Rate: Estimates and Policy Implications, 2006. 21GAO, Natural Hazard Mitigation: Various Mitigation Efforts Exist, but Federal Efforts Do 

Not Provide a Comprehensive Strategic Framework, GAO-07-403 (Washington, DC: Aug. 27, 

2007). 22 RAND Corporation, The National Flood Insurance Program’s Market Penetration Rate: Estimates and Policy Implications, 2006. 

provide evidence that compliance declined as mortgages aged. At 

the same time, the study showed that about half of single-family 

homes in special flood hazard areas had flood insurance. 20

With respect to why homeowners might not purchase or maintain required flood insurance, in a previous report we noted that 

the general public lacks an awareness and understanding about 

natural hazards and risk. 21 That is, individuals often have a 

misperception that natural hazard events will not occur in their 

community and lack a full understanding of the likelihood of an 

event occurring. As a result, homeowners might be motivated to 

forego the purchase of flood insurance when possible. With respect 

to why lending institutions might not enforce mandatory purchase 

requirements, as noted above, disagreement exists over whether 

and to what extent this is an issue. 

In order to determine how best to increase mandatory participation beyond its current level, whatever it may be, knowing the extent to which compliance is lacking at loan origination, flood insurance renewal, or both is critical. However, disagreement exists over 

where compliance is lacking and challenges exist to obtaining that 

information. In our 2002 report, we did analyses that suggested 

(with some limitations) that noncompliance at loan origination was 

not a major problem. FEMA, Federal banking regulators, and lenders all agreed with this assessment. However, the 2006 Rand study 

found no strong evidence that compliance with mandatory requirements declined over time. 22 Fully assessing compliance would require property-specific data on mortgages, flood zone determinations, and flood insurance policies, obtained both at loan origination and at various points during the life of the loan. However, 

there are a number of challenges to obtaining and assessing this 

data. These include establishing data reporting requirements for 

lenders to provide relevant mortgage data, designating an organization to receive and compare these data, and determining the 

costs and benefits of obtaining these data. 

Q.14. Can you comment on how innovations such as group insurance and community insurance can increase participation? Can 

these measures help reduce costs? What obstacles prevent them 

from being adopted? 

A.14. FEMA’s Group Flood Insurance Policy is a 3-year policy with 

limited coverage purchased on behalf of recipients of Federal disaster assistance following a natural disaster, often low-income persons or those on fixed incomes. For example, following hurricanes 

Katrina and Rita, group flood insurance policies were purchased on 

behalf of 36,285 Louisiana homeowners as part of the Federal assistance provided to those homeowners. According to FEMA, the 

purpose of these group policies is to allow property owners time to 

recover from the disaster and to be in a better position to buy flood 

insurance for themselves after the expiration of the 3-year policy 
121 

23GAO, Natural Hazard Mitigation: Various Mitigation Efforts Exist, but Federal Efforts Do 

Not Provide a Comprehensive Strategic Framework, GAO-07-403 (Washington, DC: Aug. 22, 

2007). 

term. If property owners do not purchase their own flood coverage 

at that time, they will forego future Federal disaster assistance. 

While this is not an area that GAO has studied, understanding the 

percentage of those covered under group policies that ultimately 

purchased their own policies after the 3-year term expired would 

be informative in understanding the program’s impact on participation. 

Community flood insurance, as proposed by some industry advocates, would allow communities participating in NFIP to purchase 

one policy that would cover all structures within the community. 

NFIP would determine the premium rate for the community, which 

would then, in turn, determine how to allocate the cost of the total 

premium among its residents. While this is not an issue where we 

have done analyses, it raises questions that would need to be answered, including whether a community policy would increase participation, whether such a policy offers cost savings to NFIP or policy holders, and would any savings to NFIP outweigh the challenges involved in implementing such a policy. 

