Flood Insurance: Status of FEMA's Implementation of the Biggert-Waters Act, as Amended
Published: 2015-02-19T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: NFIP, which is administered by FEMA, has faced significant financial and management challenges over the years. The Biggert-Waters Act, enacted in July 2012, instituted provisions to help strengthen NFIP's future financial solvency and administrative efficiency. For example, it required FEMA to phase out almost all discounted insurance premiums and establish a reserve fund. As implementation proceeded, however, affected communities raised concerns about some Biggert-Waters Act requirements. HFIAA was enacted in March 2014 and sought to address affordability concerns by repealing or altering some Biggert-Waters Act requirements. GAO was asked to examine the status of FEMA's implementation of the requirements established by the Biggert-Waters Act, as amended by HFIAA.
This report describes (1) FEMA's management of the acts' implementation and associated challenges and (2) the status of FEMA's implementation of selected requirements from the acts. GAO analyzed the Biggert-Waters Act and HFIAA; reviewed FEMA information on the prioritization and tracking of implementation efforts in relation to relevant internal control standards; and reviewed data and documentation on FEMA's status in implementing the Biggert-Waters Act, as amended by HFIAA, in relation to established time frames. Finally, GAO interviewed FEMA officials and representatives from 10 organizations with flood insurance expertise who were selected based on experience and type of organization.
section_title: What GAO Found
paragraphs: The Federal Emergency Management Agency (FEMA) has established some practices for managing its implementation of required changes under the Biggert-Waters Flood Insurance Reform Act (Biggert-Waters Act), as amended by the Homeowner Flood Insurance Affordability Act (HFIAA). Consistent with related federal internal control standards, FEMA has collaborated with stakeholders on prioritizing legislative requirements and developed methods to track the status of its implementation efforts. For example, FEMA formed a team of key staff to oversee these efforts and monitor progress through a tracking document that is updated regularly. However, FEMA and representatives of organizations with flood insurance expertise cited a number of challenges that FEMA faces in implementing the new requirements, including resource issues, the complexity of the legislation, and the need to balance the National Flood Insurance Program's (NFIP) financial solvency and affordability goals.
FEMA estimated that it had met requirements to complete almost half of Biggert-Waters Act sections and about one-third of HFIAA sections as of December 2014, and was taking action on others, including required studies. For example,
FEMA prioritized and implemented important HFIAA rate changes that repealed some Biggert-Waters Act rate increases and also initiated refunds to policyholders. However, data limitations have delayed implementation of some other requirements. For example, FEMA is required to make rate changes for business properties. Currently, FEMA cannot distinguish among nonresidential property policies for businesses, nonprofits, and others. FEMA anticipates collecting more specific data in late 2015 that will allow it to make the required adjustments.
As required by the Biggert-Waters Act, FEMA established the Technical Mapping Advisory Council (TMAC), which held its first meeting in September 2014, and anticipates implementing additional Biggert-Waters Act mapping requirements over the next several years.
FEMA reported that it had almost fully implemented Biggert-Waters Act mitigation assistance requirements and had begun researching alternative mitigation methods, as required by HFIAA.
FEMA had also begun implementing outreach and affordability requirements, including establishing an interim Office of the Flood Insurance Advocate.
FEMA also made progress in providing mapping-related notifications to Congress. FEMA is considering methods for providing access to any available property-level data to policyholders that would help clearly communicate flood risk. FEMA has taken some action on an affordability study that the two laws require, but data challenges have delayed progress. The study is required to analyze the impact of eliminating all discounted NFIP premiums (such as subsidized premiums), but FEMA cannot identify all properties that are receiving the discounts. In February and September 2015, the National Academy of Sciences is to deliver two reports that identify approaches for an NFIP affordability framework and nationwide affordability study, respectively.

section_title: Letter
paragraphs: The vast majority of natural disasters within the United States have  involved flooding, making flood damage one of the most costly hazards  for American homeowners. The National Flood Insurance Program (NFIP)  plays a critical role in the federal government’s efforts to minimize the  damage and financial impact of floods. NFIP was established in 1968 as  an alternative to providing direct disaster relief after floods and was  intended to reduce the federal government’s escalating costs for repairing  flood damage after disasters.The Federal Emergency Management  Agency (FEMA) within the Department of Homeland Security, which  administers NFIP, makes federally backed flood insurance available to  property owners in qualifying communities. In fiscal year 2014, NFIP  collected about $3.8 billion in premiums and insured approximately $1.3  trillion in property.
NFIP has faced significant ongoing financial and management challenges  over the years. In recent years, claims related to major weather events,  especially the 2005 and 2012 hurricanes, have required FEMA to borrow  funds from the Department of the Treasury (Treasury). As of December  31, 2014, FEMA owed Treasury $23 billion. FEMA made a $1 billion  principal repayment at the end of December 2014—FEMA’s first such  payment since 2010. Further, our prior reports on NFIP have identified significant management challenges that FEMA faces in administering the  program, including strategic and human capital planning; collaboration  among offices; and records, financial, and acquisition management. As a  result of its debt exposure and management challenges, the program has  been on GAO’s High-Risk list since 2006.
The Biggert-Waters Flood Insurance Reform Act (Biggert-Waters Act),  enacted in July 2012, instituted provisions to help strengthen the future  financial solvency and administrative efficiency of NFIP. For example, it  required FEMA to phase out almost all discounted insurance premiums  and establish a reserve fund. In April 2014, we reported that FEMA had  begun implementing some of the changes required by the Biggert-Waters  Act but had yet to complete a number of important actions. As  implementation proceeded, however, affected policyholders raised  concerns about some Biggert-Waters Act requirements, particularly the  rate increases that resulted from the phasing out of subsidies. In March  2014, Congress passed and the President signed into law the  Homeowner Flood Insurance Affordability Act (HFIAA). HFIAA sought to  address affordability concerns by repealing or altering some Biggert- Waters Act requirements, including provisions that phased out some  discounted premiums.
You asked us to examine the status of FEMA’s implementation of the  requirements established by the Biggert-Waters Act, as amended by  HFIAA. This report describes (1) FEMA’s management of the acts’  implementation and associated challenges and (2) the status of FEMA’s  implementation of selected requirements, including whether the agency  has met required time frames and established goals.
To address these objectives, we reviewed our prior related reports and  other studies and analyzed relevant laws and regulations. To respond to  the first objective, we obtained relevant FEMA documentation on  implementation priorities and status and compared this information to  appropriate federal internal control standards. We interviewed FEMA  officials responsible for managing and executing FEMA’s implementation  of the Biggert-Waters Act, as amended by HFIAA. We also interviewed  representatives from 10 organizations with flood insurance expertise to  obtain input on key changes made by the Biggert-Waters Act and HFIAA  and any implementation challenges. The 10 organizations were  judgmentally selected based on criteria such as their breadth of  experience and type of organization in order to obtain a broad range of  views. Our interviews with these organizations provided further insights  on the Biggert-Waters Act and HFIAA but are not generalizable to the  flood insurance community as a whole.
To respond to our second objective, we identified Biggert-Waters Act and  HFIAA requirements that FEMA was required to implement and obtained  FEMA documentation on the status of its implementation of these  requirements. We interviewed FEMA officials responsible for  implementing the Biggert-Waters Act, as amended by HFIAA, and the  representatives of the same 10 selected organizations discussed earlier.  We selected requirements to review further based on our legislative  analysis, our prior work, and initial interviews with FEMA. Where  available, we obtained FEMA data relevant to the implementation of the  requirements. We assessed the reliability of the data by interviewing  knowledgeable officials about and reviewing documents on the sources of  the data. We determined the data were sufficiently reliable for reporting  on FEMA’s progress in implementing Biggert-Waters Act and HFIAA  requirements and for discussing the percentage of subsidized policies,  estimates of future reserve fund contributions, and the amount of funding  for FEMA’s mapping and mitigation activities. Appendix I contains  additional information on our scope and methodology.
We conducted this performance audit from March 2014 to February 2015  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
subsections: section_title: NFIP Overview
paragraphs: In 1968, Congress created NFIP, which makes federally backed flood  insurance available to property owners in qualifying communities. NFIP  was established as an alternative to providing direct disaster relief after  floods and was intended to reduce the federal government’s escalating  costs for repairing flood damage after disasters. Currently, NFIP is  managed by FEMA’s Federal Insurance and Mitigation Administration  (FIMA), with administrative support from FEMA’s Mission Support  Bureau. FIMA staff members are responsible for monitoring and  overseeing NFIP’s three program areas: insurance, flood mapping, and  mitigation activities. Within FIMA, these areas of responsibility are  overseen by the Risk Insurance Division, Risk Analysis Division, and Risk  Reduction Division, respectively.