Q.15. FEMA’s Community Rating System (CRS) provides localities 

with an opportunity to reduce premiums for property owners if 

they adopt measures beyond what is required under NFIP in order 

to protect against flood damage. Can you comment on CRS as a 

tool to reduce risk as well as insurance premiums? How can it be 

improved to meet these goals? 

A.15. In a 2007 natural hazard mitigation report, we noted that 

community planning and mitigation activities, including those done 

through CRS, can help reduce the risk of loss from natural hazards, and should involve land use plans, building codes, and hazard 

control structures. 23 We also noted that while less than 5 percent 

of communities participating in NFIP participated in the CRS program, those participating communities represented around 67 percent of policy holders. We did not analyze the extent to which the 

CRS program reduced risk or insurance premiums, but we did note 

that CRS, like other hazard mitigation activities, faced several 

challenges. For example, mitigation efforts are often constrained by 

conflicting local interests, cost concerns, and a lack of public awareness of the risks of natural hazards and the importance of mitigation. Any efforts at improving the program’s ability to reduce risks 

and premiums would thus need to address these challenges. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR REED 

FROM SALLY MCCONKEY 

Q.1. FEMA has indicated that by the end of this fiscal year it expects to have preliminary Flood Insurance Rate Maps (FIRMs) 

issued for 92 percent of the Nation’s population. a) Can you describe the quality of the maps being produced by FEMA? How can 

they be improved? How many of its ‘‘updated’’ maps are based on 

new data or modeling; how many are simply digital maps based on 

old data? b) To what extent have funding limitations and program 
122 

metrics affected map quality? c) Can you discuss the level of coordination that exists among FEMA and other relevant agencies, such 

as the Army Corps of Engineers, NOAA, USGS, and others, in the 

development of updated maps? d) Do you believe that provisions included in the 2008 Senate flood insurance reauthorization bill will 

improve the quality of maps and coordination with other agencies 

and technical experts? 

A.1. FEMA expects to have issued Preliminary DFIRMs for 92 percent of the population through the Map Modernization initiative 

that is just being completed. The quality of the mapping will vary 

depending on the funding available for the study, when the particular mapping project was initiated and the level of State and 

community involvement in the process. 

a) The single most important factor in the quality of the map is 

the funding available for producing the map. If the map simply digitizes old data, or is done by approximate or limited detail methods, or with old and inadequate topo maps, the quality of the map may well not be adequate. Because there was 

limited funding, FEMA chose to digitize existing data for most 

of the mapping under the map modernization program. Due 

to program metrics which required that new maps be issued 

for specified percentages of the population in specified periods 

of time, the original phase of Map Modernization resulted 

mostly in moving the mapping inventory from paper maps to 

a digital platform. The funds allocated were not sufficient to 

include new engineering analyses for all studies and still meet 

program metrics. The conversion to the geospatial platform 

was a significant increase in the quality of the mapping simply through better registration to accurate base maps and enhanced further where updated high resolution topography was 

available. The quality of the maps will also vary depending on 

when in the Map Mod they were produced. Over the course 

of Map Mod (midcourse adjustment) quality assurance checks 

were implemented which resulted in improving the quality of 

the maps. The quality of the maps will vary depending on 

what quality assurance controls were in place when the maps 

were prepared. Many States were closely involved with decision making regarding the extent of new engineering data incorporated. Through the Coordinated Needs Mapping System 

database development currently underway, FEMA will have 

data on adequate engineering studies and those needing new 

engineering that can be used to prioritize future studies during Risk MAP. The maps can be improved by expanding State 

and community participation in the process and by processes 

to improve the accuracy at every step in the process. This may 

result in slowing down the number of maps produced, but will 

greatly improve community acceptance of the maps. 

b) Funding for Map Mod was not sufficient to secure new engineering study data for all counties in the Nation. FEMA and 

the States had to weigh trading new study data for fewer 

maps moved to digital formats. Because of funding limitations 

there remain counties that still have only paper maps and 

areas where the study data does not reflect existing condi-
123 

tions. When States did not actively participate in the planning 

process for DFIRM mapping, the FEMA program metrics were 

the drivers in prioritizing projects and the scope of work. 

c) The level of coordination between FEMA and the USACE has 

been steadily improving. At the national level there have been 

regular meetings such as the Intergovernmental Food Risk 

Management Committee (IFRMC) which is an ongoing process 

to involve State and local mapping and flood risk management 

partners. The USACE Silver Jackets Program is one good 

mechanism to gain the regional/State level coordination. 

d) The 2008 Senate bill has a number of important mapping provisions, e.g., authorizing continued funding for mapping that 

will have an impact on improving flood hazard identification 

and coordination among agencies. The 2008 Flood Insurance 

Reform bill, as passed by the Senate, provides for significant 

additional mapping tasks such as mapping the 500 year floodplain, areas affected by erosion and areas affected by sea level 

rise. The measure also includes provision for inclusion of mapping data from other Federal agencies, such as the Army 

Corps of Engineers’ inundation maps and the Fish and Wildlife Services’ Coastal Barrier Resource Zone (COBRA) maps. 

Q.2. Updating a Flood Insurance Rate Map (FIRM) does not necessarily increase the number of properties subject to National Flood 

Insurance Program (NFIP) mandatory purchase requirements. 

Homeowners in special flood hazard areas (SFHAs) may find their 

properties excluded from those areas when an updated flood map 

is adopted. 

Can you compare the number of properties have been added to 

special flood hazard areas (SFHAs) to the number that have been 

removed during the last several years of ‘‘map modernization’’? 

A.2. Updating the Flood Insurance Rate Maps does not necessarily 

increase the number of properties shown in the floodplain. There 

are two independent sources that indicate the number of properties 

newly shown in a SFHA is very nearly the same number of properties removed from a SFHA, within about 1 percent. In May 2010, 

FEMA used a large sample of completed digital flood maps and 

compared the change of housing units which had a change in 

SFHA (in or out) and found a positive 1 percent increase in housing 

units now shown in a SFHA. The National Flood Determination 

Association did a preliminary evaluation of changes in property determinations for SFHA and that data indicated about as many 

properties were newly identified in an SFHA as properties newly 

shown no longer in an SFHA. It is important to keep in mind that 

in part, Map Modernization was initiated because Flood Insurance 

Rate Maps had inaccuracies due to a variety of reasons, so changes 

in the SFHA would be expected. 

Q.3. Can you comment on the public participation in the adoption 

of new maps and how that process can be improved? 

A.3. Public participation, including community leaders and staff, is 

extremely important throughout the mapping process for many reasons. FEMA’s Risk MAP plan for 2010–2014 emphasizes public engagement starting even earlier in the study to improve the process. 
124 

With full engagement this should reduce the number of communities and/or community leaders who have concerns with the technical data and the areas shown at risk of flooding on the Flood Insurance Rate Maps. The motivation for denying that flood risk exists varies as do the tactics to delay showing the risk on the map. 

Improved capacity for FEMA and the States to provide technical 

assistance to communities could enhance their ability to effectively 

engage in the process and to facilitate public participation. 

Q.4. What responsibilities do FEMA and localities have to inform 

the public about map updates at the outset of the process? What 

is the most important aspect of the flood maps for communities and 

property owners? 

A.4. FEMA has certain prescribed responsibilities with respect to 

public notification, which varies depending on the nature of the 

mapping projects. Local governments that participate in the NFIP 

also have responsibilities to notify their citizens who are at risk of 

flooding, which is the role of accurate maps. Some communities and 

States send postcards to their citizens who are shown in mapped 

flood hazard areas. Communities and property owners often do not 

fully appreciate their exposure to floods and thus object to maps 

showing areas that are special flood hazard areas. Frequent, sustained communication about flood risk and risk management is 

needed, not just during the mapping process, but as part of an ongoing awareness. 