Private insurance companies, referred to as “Write Your Own” companies  (WYO), write, sell, and service NFIP policies, which are financially backed  by the federal government. FEMA funds NFIP primarily through the  insurance premiums paid by policyholders but receives appropriations for  some flood mapping and mitigation activities. NFIP premiums are to cover  insurance claims and all program costs, including outreach, research, and  operating expenses. When premiums are insufficient to cover these  costs, FEMA may borrow money from Treasury, although Congress sets  limits on the overall amount that FEMA may borrow.
section_title: Insurance
paragraphs: As of December 2014, about 22,000 communities across the United  States and its territories were voluntarily participating in NFIP by adopting  and agreeing to enforce flood-related building codes and floodplain  management regulations to reduce future flood damage. Homeowners  with mortgages held by federally regulated lenders on property in special  flood hazard areas (SFHA) are required to purchase flood insurance.  Others may purchase flood insurance voluntarily if they live in a  participating community. NFIP establishes flood zone designations  through its mapping process. SFHAs are high-risk areas that have a 1  percent or greater annual chance of flooding and are designated as A,  AE, V, or VE zones.
NFIP coverage limits vary by program (regular or emergency) and  property type (for example, residential or nonresidential). In NFIP’s  regular program, the maximum coverage limits for residential  policyholders are $250,000 for buildings and $100,000 for contents. For  commercial policyholders (that is, those with policies for nonresidential  properties and multifamily properties), the maximum coverage limit is  $500,000 per building and $500,000 for the building owner’s contents.  Additional coverage is available for contents owned by tenants. NFIP  differentiates two levels of coverage under the regular program—basic  and additional. Because claims are more likely to be made against the  first several thousand dollars of coverage than against higher levels of  coverage, FEMA charges a higher insurance premium per $100 of basic  coverage than it does per $100 of additional coverage.
FEMA uses a nationwide class rating system to determine premiums,  rather than an individual property or community-level rating system. The  premium that NFIP policyholders pay has several components, including  a risk component. The risk component varies among policyholders  based on location and property characteristics such as flood zone  designation (e.g., rate class), elevation of the property relative to the  community’s base flood elevation (BFE) (where data are available),  building type, number of floors, presence of a basement, and the year a  structure was built relative to the year of a community’s original flood  map.
The 1968 law that created NFIP authorized subsidies for some policies to  encourage community and property owner participation. Generally,  subsidized policies cover properties in high-risk locations that otherwise  would have been charged higher premiums and that were built before  Flood Insurance Rate Maps (FIRM) became available and their flood risk  was clearly understood. Further, NFIP allows other property owners to  continue to pay “grandfathered” rates, which do not reflect reassessments  of their properties’ flood risk that occur when the properties are remapped  into higher-risk flood zones but whose policies continue to be classified  with other policyholders from lower-risk zones.
section_title: Mapping
paragraphs: FIRMs serve several purposes. They provide the basis for setting  insurance rates and identifying properties whose owners are required to  purchase flood insurance. They also provide the basis for establishing  floodplain building standards that communities must adopt and enforce as  part of their NFIP participation. While FIMA’s Risk Analysis Division is  responsible for flood mapping activities and for flood mapping policy and  guidance, stakeholders from all levels of government and the private  sector participate in the mapping process. FEMA identifies flood hazards,  assesses flood risks, and provides appropriate hazard and risk  information to communities nationwide. FEMA relies on local  governments to provide it with notice of changes in communities that can  pose new or changed flood hazards and works with localities to collect  the information needed to update flood maps.
section_title: Mitigation
paragraphs: FEMA supports a variety of flood mitigation activities that are designed to  reduce flood risk and thus NFIP’s financial exposure. These activities,  which are implemented at the state and local levels, include hazard  mitigation planning; the adoption and enforcement of floodplain  management regulations and building codes; and the use of hazard  control structures such as levees, dams, and floodwalls or natural  protective features such as wetlands and dunes. Community-level  mitigation funding is available through FEMA via grant programs such as  the Flood Mitigation Assistance (FMA) Program. Through these  programs, FEMA provides cost-sharing opportunities for communities for  mitigation activities. At the individual property level, mitigation options  include elevating a building to or above the area’s BFE, relocating the  building to an area with less flood risk, or purchasing and demolishing the  building and turning the property into green space.
section_title: Recent Legislation
subsections: section_title: The Biggert-Waters Act
paragraphs: In July 2012, the President signed into law the Biggert-Waters Act to help  strengthen the financial soundness of NFIP. The act mandated changes  to several aspects of NFIP’s three programmatic areas—insurance,  mapping, and mitigation—and also required a study on affordability (see  app. II for a detailed chart of selected requirements from the Biggert- Waters Act).
With respect to insurance, the Biggert-Waters Act required FEMA, among  other things, to:  create a reserve fund that would maintain at least 1 percent of the  total annual potential loss exposure faced by NFIP based on  outstanding flood insurance policies in force in the prior fiscal year; issue a report to Congress setting forth options to repay FEMA’s total  debt to Treasury within 10 years;  increase rates to phase out premium discounts for grandfathered  properties that had been remapped to higher-risk flood zones but  were still classified with other policyholders from the lower-risk zone; increase rates (at 25 percent a year) to phase out subsidies for certain  properties, including secondary residences, businesses, and severe  repetitive loss properties; prohibit subsidized rates for properties purchased after or not insured  as of July 6, 2012; and develop a methodology for determining the appropriate amounts that  WYOs should be reimbursed for selling, writing, and servicing NFIP  policies and adjusting claims.
To improve the accuracy of FIRMs (which are used in rate setting), the  Biggert-Waters Act required the creation of a Technical Mapping Advisory  Council (TMAC) to review and provide recommendations on updating and  improving community flood maps. In addition, Section 216 of the Biggert- Waters Act authorized funding for and established a national flood  mapping program, under which FEMA was to review, update, and  maintain rate maps in coordination with TMAC. With respect to  mitigation, the Biggert-Waters Act amended aspects of FEMA’s existing  mitigation grants assistance programs. For example, Section 225: eliminated as independent programs a mitigation assistance grant  program and a pilot program specific to repetitive insurance claims  properties and severe repetitive loss properties, respectively; allowed for grants for eligible mitigation activities to be provided  directly to policyholders under certain circumstances; and allowed FEMA to pay a higher percentage of total costs for activities  providing mitigation for severe repetitive loss properties than for  mitigation activities for other properties covered by the grants  program.
The Biggert-Waters Act also mandated that FEMA contract with the  National Academy of Sciences (NAS) to conduct a study that would  include an analysis of the costs and benefits to the federal government of  a flood insurance program with full risk-based premiums that could be  combined with a means-tested insurance voucher program for individuals  who could not otherwise afford coverage. Under the Biggert-Waters Act,  the NAS study can inform a FEMA affordability study, which includes  methods to encourage and maintain participation in NFIP and methods to  establish an affordability framework.
Concern over rapid rate increases implemented under the Biggert-Waters  Act played a role in the enactment of HFIAA in March 2014. HFIAA  repealed some of the rate increases implemented under the Biggert- Waters Act. However, the act also modified or continued some changes  made by the Biggert-Waters Act to NFIP (see app. II for a detailed chart  of selected requirements from HFIAA).
Among other things, HFIAA contained the following with respect to  insurance:  created a premium surcharge that would be deposited in the reserve  fund (generally, a $25 surcharge for primary residences and a $250  surcharge for others);  restored grandfathered rates removed by the Biggert-Waters Act,  effective retroactive to the Biggert-Waters Act’s enactment on July 6,  2012; did not affect the schedule for phasing out subsidized policies for  properties such as secondary residences, businesses, and severe  repetitive loss properties (rates would continue to increase at 25  percent a year);  reinstated subsidized rates for properties that were purchased after or  not insured as of July 6, 2012, that had been removed by the Biggert- Waters Act, but required that FEMA increase premium rates on these  and many other types of subsidized policies by at least 5 percent up  to the caps established by HFIAA for all policies annually;  limited average increases for a risk class to 15 percent and individual  policy increases to 18 percent; and  required FEMA to issue refunds directly to those who paid NFIP  premiums under the Biggert-Waters Act in excess of rates set under  HFIAA.