Q.5. How are property owners informed after updated maps are 

adopted? Do homeowners receive any specific information with regard to their properties and how is that information otherwise 

made available? 

A.5. Property owners may be informed about updated mapping 

through a number of channels. The minimum requirement is a 

public notice in the local newspaper. More often property owners 

are alerted to a change in the flood hazard status of their property 

when a federally backed mortgage is in place and periodically reviewed. The most effective means of communication is when the 

local entities reach out to the public with data about the flood hazard identification. FEMA’s Risk MAP program will take advantage 

of the digital platform of most floodplain maps by using geospatial 

analyses to identify properties that have a changed flood hazard 

status during mapping updates. This will allow focused outreach to 

those property owners. The Risk MAP product is called ‘‘changes 

since last map’’ and should be supported. However, preparing such 

products will utilize mapping dollars and adequate funding to continue to produce new maps needs to be augmented with adequate 

funding for outreach and communication. 

Q.6. What factors and data does FEMA consider from communities 

and property owners in deciding whether to adjust maps? 

A.6. Communities and individuals can submit to FEMA their concerns about inaccurate mapping. These are typically anecdotal, but 

could include technical data. The Risk MAP plan incorporates objective information such as the validity of the engineering data 

based on changes in watershed development or storm events, availability of topographic data, risk (often represented by population) 
125 

and other data that communities provide in identification of 

projects. Communities have the responsibility to notify FEMA 

when there are changes in the watershed or more specifically 

changes to the watercourse that effect the extent of flooding. Unfortunately, many communities are lax in providing this information. 

Continued, persistent outreach and education to communities is essential. Communities and individuals may ignore requests for participation and for data and only engage after the mapping is complete and they become aware of changes. Other communities are 

actively engaged in working with FEMA and the State to provide 

data and input, thus resulting in accurate maps. 

Q.7 What funding and technical assistance, if any, are provided to 

States and communities to help them develop their own capacity to 

assist in mapping updates? 

A.7. Cooperating Technical Partnerships is the mechanism in 

which qualified communities can participate in the mapping process with FEMA. A few larger communities have that expertise, but 

generally States or counties enter into the partnership with FEMA. 

When FEMA has a mapping project, whoever is responsible for the 

project development is required to engage and invite the communities to participate in the mapping process through a series of required notifications and meetings, which has some funding as part 

of the study costs. Additional capacity at FEMA to provide mapping partners with specific funding and guidance to ensure communities can more fully participate in the process would be helpful. 

Q.8. The House has adopted language in its NFIP reauthorization 

bill that would establish a 5-year moratorium on the mandatory 

purchase requirement for properties that are mapped into a special 

flood hazard area. a) Will this provision have any effect on properties that are removed from a special flood hazard area as the result of the adoption of an updated flood map? In other words, 

would the owners of these properties be able to drop their flood insurance as the result of the new map? b) Is there any way to quantify the impact this provision would have on the financial standing 

of the program? 

A.8. a) Yes. Properties no longer shown as being in a Special Flood 

Hazard Area (SFHA) would no longer be required to purchase flood 

insurance. b) ASFPM assumes that FEMA would be able to provide 

an estimate based on projected numbers newly out of a SFHA and 

newly in a SFHA. FEMA is likely to make an effort to retain policies on properties newly mapped as out of a SFHA, but those policies would be available at a significantly reduced premium rate. 

Q.9. The House’s proposed moratorium on the mandatory purchase 

of flood insurance will not prevent the adoption of new maps. As 

a result, the risks depicted on new maps will be known and disclosed. a) With updated maps in hand, how do you believe lenders 

will react? Can and will lenders still require homeowners to purchase flood insurance, notwithstanding the moratorium, in order to 

limit their risk? b) If new maps are not adopted or disclosed to the 

public, what are the consequences to public safety, property risk, 

etc.? 
126 

A.9. a) There may be some compliance questions since lenders are 

expected to utilize the most recently issued flood insurance rate 

maps. Response to this question is not within the ASFPM’s area of 

expertise, so we hesitate to speculate. b) Not disclosing flood risk 

information to the public means that the Government is withholding information that is critical to individual decisions about 

safety and protection of life and property and to local community 

decisions about management of flood risk and future development 

and redevelopment. 