In the area of mapping, HFIAA added a requirement that TMAC review  FEMA’s flood mapping program and issue a report with respect to the  technical credibility of flood hazard data in all areas where FIRMs are  prepared or updated. FEMA is required to provide TMAC’s review report  to Congress. HFIAA also requires that FEMA notify affected communities  before work begins on new or updated mapping about the model or  models being used and provide an explanation of why that model is  appropriate. Regarding mitigation, HFIAA required FEMA to establish  guidelines to provide alternative mitigation methods, other than building  elevation, to reduce flood risk to residential buildings that cannot  otherwise be elevated due to their structural characteristics.
HFIAA also permitted additional funding to complete the affordability  study, along with additional requirements to include, after which FEMA  would be required to prepare and present to Congress an affordability  framework that considered (1) accurate communication to consumers of  flood risk; (2) targeted assistance to policyholders based on their financial  ability to participate in NFIP; (3) individual or community actions to  mitigate the risk of flooding or lower the cost of flood insurance; (4) the  impact of increases in premium rates on participation; and (5) the impact  of FIRMs on the affordability of flood insurance. HFIAA also required  FEMA to designate a Flood Insurance Advocate to advocate for the fair  treatment of NFIP policyholders and property owners in the mapping of  flood hazards, the identification of risks from flood, and the  implementation of measures to minimize the risk of flood.
section_title: FEMA Has Prioritized and Tracked Required Changes, but Faces Implementation Challenges
paragraphs: In managing its implementation of the Biggert-Waters Act, as amended by  HFIAA, FEMA has prioritized its implementation of required changes,  established internal mechanisms and indicators for communicating and  tracking its implementation status, and regularly communicated its  implementation efforts to key external stakeholders. These steps are  consistent with relevant federal internal control standards. However,  FEMA faces a number of challenges related to the implementation of  these laws, such as resource constraints and the need to balance NFIP’s  financial solvency with affordability, as well as existing organizational  challenges that could affect its implementation efforts.
subsections: section_title: FEMA Has Prioritized, Tracked, and Communicated Its Implementation of the Biggert-Waters Act, as Amended by HFIAA
paragraphs: To manage its implementation of changes required by the Biggert-Waters  Act and HFIAA, FEMA has: established implementation of the changes as a strategic objective in  its 2014-2018 strategic plan;  ranked the implementation of HFIAA requirements in terms of priority; established mechanisms for coordinating internally on prioritizing and  tracking its implementation efforts; and  communicated regularly with external stakeholders.
As well as making implementation of the changes an organizational  priority within its strategic plan, FEMA has also prioritized legislative  requirements for implementation. In its 2014-2018 strategic plan, FEMA  established strategy 4.3.1, “Strengthen implementation by prioritizing  NFIP reforms under the Biggert-Waters Act of 2012, the Homeowner  Flood Insurance Affordability Act of 2014, and the Hurricane Sandy  Rebuilding Task Force.”officials stated that they met internally in a collaborative process to rank  each section of the law in terms of implementation priority. The officials  added that senior FEMA management, including the administrator, were  informed of the outcomes of these sessions and consulted on priorities.
Following the passage of HFIAA, FEMA  FEMA officials also told us that in developing their implementation  priorities they took into consideration input from external stakeholders,  such as organizations with flood insurance expertise and experience,  WYOs, and congressional representatives.
FEMA also delegated responsibility for implementation among divisions  (Risk Insurance, Risk Analysis, and Risk Reduction) and FEMA’s front  office. FEMA’s highest priority has been implementing rate changes  required by HFIAA, including rate reductions that have resulted in refunds  for some policyholders. This priority is consistent with the intent of HFIAA,  which sought to address affordability concerns by postponing or repealing  some Biggert-Waters Act requirements, including provisions that phased  out some discounted premiums (subsidized and grandfathered rates).  According to FEMA officials, other high-priority implementation efforts  related to HFIAA include communicating flood risk more clearly to  individual policyholders, as required by HFIAA Section 28; meeting  mapping notification requirements (required by HFIAA Section 30); and  designating the flood insurance advocate (required by HFIAA Section 24).
FEMA has established an integration team to oversee its implementation  efforts and created regularly updated tracking documents and indicators  to prioritize and track implementation. These indicators include numbers  assigned to requirements reflecting level of priority and percentages of  completion for requirements. FEMA officials stated that the integration  team consists of two or three representatives from each of FIMA’s key  divisions, the Office of Chief Counsel, FEMA senior management, and  others. According to FEMA officials, the integration team met weekly for  the first 6 months after the passage of HFIAA and now meets biweekly. At  these and other working meetings, staff members and management  review the status of implementation efforts, discuss their workload, and  evaluate priorities. FEMA has also created tracking documents for both  the Biggert-Waters Act and HFIAA that are updated by the integration  team at their meetings. These documents rank requirements in terms of  priority and establish status indicators that allow staff to review progress  toward implementation in terms of percentage completed. The documents  also provide a schedule for key deliverables. For most of the reports it is  required to produce, some of which do not have legislatively established  due dates or have due dates that have already passed, FEMA has  established completion time frames. FEMA has also proposed tentative  schedules for completing many other requirements. For example, FEMA  documentation shows that in certain cases involving rulemaking,  multiyear time frames for completing the related requirement have been  established.
FEMA officials said that FEMA had also undertaken a broad strategy to  educate consumers, stakeholders, elected officials, and the media about  flood insurance reform changes and had met frequently with Congress  and external stakeholders (including associations involved in NFIP  issues) to discuss priorities and the status of FEMA’s implementation of  the Biggert-Waters Act and HFIAA. FEMA officials stated that they had: met with key congressional committee staff on a biweekly basis to  update them on FEMA’s implementation progress and conducted over  100 meetings to educate congressional representatives and staff on  program changes from the Biggert-Waters Act and HFIAA,  in 2013 and 2014 worked with a stakeholder association to reach out  to local officials to educate them on Biggert-Waters Act and HFIAA  changes, developed materials and a specialized toolkit for agents to educate  policyholders about the Biggert-Waters Act and HFIAA,  consulted with WYOs, as required by HFIAA Section 3, holding a total  of 10 consultation sessions specifically on HFIAA implementation and  assigned a FEMA manager who is responsible for communicating  guidance to WYOs,  conducted communications roundtables with four key stakeholder  groups to get ideas and feedback on communicating NFIP reforms to  relevant audiences, met with representatives from several federal agencies on three  occasions to discuss upcoming changes,  conducted training and developed materials for insurance agents and  other insurance professionals (lenders, realtors, adjusters, and others)  to help ensure they have the information and tools they need to  properly communicate with policyholders. Between May 2013 and  October 2014, FEMA estimates it had trained over 48,500 agents and  insurance professionals, and developed materials that policyholders will receive in their annual  insurance renewal package describing rate changes.
Steps that FEMA has taken to manage its implementation of the Biggert- Waters Act, as amended by HFIAA, are consistent with relevant federal  internal control standards. FEMA has undertaken risk assessment—one  of five internal control standards—by establishing agency priorities for  implementation. Prioritization activities are a risk identification method  that helps management to identify risk factors, both agency-wide and at  the activity level. By establishing indicators for tracking its implementation  efforts, which are also reviewed by management, FEMA has also  implemented control activities, another internal control standard. Control  activities are the policies, procedures, and mechanisms that help ensure  that management’s directives are carried out. FEMA’s communication of  its priorities and implementation within various levels of the agency and  externally are consistent with the internal control standard for “information  and communications.” Communicating information in a timely manner to  management and relevant staff within the organization, as well as  externally with key stakeholders, may have a significant impact on the  agency achieving its goals.
section_title: FEMA Faces Challenges in Implementing the Biggert-Waters Act and HFIAA Requirements
paragraphs: FEMA officials and representatives of flood insurance organizations we  interviewed cited a number of challenges related to FEMA’s  implementation of the required changes, including the complexity of the  legislation and timing of the enactment of HFIAA, resource constraints,  and the competing program goals of financial solvency and affordability.  Representatives of 4 of the 10 organizations we interviewed stated that  both acts added complexity to NFIP without simplifying any aspects of the  program. Representatives from 3 organizations mentioned the timing of  the passage of HFIAA as a challenge for FEMA. FEMA was in the  process of implementing the Biggert-Waters Act when HFIAA was passed  and had to undo some of its previous actions to implement certain  requirements. Notably, rate increase caps enacted under the Biggert- Waters Act were reduced in HFIAA, while certain subsidy removals were  reversed. As a result of these changes, FEMA was required to cancel  certain rate increases and issue refunds to affected policyholders. FEMA  officials and representatives of half of the organizations we interviewed  cited resource constraints as a challenge for FEMA in implementing flood  insurance reforms. FEMA officials noted that they were operating within  the budget for fiscal year 2014 that was approved prior to the enactment  of HFIAA. While HFIAA made funding available for certain requirements,  it did not do so for others, including the flood insurance advocate position.
Representatives from the 10 organizations we interviewed noted  implementation challenges related to NFIP financial solvency or program  affordability. Seven stated that the Biggert-Waters Act, as amended by  HFIAA, required FEMA to balance the competing goals of NFIP financial  solvency with affordability concerns. Representatives of almost all of the  organizations we interviewed (9 out of 10) expressed concern for the  financial solvency of NFIP. Six generally favored the removal of discounts  for certain policies—subsidized and grandfathered policies—that were  initiated under the Biggert-Waters Act but slowed by HFIAA.  Representatives from half of the organizations we interviewed stated that  rate changes as implemented under the Biggert-Waters Act would have  been beneficial to NFIP’s financial position or expressed concern that  reinstating certain subsidies and extending the time period for the phasing  out of discounted premiums under HFIAA would have a negative impact  on the program’s financial solvency. However, representatives from eight  organizations also noted that some rate increases were phased in too  quickly under the Biggert-Waters Act and that the slowing of rate  increases under HFIAA was beneficial for policyholders.
In addition to challenges specific to the implementation of the Biggert- Waters Act and HFIAA requirements, FEMA continues to face  organizational challenges that have contributed to its placement on  GAO’s High-Risk list since 2006 and which could also impact its  implementation efforts. In addition to the debt incurred by the program  ($23 billion as of December 2014), weaknesses remain in NFIP  management and operations, including contractor oversight, that continue  to place the program at risk. As we identified recently in a December  2014 report, contractor issues have affected FEMA’s efforts to implement  some rate changes required by the Biggert-Waters Act. We  recommended that FEMA institute controls to validate implementation of  data system changes and track their progress toward completion in its  contractor monitoring reports. FEMA agreed to implement these  recommendations and it plans to institute a test plan to validate future  system changes, work with WYOs to obtain information on the status of  their implementation of system changes, and develop procedures to  monitor progress toward the completion of major data system changes.
section_title: FEMA Has Made Progress Implementing Certain Requirements but Lacks Data to Implement Others
paragraphs: FEMA has made progress implementing some but not all of the  provisions of the Biggert-Waters Act and HFIAA. The Biggert-Waters Act  and HFIAA require FEMA to implement changes to the three key  components of NFIP (insurance, mapping, and mitigation), improve its  communication with policyholders, and study NFIP affordability. FEMA  has made some insurance-related changes, including some rate changes  and an increase in reserve assessments. But other changes, such as the  Biggert-Waters Act requirement to remove some subsidies, have been  only partially implemented because necessary data have yet to be  collected. The implementation of key Biggert-Waters Act and HFIAA  mapping requirements must be coordinated with an expert council that  was recently established in July 2014 and held its first meeting in  September 2014. FEMA officials anticipate that the implementation of  these additional changes will happen over the next several years. FEMA  has executed almost all the mitigation assistance requirements under the  Biggert-Waters Act and has begun evaluating alternative mitigation  methods for residential buildings, as HFIAA requires. Finally, FEMA has  begun taking steps to improve communications with policyholders by  establishing an interim Office of the Flood Insurance Advocate and  providing required notifications, but the lack of available data has delayed  the issuance of an affordability study. In February and September 2015,  the National Academy of Sciences (NAS) is to deliver two reports that  identify approaches for an NFIP affordability framework and nationwide  affordability study, respectively.
subsections: section_title: FEMA Has Made Some Insurance-Related Changes but Lacks the Data Needed for Full Implementation
paragraphs: FEMA considered that it had fully met requirements for completing close  to half of the Biggert-Waters Act sections (16 of 34) and about one-third  of the HFIAA sections (8 of 26) as of December 2014. Figure 1  illustrates the progress FEMA has made with respect to certain  insurance-related requirements that are being undertaken primarily by  FIMA’s Risk Insurance Division, such as required rate changes.
FEMA began phasing out subsidized premium rates under the Biggert- Waters Act, but reinstated some due to HFIAA requirements. NFIP has  two types of premium rates: those that reflect the full risk of flooding  within a rate class (full-risk rates) and those that do not reflect full risk  within a rate class. Generally, subsidized policies cover properties in  high-risk locations that otherwise would have been charged higher  premiums, and were built before Flood Insurance Rate Maps (FIRM)  became available and their flood risk was clearly understood. Premium  subsidies were seen as a way to encourage participation in NFIP but over  time have contributed to NFIP’s financial instability. The largest number of  subsidized policies has been for properties built before FIRMs became  available (pre-FIRM). As of September 30, 2013, subsidized policies   The Biggert-Waters  accounted for about 20 percent of NFIP policies.Act removed subsidies for two groups of properties:
Biggert-Waters Act Section 205 required immediate removal of  subsidized rates for certain properties, including newly purchased  properties or properties not covered as a result of the policyholder’s  decision to allow coverage to lapse after July 6, 2012 (the date the act  became law). Upon policy renewal, FEMA was required to charge  premiums that reflected full-risk rates. However, HFIAA Section 3  reinstated subsidies for the newly purchased properties and certain  lapsed properties but also required (Section 5) that FEMA increase  the premium rates for such policies—and certain other pre-FIRM  properties—by 5 percent to15 percent annually.
Biggert-Waters Act Section 205 also required that subsidies for  certain properties, including secondary residences, businesses, and  severe repetitive loss properties, be phased out (see fig. 2 for a full list  of affected properties). FEMA must increase rates for these properties  by 25 percent annually, until the average rate equals the full-risk rate.  HFIAA maintained these rate increases.
To comply with the Biggert-Waters Act, FEMA issued guidance to WYOs  in March 2013 (effective Oct. 1, 2013) on charging full-risk premiums for  properties purchased after or not insured as of July 6, 2012. As  discussed previously, HFIAA Section 3 required FEMA to reverse this  guidance. In an April 2014 WYO bulletin (effective May 1, 2014), FEMA  reinstated the rates that had been in effect prior to the Biggert-Waters Act  changes. Then, in October 2014 guidance FEMA increased rates for all  pre-FIRM subsidized primary residences by an average annual rate of 14  percent, effective April 2015. FEMA has also issued guidance on the  ongoing 25 percent rate increases required by Biggert-Waters Act Section  205. For example, FEMA implemented two annual 25 percent rate  increases on secondary residences, effective in January 2013 and  January 2014. For other property types, FEMA implemented 25 percent  annual rate increases as of October 2013. Further, in October 2014,  FEMA released guidance implementing annual 25 percent rate increases  on the following subsidized properties: non-primary residences, severe  repetitive loss properties, and substantially cumulatively damaged or  “substantially damaged or improved” properties, effective April 1, 2015.
subsections: section_title: Business Subsidies
paragraphs: FEMA began phasing out business subsidies, as required by the Biggert- Waters Act Section 205, but later reinstated them due to HFIAA  requirements. In March 2013 guidance (effective Oct. 1, 2013), FEMA  increased rates for all nonresidential policies by 25 percent, although it  was required to raise rates only on business properties. guidance, FEMA noted that by increasing nonresidential policy rates by  25 percent they would ensure that all business properties are rated as  required by the law. For rate-setting purposes, FEMA categorizes  businesses as “nonresidential,” along with other structures such as non- profits, churches, and detached garages, and does not have data  necessary to specifically identify businesses.
Subject to certain exceptions, HFIAA Section 5 generally capped the  maximum allowable premium increase for individual properties at 18  percent and at 15 percent within any rate class. In guidance issued in  June 2014 (effective Oct. 1, 2014), FEMA stated that because it could not  identify business properties, it was reducing rates on all nonresidential  policies in order to comply with HFIAA annual rate increase caps. FEMA officials told us that beginning in October 2015 they will ask owners of  nonresidential structures to specify the type of property they were  insuring. FEMA officials told us that they are coordinating with WYOs to  develop criteria for determining what constitutes a business and modeling  the definition on those currently used by the Internal Revenue Service  and other agencies. As the reporting of data has a 2-month lag, the first  data will arrive in December 2015. Once nonresidential structures are  categorized, FEMA plans to begin reducing subsidies to businesses  through 25 percent annual premium rate increases.
section_title: Grandfathered Policies
paragraphs: W-13016.