Q.10. Despite mandatory participation requirements, many homeowners do not buy or maintain flood insurance. Can you describe 

the reasons for this and do you have any suggestions on how to improve participation in NFIP? 

A.10. The provision of mandatory insurance applies to only a subset of property owners, those with federally backed mortgages. 

Property owners who own their homes outright or do not have a 

federally backed mortgage may not be aware that their property is 

in the floodplain. However, perception of lack of risk by property 

owners is likely the primary reason that flood insurance is not purchased or purchased and dropped. Those who have not experienced 

a flood do not comprehend or acknowledge the damage they could 

face. Often, property owners believe the Federal Government will 

cover their loss from flooding, but while disaster assistance provides some minor assistance, it does not provide good financial security that insurance would provide. Affordability is another reason 

mentioned by some for not purchasing flood insurance or for dropping insurance. For this reason ASFPM has suggested a voucher 

program in HUD to provide means tested vouchers for flood insurance for those who truly cannot afford it. 

Q.11. Can you comment on how innovations such as group insurance and community insurance can increase participation? Can 

these measures help reduce costs? What obstacles prevent them 

from being adopted? 

A.11. Innovations such as group insurance and community insurance show great promise for a number of reasons. Group insurance 

for those protected by structures, such as levees, integrates the insurance as part of their flood risk reduction plan and ensures that 

everyone, regardless of their mortgage type or lack of mortgage, 

has insurance in these areas of residual risk. Individuals often 

have little or no input on decisions that can increase their individual or their communities’ exposure to flooding or increased risk. 

Communities guide land use decisions and infrastructure support; 

thus are the appropriate stewards to ensure adequate insurance 

protection to reflect the risk associated with those decisions. They 

can choose to make development decisions that reduce their risk 

and lower premiums, or they can make bad development decisions, 

which will impact all citizens in the community who will then pay 

higher premiums. Group insurance for areas behind levees or community group policies could greatly incentivize community or levee 

district officials to take actions to reduce risk, resulting in lower 

premium costs. In these situations, the cost of coverage would presumably be built into local tax or fee structures. 
127 

FEMA is engaged in a major study of ways to improve the NFIP 

called ‘‘Re-thinking the NFIP,’’ with a report and recommendations 

expected within the next year. Ideas such as these group policies 

are among those under study. 

Q.12. FEMA’s Community Rating System (CRS) provides localities 

with an opportunity to reduce premiums for property owners if 

they adopt measures beyond what is required under NFIP in order 

to protect against flood damage. Can you comment on CRS as a 

tool to reduce risk as well as insurance premiums? How can it be 

improved to meet these goals? 

A.12. CRS is indeed an important tool for communities to take actions to reduce flood risk or to educate their populations on flood 

risk and mitigation options—resulting in reduced premiums. Communities are rated according to their actions and activities in this 

regard. One way to improve communities’ ability to participate in 

the CRS program and improve their ratings would be to improve 

support and funding for the Community Assistance Program (CAP). 

Through the CAP program State NFIP Coordinators can work directly with communities in their jurisdictions to understand this 

fairly complex program and to upgrade their CRS approaches. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR REED 

FROM J. NICHOLAS D’AMBROSIA 

Q.1. The House’s proposed moratorium on the mandatory purchase 

of flood insurance will not prevent the adoption of new maps. As 

a result, the risks depicted on new maps will be known and disclosed. 

With updated maps in hand, how do you believe lenders will 

react? Can and will lenders still require homeowners to purchase 

flood insurance, notwithstanding the moratorium, in order to limit 

their risk? 