FEMA increase rates to phase out premium discounts for grandfathered  properties—properties that had been remapped into higher flood-risk  zones but continued paying lower-risk premium rates. However, FEMA  had not planned to begin implementing rate increases on grandfathered  properties until the second half of 2014. Due to the passage of HFIAA in  March 2014, which repealed this Biggert-Waters Act requirement, FEMA  never began phasing out the grandfathered premium rates.
Regardless of the passage of HFIAA, FEMA would have faced challenges  in phasing out grandfathered policies as it does not have the elevation  data necessary to determine full risk rates for all of these policies. NFIP  allows certain property owners to continue to pay “grandfathered” rates,  which do not reflect reassessments of their properties’ flood risk that  occur when the properties are remapped into higher-risk flood zones but  whose policies continue to be classified with other policyholders from a  lower-risk zone. In order to identify grandfathered policies that are not  paying full-risk rates, FEMA officials told us the agency would need to  know the property’s elevation in relation to the base flood elevation (BFE)  level of the ground beneath the property. However, not all policyholders  have elevation certificates that show this information, in part because  certificates are not required for all properties. In particular, a FEMA official  stated that elevation certificates are not required for properties built  outside of a special flood hazard area (SFHA) that are later remapped  into an SFHA and pay a grandfathered rate. In addition, an elevation  certificate generally has not been required for pre-FIRM buildings that  previously received subsidized rates because information about elevation   Finally, a FEMA official also noted  was not used in setting those rates.that properties may have out-of-date elevation certificates, if remapping  has moved them into a high-risk class. We have previously recommended  that FEMA develop and implement a plan to obtain elevation information  needed to determine full-risk rates for subsidized properties, which are  generally also pre-FIRM structures.recommendation, as well as to identify grandfathered policies that are not  paying full-risk rates, FEMA officials said that they were in a multiyear  process of determining how to collect elevation data. They told us that  they were considering whether available BFE databases could serve as a  proxy for elevation certificates at the individual property level, for the  limited geographies where such data are available.
The number of grandfathered properties could also continue to grow due  to the passage of HFIAA. Because HFIAA Section 4 restored  grandfathering, future remapping of properties into a SFHA could create  new grandfathered and subsidized policies, depending on property  characteristics. HFIAA Section 6 stipulated that for properties newly  mapped into SFHAs, when the new premium rate is calculated as a full- risk rate, a lower than full-risk rate (preferred-risk premium) will be applied  the year following map revision. At the end of this 1-year period, a  permanent rate is phased in. Therefore, in the event that an SFHA  expands:
Pre-FIRM properties that are newly insured for the first time following  an SFHA expansion are still eligible, under previously established  NFIP rules, to receive subsidized policies. When this occurs, it will  increase the overall number of subsidized policies.
Properties eligible for the initial preferred-risk premium will then have  their premium increased each year until the policy reaches its full-risk,  grandfathered, or subsidized rate, depending on the property’s  eligibility.
For properties that are already insured or were built in compliance  with the FIRM in place at the time of construction, full-risk rates may  be based on the previous, lower risk rate zone. Therefore, policies  written under this rule represent newly grandfathered policies within  NFIP.
section_title: Refunds
paragraphs: FEMA has issued guidance to repeal certain rate increases and issue  refunds as required by HFIAA. In addition to the repeal of certain subsidy  removals discussed above, Section 5 of HFIAA capped the maximum  allowable premium increase for individual policies at 18 percent and the  maximum average increase at 15 percent for any rate class. In October  2014, FEMA issued new guidance to implement rate-setting requirements  in accordance with HFIAA, which included rate adjustments to reflect  HFIAA caps on annual rate increases. The guidance will be effective for  all policies newly purchased or renewed on or after April 1, 2015.  Previously, FEMA also issued guidance in June 2014 (effective Oct.  2014) that provides refund procedures for eligible policyholders. In  certain cases, per HFIAA Section 3, policyholders will receive refunds  from FEMA.
WYOs began issuing refunds in October 2014 and, according to FEMA  documentation, almost all refunds were issued by December 2014.groups of policyholders received refunds:
Refunds were issued to those who became ineligible for subsidies  under the Biggert-Waters Act because they had purchased properties  after July 6, 2012, or whose coverage had lapsed as of that date for  certain reasons. The subsidized premium rates for the newly  purchased homes and some of the lapsed covered properties were  reinstated under HFIAA Section 3 (see fig. 2). According to FEMA  officials, this group of policyholders was expected to receive an  average refund of $1,000.
Refunds were issued to those who experienced premium increases  under the Biggert-Waters Act that were above the 18 percent annual  cap imposed by HFIAA Section 5. The Biggert-Waters Act stipulated  that premiums generally could be increased annually up to 20 percent  within any rate class, with no cap on annual increase for any  individual policy. As we have seen, HFIAA revised this cap generally  at 18 percent for individual properties and at 15 percent within any  rate class (these caps do not apply to properties still subject to the 25  percent annual increases for subsidy removal). FEMA officials  estimated that the average refund for this group of policyholders was  approximately $60.
In addition, businesses and nonresidential properties will receive one-time  refunds in 2014 for premium increases above 18 percent. FEMA must  issue refunds to all nonresidential policyholders as HFIAA eliminated  FEMA’s legal authority to make the initial increase in their rates. As noted  earlier, FEMA will implement ongoing annual 25 percent rate increases  on businesses after it has collected the data necessary to identify them.  According to FEMA, properties that are still subject to the 25 percent  annual increases for subsidy removal (see fig. 2) will generally not receive  refunds.
section_title: Other Rate Changes
paragraphs: As required by HFIAA Section 5, FEMA issued guidance in October 2014  (effective April 2015) that caps the annual maximum allowable premium  increase for individual properties at 18 percent and at 15 percent within  any rate class. In its guidance, FEMA also raised average premiums on  pre-FIRM subsidized policies by 14 percent, in the top range of allowable  premium increases, which includes the reserve assessment. FEMA  officials stated that they planned to increase rates for these properties  annually. They added that as FEMA increases subsidized rates, at some  point a policyholder may have an incentive to obtain an elevation  certificate and pay the full-risk rate rather than the subsidized rate  because the full-risk rate would be lower.
FEMA officials told us that tracking prospective premium increases for  individual policies based on current coverage elections was not difficult,  but that setting rates while keeping overall increases under 18 percent for  individual properties could be challenging. FEMA officials stated that a  cap on individual policies has never been required under NFIP prior to  HFIAA. They added that the total premium for a policy is determined by multiple rating factors. As these factors are calculated separately,  overall premiums could increase by more than 18 percent in total during  the rate-setting process. To address this issue, FEMA officials said that  they would monitor rate increases for individual policies and that FEMA  already had checks in place to try to ensure that no policies exceeded the  premium increase cap in a given year. FEMA officials also told us that  they reviewed the impact of rate changes on a sample of policies. For  each of the policies within the sample, rating factors were used to  calculate premiums under previous rate-setting practices, which were  compared to premiums calculated under new rate-setting practices  required by HFIAA. FEMA officials noted that they have done these  checks prior to the Biggert-Waters Act in order to identify any individual  policies that might be experiencing unusual rate increases.
section_title: Policies Exceeding 1 Percent of Total Coverage
paragraphs: HFIAA Section 7 asks FEMA to “strive to minimize the number of policies  with annual premiums that exceed one percent of the total coverage” and  requires FEMA to report such policies to Congress. FEMA officials stated  that they were compiling a report that would compare the number of  policies with a premium exceeding 1 percent of coverage as of December  31, 2012, with the number of such policies 1 year later, after the Biggert- Waters Act rate increases. FEMA officials stated that after the  implementation of the Biggert-Waters Act rate changes, there was a large  increase in the number of policies with premiums exceeding 1 percent of  total coverage. However, they also told us that the number of such  policies had been large prior to the act (including subsidized policies). As  of December 2014, FEMA estimated that this report was 50 percent  complete. HFIAA did not establish a due date for issuing the related  report, but FEMA officials expect an internal draft of this report will be  completed in January 2015, with concurrence taking additional time.
FEMA officials told us the agency will be unable to keep premiums below  1 percent of total coverage for a large number of policies. Currently,  FEMA’s rate-setting policy requires rates above 1 percent of coverage for  several classes of properties, including high-risk properties located in  SFHAs. Further, some policies include only basic coverage that may  result in a relatively higher pay-out than those with additional coverage.  As a result, the premiums on those policies are high relative to their  coverage level, and may exceed 1 percent of total coverage.