A.1. The National Association of REALTORS® (NAR) supports provisions which help property owners adjust to rate increases when 

a property is newly mapped into the floodplain. While this would 

effectively delay the Federal mandate, it would not prohibit the 

lender from requiring flood insurance. Once the property is mapped 

into the floodplain, lenders would still have a strong financial interest to limit their risk. 

Q.2. If new maps are not adopted or disclosed to the public, what 

are the consequences to public safety, property risk, etc.? 

A.2. It depends on the accuracy of the new flood maps. If the maps 

were accurate, adopting and disclosing them could reduce risks to 

property and public safety. However, there is also considerable evidence to the contrary. For example, during the hearing, Senator 

Schumer pointed to the example of Wheatfield, NY, where FEMA 

recently removed hundreds of properties from the new maps after 

the town challenged the findings. These are owners that were required to buy flood insurance when, in fact, the risk did not justify 

the cost. NAR supports improving the accuracy of flood mapping 

technology, to enhance public safety and reduce property risk. 
128 

Q.3. Despite mandatory participation requirements, many homeowners do not buy or maintain flood insurance. Can you describe 

the reasons for this and do you have any suggestions on how to improve participation in NFIP? 

A.3. Flood insurance is required to obtain a federally related mortgage loan. The requirement does not apply to cash purchasers (up 

to 28 percent of purchases according to a recent NAR survey) or 

those financing with a private lender which is not federally regulated nor sells to a GSE. NAR believes that an incentive-based approach would strengthen program participation. Adding types of 

coverage to include living expenses and business interruption and 

updating coverage limits (that have not been adjusted since 1994) 

would make the NFIP more attractive to voluntary participants. 

There could be more education and outreach to address common 

myths which get in the way of participation. 

Q.4. Can you comment on how innovations such as group insurance 

and community insurance can increase participation? Can these 

measures help reduce costs? What obstacles prevent them from 

being adopted? 

A.4. As Resources for the Future describes this concept, 

One way to ensure that all homeowners will be covered 

when a flood strikes is for the NFIP to insure communities 

instead of individuals. As Leonard Shabman has discussed, 

local governments or flood risk management districts could 

purchase a policy from the NFIP that would cover all the 

structures in the jurisdiction, for all flood risk and not just 

1 percent, up to the NFIP coverage limit ($250,000 building coverage for residences and $500,000 building coverage 

for businesses). The local entity would recover the cost by 

assessing each property, perhaps as an incremental increase to the property tax. The local jurisdiction could decide how to allocate costs, whether based on FEMA rates 

or otherwise. As a result, any cross-subsidization in prices 

would become a local issue, not a Federal one. (Please see 

Carolyn Kousky, ‘‘Reforming the National Flood Insurance 

Program,’’ Issue Brief 10-01 [February 2010]). 

Requiring every property owner in a community to purchase 

flood insurance, even when the flood risk does not justify the cost, 

is not the answer. While this may broaden the rate base and reduce the cost per property, objections to expensive flood insurance 

which is not necessary, would present the most significant obstacle 

to widespread community adoption. 

Q.5. FEMA’s Community Rating System (CRS) provide localities 

with an opportunity to the reduce premiums for property owners 

if they adopt measures beyond what is required under NFIP in 

order to protect again flood damage. Can you comment on CRS as 

a tool to reduce risk as well as insurance premiums? How can it 

be improved to meet these goals? 

A.5. NAR supports voluntary, incentive-based approaches to mitigation such as CRS’s. However, only a fraction of NFIP communities participate and we have not received many comments from 

REALTORS®, who could benefit from improving program participa-
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tion. Lack of education about CRS benefits and requirements have 

been cited as contributing factors (www.ksda.gov/dwr/content/ 

314/cid/1715). At least one expert has pointed to the link between 

the CRS and the Building Code Effectiveness Rating Schedule as 

a potential deterrent; for more, please see: 

www.sgccnetwork.ning.com/group/hazardresilience/forum/topics/ 

flood-insurance-premium?commentId=3284163 percent3 AComment 

percent3A4397&groupId=3284163 percent3AGroup percent3A4276. 
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ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD

STATEMENT SUBMITTED BY SENATOR MARK PRYOR 

Chairman Dodd and Vice Chairman Shelby, thank you for holding today’s hearing 

on the National Flood Insurance Program. I appreciate your attention to this important topic. 