In addition, as we have seen, HFIAA Section 5 requires that FEMA raise  premium rates on certain policies by at least 5 percent per year. FEMA  officials said that many such policies already carried premiums that  exceeded 1 percent of total coverage.
section_title: Reserve Assessments and Related Reports
paragraphs: As discussed previously, as of December 2014, FEMA’s debt to Treasury  from flood insurance payments totaled $23 billion. To avoid large  increases in FEMA’s debt, Biggert-Waters Act Section 212 required that  FEMA create a reserve fund that maintained at least 1 percent of total  annual potential loss exposure. The reserve fund is to be phased in over  time, with at least 7.5 percent of the total added yearly, but FEMA is not  permitted to exceed annual rate increase caps to build up or maintain the  reserve fund. NFIP’s current exposure is $1.3 trillion, meaning the reserve  fund eventually would need to hold $13 billion, and FEMA would have to  collect approximately $975 million annually (7.5 percent of $13 billion) in  order to meet statutory targets. As shown in figure 1, FEMA lists the  establishment of the reserve fund as 100 percent complete, reflecting that  the reserve fund has been created. However, FEMA has not yet met the  yearly statutory target for reserve fund contributions.
FEMA has issued guidance on financing the reserve fund and will do so  through two separate funding sources: a reserve fund assessment and a  reserve fund surcharge. As we reported in April 2014, FEMA established  a reserve assessment on NFIP policies following the enactment of the  Biggert-Waters Act. With the exception of preferred-risk policies, new  policies or renewals on or after October 1, 2013, were subject to a 5  percent increase on their policies for the purposes of building the reserve  fund. In an October 1, 2014, WYO bulletin, FEMA raised its reserve  assessments. Effective April 2015, policies that had been charged a 5  percent reserve fund assessment will be charged an additional 10  percent. For preferred-risk policies, the reserve fund assessment will  increase from 0 percent to 10 percent. FEMA has issued guidance to the  WYOs and will begin charging a reserve fund surcharge that is separate  from the reserve assessment beginning in April 2015. Consistent with  HFIAA Section 8, primary residential properties are subject to a $25  surcharge, while all nonprimary residential and nonresidential properties   Due to the April 2015 increases in  are subject to a $250 surcharge.reserve assessments and surcharges, FEMA officials estimated that  reserve fund contributions will total approximately $500 million in fiscal  year 2015. They also estimated that about $1 billion will be contributed to  the reserve fund in fiscal year 2016.
FEMA officials noted that a main limitation in calculating these estimates  was potential changes in demand for NFIP policies that could impact  forecasted reserve fund contributions. They said that the addition of the  surcharge and the continued increases from pre-FIRM subsidy removal,  as well as increased reserve assessments, could accelerate the decline  in policyholders. FEMA and representatives of 6 of the 10 organizations  we interviewed also noted that relatively low-risk policyholders might  leave the program because of the increases, but the full impact is unclear.  Further, while representatives from 4 of the 10 organizations we  interviewed viewed building the reserve fund as beneficial to the financial  position of NFIP, a couple expressed concerns that FEMA might not be  able to reduce NFIP’s debt while building the reserve. Representatives  from 2 of the 10 organizations we interviewed noted that neither the  Biggert-Waters Act nor HFIAA addressed NFIP’s outstanding debt.
In mid-December 2014, FEMA issued its fiscal year 2013 NFIP report to  Congress, which included the following reports required by the Biggert- Waters Act:
Biggert-Waters Act Section 212 required FEMA to submit an annual  report to Congress if yearly contributions to the reserve fund do not  meet the 7.5 percent target. HFIAA Section 20 amends this provision  to require quarterly reporting if the reserve ratio required is not  achieved in a given fiscal year.
Biggert-Waters Act Section 213 required FEMA to issue a report to  Congress by January 2013 on a repayment plan setting forth options  to repay FEMA’s total debt to Treasury within 10 years.
FEMA’s analysis in the report was conducted prior to the enactment of  HFIAA. FEMA reported that it would be unlikely that the required  reserve fund balance (approximately $13 billion) would be achieved in the  next 20 years due to NFIP’s outstanding current debt and related interest  expenses. FEMA’s analysis also concluded that, under the current NFIP  operating environment, the agency will be unable to repay its debt within  the 10-year time frame.
Biggert-Waters Act Section 224 required FEMA to develop a methodology  to compensate WYOs, using actual flood insurance expense line data as  an input. Specifically, the Biggert-Waters Act required FEMA to: develop a methodology by January 2013, using actual flood insurance  line expense data, for determining the amount that WYOs should be  compensated for selling, writing, and servicing NFIP policies and  adjusting claims on behalf of NFIP,  issue rules by July 2013 for formulating revised expense  reimbursements, and  submit a report to Congress within 60 days of the rule effective date  including the rationale for the rule and the degree to which the policy  accurately represents WYOs’ true operating costs and expenses.
According to FEMA officials, FEMA is currently undertaking rulemaking as  required by Section 224.
FEMA currently provides approximately 12 percent of collected premiums  to the WYOs to cover operating expenses. Since 2001, the percentage of  premiums has included an additional 1 percentage point after some WYO  companies told FEMA that their actual expenses to service flood  insurance policies were greater than the amount they were being  reimbursed. In August 2009, we concluded that there was no basis for  providing these additional payments to WYO companies and  recommended that FEMA immediately reassess the practice of paying  WYOs the additional 1 percent.
W-14053. Because expenses are paid to WYOs as a percentage of premiums, expense  payments are larger for high-risk policies with large premiums. and commissions as this percentage was written into the agreements  between WYOs and FEMA.
As part of its efforts to develop a new WYO compensation methodology,  FEMA has taken steps to address the quality of WYOs’ expense data. In  a May 2013 presentation, FEMA stated that it has worked with the  National Association of Insurance Commissioners to issue new reporting  guidelines requiring submission of uniform data. However, FEMA also  stated, and we have previously reported, historically expense data were  reported by WYOs under a variety of accounting interpretations. Because of this, FEMA stated that the data were unusable as a basis for  determining actual WYO operating expenses. FEMA also noted that  federal flood expense data reported to the National Association of  Insurance Commissioners would have to become “more credible” to be  used effectively in calculating annual WYO expenses. FEMA officials  told us that once the WYO compensation methodology was complete, the  rulemaking process would take several additional years.
section_title: FEMA Expects Implementation of Mapping Requirements to Take Several More Years
paragraphs: Figure 3 illustrates FEMA’s progress in implementing selected Biggert- Waters Act and HFIAA mapping requirements.
GAO-09-455.
Most of the due dates listed were established by the Federal Emergency Management Agency  (FEMA) after the legislative due dates had passed.
Due dates listed are mandated by BWA.
subsections: section_title: Mapping Program
paragraphs: Both the Biggert-Waters Act and HFIAA established requirements  intended to improve FEMA’s FIRMs. Biggert-Waters Act Section 216  established the National Flood Mapping Program and defined FEMA’s  responsibility for developing and maintaining FIRMs that are adequate to  make flood-risk determinations. The Biggert-Waters Act required that  FEMA review, update, and maintain maps that, among other things, use  current, accurate, ground-elevation data; include future conditions risk  assessment and modeling; and incorporate the best available climate  science. The Biggert-Waters Act did not establish a due date for  completing this section, and FEMA anticipates that meeting this and other  mapping requirements will take several years. As shown in figure 3,  FEMA estimated Biggert-Waters Act Section 216 to be 30 percent  complete as of December 2014.
The Biggert-Waters Act also authorized $400 million to be appropriated  for updating maps annually for fiscal years 2013 through 2017. FEMA’s  Risk Mapping, Assessment, and Planning (Risk MAP) program, which  encompasses NFIP mapping activities, is funded from two sources—  As  appropriated funds and fee income from NFIP insurance activities. shown in table 1, appropriations and total funding for the NFIP mapping  program have generally decreased since 2009, while fee income has  increased slightly. In fiscal year 2009, almost $220 million was  appropriated to the mapping program, but in fiscal year 2014 this amount  fell to approximately $95 million. In addition to funding, representatives  from almost all of the organizations we interviewed (9 out of 10) cited  various challenges for FEMA associated with implementing flood mapping  requirements, including a lack of elevation data and the changing natural  environment.
See GAO, 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, D.C.: Dec. 2, 2010) for a detailed discussion of  FEMA’s mapping program. Prior to the Biggert-Waters Act, in fiscal year 2009 FEMA had  begun a 5-year effort— Risk Mapping, Assessment, and Planning (Risk MAP)—to build on  the flood hazard data and maps produced during earlier map modernization initiatives.  Under Risk Map, FEMA also began reviewing 20 percent of the nation’s flood maps  annually. The funding from fees advances mapping while also paying for things like call  centers, data management and archive, web presence, business functions, internal  controls, and program management. The appropriated funding is focused on map  production and map updates.
To assist with the implementation of FEMA’s mapping program, Biggert- Waters Act Section 215 required FEMA to establish a Technical Mapping  Advisory Council (TMAC) to work with FEMA to update its mapping  program and provide recommendations on how flood insurance maps  could incorporate the best available climate science, among other things.  Under this requirement, TMAC was to have issued by July 2013 a report  with recommendations to FEMA to ensure that its FIRMs incorporated the  best available climate science and that it used the best available  methodology to assess future flood risks (Future Conditions Risk  Assessment and Modeling Report). HFIAA Section 17 further required  that TMAC review FEMA’s flood mapping program to help ensure that  FIRMs incorporate technically credible flood hazard data and that FEMA  provide TMAC’s review report to Congress. HFIAA did not set a deadline  for FEMA to complete this requirement. FEMA estimated that the  implementation of Biggert-Waters Act Section 215 was 35 percent  complete and HFIAA Section 17 was 10 percent complete as of  December 2014 (see fig. 3).
In July 2014, 2 years after the Biggert-Waters Act was passed, FEMA  selected TMAC members, and in September 2014 TMAC held its first  meeting. TMAC held its second meeting in early December 2014. As  mandated in the Biggert-Waters Act, TMAC includes representatives from  federal, state, local, and private sector organizations. In establishing  TMAC, FEMA officials said that it took approximately 2 years due in part  to the rigorous vetting process they conducted for selecting TMAC  members that was governed by federal standards for establishing such  committees. In addition, as the Biggert-Waters Act did not authorize  funding for establishing TMAC, FEMA officials told us that they first had to  secure such funding. FEMA anticipates that TMAC will issue the required  Biggert-Waters Act report, Future Conditions Risk Assessment and  Modeling, in October 2015. As many of the Biggert-Waters Act mapping  reforms, such as Section 216, are required to be implemented in  coordination with TMAC, FEMA anticipates that the implementation of  these additional changes will happen over the next several years as  TMAC makes its recommendations to FEMA.
However, FEMA has recently made some improvements to its mapping  program and implemented certain requirements. For example, since  August 2013 FEMA bi-annually issues a publicly available document  (Standards for Flood Risk Analysis and Mapping) that summarizes NFIP  mapping standards, with the latest version issued in November 2014.  This document is the result of a multiyear project begun in 2011 to  improve the way guidelines and standards are published, maintained, and  used. FEMA officials noted that many of their existing standards align with  Biggert-Waters Act requirements. For example, they noted that their  Standards for Flood Risk Analysis and Mapping include at least 10  standards that align with utilizing the most accurate topography and  elevation data available (as discussed in the Biggert-Waters Act). In  addition, the November 2014 version incorporates aspects of a HFIAA  requirement that addresses flood protection systems in communities. As  shown in figure 3, FEMA has also completed or nearly completed certain  Biggert-Waters Act mapping requirements, including (1) removing the  limitation on state contributions for updating flood maps (Section 219); (2)  producing an interagency coordination study, contracted with and  conducted by the National Academy of Public Administration (Section  221); and (3) establishing a flood protection accreditation task force  (Section 226).
section_title: Mapping-Related Notifications and Appeals
paragraphs: FEMA has made progress in providing mapping-related notifications and  is clarifying the appeals reimbursement HFIAA requires. HFIAA Section  30 required that FEMA notify communities affected by the mapping model  before starting a new or updating an existing mapping model that could  result in a new or updated FIRM. FEMA must also notify the  congressional members from the affected areas at least 30 days before a  preliminary map is issued. The notice is to include estimates of the  number of homes and businesses affected by preliminary mapping  changes. HFIAA did not establish a deadline for FEMA to complete this  section. FEMA estimated that this section was 45 percent complete (see  fig. 3) as of December 2014, and anticipates completing it after fiscal year  2015.
FEMA has begun issuing monthly notices to congressional  representatives and affected communities but has not provided current  estimates of the number of homes and businesses affected. FEMA  officials told us that they did not have a database to track property  ownership, something they would need in order to calculate the  estimates. As of September 2014, FEMA officials said that they were  working toward creating such a database but face challenges, including  data availability as this information is typically collected at the state and  local levels.
Biggert-Waters Act Section 246 created and HFIAA Section 18 expanded  upon FEMA’s ability to set aside funds to reimburse homeowners for  successful map appeals. FEMA officials told us that they had begun  working on clarifying requirements under this section and that they will  need to develop a process for communicating to communities their status  in the reimbursement process. FEMA has not previously reimbursed  homeowners for successful map appeals. Biggert-Waters Act Section 246  requires that this requirement be implemented through a rulemaking  process. FEMA officials indicated that they planned to group this  requirement with other Biggert-Waters Act and HFIAA mapping proposed  rules. FEMA does not anticipate completing this requirement for several  years.
section_title: FEMA Has Taken Steps to Implement Mitigation Requirements
paragraphs: Figure 4 illustrates the progress FEMA has made in implementing  Biggert-Waters Act and HFIAA mitigation-related requirements.
FEMA has executed almost all mitigation assistance requirements under  the Biggert-Waters Act. The act did not establish a due date for  completing these requirements, but FEMA estimated that implementation  of Biggert-Waters Act Section 225, which covers mitigation assistance  programs, was 90 percent complete (see fig. 4) as of December 2014.  Section 225 made several changes to FEMA’s mitigation assistance  programs. In particular, it eliminated two mitigation grant programs as  independent programs: a pilot program for Severe Repetitive Loss (SRL)  properties and a program for Repetitive Flood Claims (RFC). The SRL  program was designed to reduce the long-term risk of flood damage to  severe repetitive loss residential properties and the associated drain on  the National Flood Insurance Fund, while the RFC program was designed  to reduce the long-term risk of flood damage to structures insured under  NFIP that have had one or more claim payments for flood damage.  Biggert-Waters Act Section 225 also made changes to the cost-sharing  structure for mitigation grants—FEMA now pays up to 100 percent of the  mitigation costs for severe repetitive loss properties, up to 90 percent for  repetitive loss properties, and up to 75 percent for all other mitigation  projects. Prior to the act, FEMA paid up to 90 percent of the mitigation  costs for severe repetitive loss properties, up to 100 percent for repetitive  loss properties, and up to 75 percent for all other mitigation projects.
FEMA has since incorporated parts of the SRL and RFC programs into its  Flood Mitigation Assistance (FMA) Program and updated its cost-sharing  guidance. FEMA officials told us that the elimination of the repetitive and  severe repetitive loss programs as independent programs and the cost- sharing changes were positive improvements to NFIP under the Biggert- Waters Act. FEMA officials stated that combining the programs simplified the application process and program administration and the  new cost-sharing structure further encourages mitigation for properties.  Given that severe repetitive loss properties are the most burdensome in  terms of expenses for NFIP, this updated cost-sharing structure is  expected to help reduce outlays.
FEMA still needs to institute an important mitigation assistance  requirement under the Biggert-Waters Act. Specifically, FEMA has not yet  developed a process or guidance for providing mitigation assistance  grants directly to policyholders, as now allowed under Biggert-Waters Act  Section 225(a)(3). Under this section, if FEMA determines that a state or  community cannot manage a grant, it can provide the grant directly to  policyholders. The act did not establish a time frame for completing this  requirement. According to FEMA, it needs to establish criteria for  determining when a state or community cannot manage a grant, and such  criteria need to go through a rulemaking process, which can take some  time. FEMA officials noted that FEMA has never provided mitigation  assistance grants directly to policyholders. According to FEMA officials,  by providing mitigation assistance grants directly to policyholders,  individuals who live in a state that does not participate in NFIP will now  have the opportunity to participate in NFIP’s grant programs.
FEMA, along with representatives from almost all of the organizations (9  out of 10) we interviewed, emphasized the importance of mitigation in  terms of its potential to reduce flood risk and NFIP’s financial exposure.  Representatives from seven of these organizations noted that mitigation  was expensive and that it needed to be made more attractive for  policyholders and communities. However, as we previously reported,  demand for mitigation assistance funding has exceeded available funding  levels. As shown in table 2, since the enactment of the Biggert-Waters  Act funding has increased for the FMA program, due in part to the  incorporation of the SRL and RFC programs into FMA. However, funding  has been reduced for the Pre-Disaster Mitigation program, which funds  pre-disaster mitigation programs intended to reduce flood risks to  populations and structures.