For the past several years, I’ve been working to address FEMA’s flood map modernization process. In Arkansas, we have had repeated problems with the implementation of the Flood Map Modernization Program. The problems center around two 

basic themes. The first is in regard to levee certifications. We have some communities that gained ownership and responsibility of their levees years ago—maybe 30 

or 40 years ago. And these levees may or may not have been maintained properly. 

We can play the blame game all we want, but the point is that now we are in 

a situation where there are a good number of locally owned levees that need serious 

repairs and modernizations in order to be certified. This takes money. These communities lack the resources to certify and potentially repair the levees. There is very 

little Federal money available to help communities bring their levees up to code 

which can result in a community’s inability to have levees depicted on the flood 

maps. And in some cases, they do not have adequate time to complete repairs and 

upgrades before the flood maps are finalized. 

The second theme is in regard to what happens after a levee is certified—either 

by the U.S. Army Corps of Engineers or by another entity. There are ongoing issues 

in Arkansas regarding the proper way to depict the level of protection provided by 

a certified levee on the updated flood maps. This is a huge issue in my State because the classification of certified levees on FEMA’s updated maps affects both fairness and economic development. 

The Mississippi River, which is the eastern border of my State, has a vast levee 

system that protects the communities along the river. This is a $32 billion investment of Federal, State, and local funds. I have concerns that this significant investment in flood protection is not being accurately depicted on FEMA’s flood maps. I 

also have concerns that if a needed repair is identified during the certification process, that there is not adequate time and money for the U.S. Army Corps of Engineers to complete necessary upgrades or repairs before the maps are finalized. 

We need some real solutions to the problems we’re facing. Many Senators have 

been working on this issue for a long time with very little real, concrete progress 

made on addressing our concerns about transparency, flexibility and communication. 

I am frustrated, my constituents are frustrated and I am sure many of my colleagues are frustrated. I am frustrated because it seems like FEMA has dismissed 

my concerns as trivial rather than working with Congress to find a real solution 

to the problems facing my constituents. 

Let me emphasize that I do support modernizing our maps. I think it’s a good 

thing to do and something that we should do. I am not supportive of the way in 

which the flood maps have been updated. There are several things I’d like to see 

change in order to make this process run more smoothly. 

First, I support a 5 year moratorium on mandatory flood insurance purchase for 

communities that are newly mapped as ‘‘special flood hazard areas.’’ Representative 

Waters included a provision to do this in her legislation, H.R. 5114. Second, I would 

like to see a 5-year phase-in of flood insurance premiums for individuals purchasing 

flood insurance for the first time. This provision is also included in H.R. 5114. 

Third, I would like to see FEMA differentiate the Mississippi River and Tributaries levee system from other levee systems on their maps. This levee system is 

one the most, if not the most, advanced and successful flood control structures in 

the world. This is a result of a $32 billion Federal, State, and local investment. That 

investment should be shown on FEMA’s flood maps. 

In closing, I’d like to again thank Senators Dodd and Shelby for holding today’s 

hearing and for allowing me to provide a statement. I will continue to work to address the problems that my constituents are facing with regard to the National 

Flood Insurance Program and FEMA’s Map Modernization Program. I look forward 

to working with the Banking Committee in doing so. 
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LETTER SUBMITTED BY ADAM KOLTON, SENIOR DIRECTOR, CONGRESSIONAL AND FEDERAL AFFAIRS, NATIONAL WILDLIFE FEDERATION 
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