HFIAA contains additional requirements that pertain to FEMA’s mitigation  activities. HFIAA Section 14 requires FEMA to take into account flood  mitigation activities when estimating premiums. FEMA estimated that this  section was 10 percent complete as of December 2014 (see fig. 4).  FEMA officials said that they were at the beginning stages of considering  a process for accounting for such activities. The implementation of this  requirement should make mitigation activities more attractive to  policyholders because rates would be adjusted based upon mitigation  measures. HFIAA did not establish a due date for completing this  requirement. As of December 2014, FEMA anticipated completing this  requirement in fiscal year 2015 or later.
HFIAA Section 26 requires that FEMA establish guidelines for alternative  methods of mitigation (other than building elevation) to reduce flood risk  to residential buildings that cannot be elevated due to their structural  characteristics. HFIAA requires that the guidance be established by  March 2015. FEMA estimated that this section was 30 percent complete  as of December 2014. According to FEMA officials, FEMA has created an  internal working group to start developing related guidelines and hired a  contractor in August 2014 to assist. FEMA’s working group and the  contractor are in the process of creating guidelines for alternative  methods of mitigation. Some options they are considering for alternative  methods of mitigation are elevating infrastructure critical to the property  when the property itself cannot be elevated (for example, heating and air  conditioning systems), constructing small barriers, and using flood- resistant materials in construction. The contractor is also analyzing the  effectiveness of each type of alternative mitigation measure. After the  analysis is completed, FEMA actuaries will adjust rates based upon  alternative mitigation methods, and guidelines on the methods will be  released to the public, as required by HFIAA.
FEMA officials stated that they faced challenges determining the long- term effects of alternative mitigation, as well as the appropriate discount  to apply to premiums for such activities. According to FEMA officials, it is  possible to determine if an alternative mitigation method is designed and  installed appropriately; however, it is more challenging to ensure that the  system is maintained over time to warrant a continued discount in flood  insurance premiums. As of January 2015, FEMA anticipated completing  this requirement by late March 2015, as required by HFIAA.
section_title: FEMA Has Begun to Implement Notifications and Affordability-Related Requirements
paragraphs: Figure 5 illustrates the progress FEMA has made in implementing other  requirements related to outreach, communications, and affordability.
As required by HFIAA Section 24, FEMA has begun establishing a flood  insurance advocate to help ensure the fair treatment of NFIP  policyholders and property owners in the mapping of flood hazards,  identification of flood risks, and implementation of measures designed to  mitigate them. HFIAA describes the advocate’s duties as educating  policyholders about various issues and assisting them in understanding  procedural requirements, as well as coordinating outreach and education  with local communities, among other things. HFIAA did not establish a  due date for completing this requirement. FEMA estimated that this  requirement was 55 percent complete as of December 2014 (see fig. 5).  FEMA and representatives from three of the 10 organizations we  interviewed said that the establishment of the advocate was one of the  key changes made by HFIAA and emphasized its importance.
In mid-December 2014, FEMA established an interim Office of the Flood  Insurance Advocate, which is led by an acting flood insurance advocate  (effective Dec. 22, 2014). FEMA officials said that until funding is  available to establish a permanent office, the interim office would  leverage existing resources, and a number of FEMA employees would be  detailed to the interim office. The interim office is to begin work on  providing specialized assistance to citizens and policyholders on NFIP  issues, as well as regional mapping outreach and education support. The  acting advocate and staff will address specific public inquiries or concerns  regarding NFIP processes. In addition, the acting advocate will also  develop a long-term regional mapping outreach and education strategy  with the goal of maximizing public support for NFIP activities. FEMA  officials stated that the flood insurance advocate will be an independent  office within FEMA and have direct access to the FEMA administrator on  an advisory basis.
FEMA spent several months developing options to implement this  requirement. FEMA detailed one of FIMA’s executive officers to take the  lead on producing the concept of operations. FEMA officials told us that  they also had held discussions with internal and external stakeholders to gain input  on the position’s proposed structure and duties, analyzed data from FEMA call centers to identify important topics for engaged with congressional leaders to identify issues from  constituents about NFIP, and benchmarked with other federal agencies with advocacy offices to  determine best practices.
subsections: section_title: Notifications
paragraphs: HFIAA enacted requirements intended to improve the way FEMA  communicates NFIP insurance rates and flood risks to policyholders and  others. Section 31 requires FEMA, at least 6 months prior to  implementation, to make publicly available the rate tables and  underwriting guidelines that provide the basis for rating changes made in  response to HFIAA requirements. It also requires FEMA to report to  Congress, no later than June 2014, on the feasibility of releasing  property-level policy and claims data and how the release of these data  may assist policyholders and insurers in understanding how FEMA  determines actuarial premium rates and assesses flood risk. In response  to HFIAA Section 31, FEMA had begun issuing rate change notifications.  FEMA officials told us that the 6-month notification requirement did not  pose challenges, as they had taken similar actions in the past and had a  similar informal agreement with WYOs prior to HFIAA. For example, in  October 2014, FEMA publicly issued guidance implementing certain  HFIAA rate changes that would take effect 6 months later in April 2015.
In September 2014, about 2 months after the deadline established by  HFIAA, FEMA issued the required report to Congress on the feasibility of  releasing property-level policy and claims data and establishing  guidelines for releasing these data required by Section 31. FEMA  reported that NFIP collects and maintains property-level policy and claims  data containing some information that is governed by privacy law.  FEMA also noted that its current guidelines for releasing this information  satisfy the HFIAA requirement. However, FEMA officials stated that  releasing individual policy and claims data would not help policyholders  and insurers understand how FEMA determines actuarial premium rates  and assesses flood risk. FEMA explained that full-risk premiums were not  based on loss experience due to the large variability of flood losses.  Rather NFIP rate setting is based on several components, including a risk  component that varies based on the flood risk profile of an entire risk  class, and not specific properties.
HFIAA Section 28 requires FEMA to clearly communicate full flood risk  determinations to individual property owners regardless of whether their  premiums are full actuarial rates, and FEMA has begun evaluating how to  implement this provision but cited challenges. FEMA officials noted that in  order to give a property owner a specific full-risk rate, for example, FEMA  would need an elevation certification, which can be expensive. FEMA  officials estimate that obtaining elevation certificates can cost  policyholders from about $500 to $2,000 or more. As discussed earlier,  FEMA does not have elevation data for many properties as it does not  require certain policyholders to obtain elevation certificates. We have  previously recommended that FEMA develop and implement a plan to  obtain flood risk information needed to determine full-risk rates for  subsidized properties.multiyear process of determining how to collect elevation data and  whether available BFE databases could serve as a proxy for elevation  certificates at the individual property level, for the limited geographies  where such data are available. FEMA actuaries also told us that they  were considering methods for providing access to policyholders for any  property-level data that were available. HFIAA did not establish a due  date for completing this requirement. FEMA estimated that this  requirement was 20 percent complete as of December 2014 (see fig. 5)  and anticipates completing it in fiscal year 2015.
section_title: Affordability Studies
paragraphs: FEMA has taken some action on the affordability studies required by the  Biggert-Waters Act and HFIAA, but data challenges have delayed  progress. Biggert-Waters Act Section 236 required FEMA to contract with  the National Academy of Sciences (NAS) to conduct a study to inform  FEMA’s affordability study. FEMA’s study is to examine methods for  encouraging NFIP participation and educating policyholders, as well as  establishing an affordability framework that includes methods to help  individuals afford risk-based premiums through targeted assistance, such  as a means-tested voucher program. The section also permits $750,000  in funding and established a due date of April 2013 for completing the  study. FEMA and NAS did not complete this study within the required  time frames. FEMA officials said that they did not have sufficient time or  funding to complete the study and noted that the legislation had also  asked them to determine the economic impact of removing all premium  discounts from NFIP, something they had thus far been unable to do.  FEMA officials cited their lack of elevation data for structures affected by  grandfathering and subsidization. The lack of these data means that full- risk rates for many properties cannot be calculated, and thus, the  economic impact of removing premium discounts for subsidized and  grandfathered policies cannot be determined. In addition, FEMA cited  data challenges related to understanding how much a policyholder could  afford—for instance, FEMA does not have direct access to information on  policyholders’ incomes.
HFIAA Section 16 amended the Biggert-Waters Act Section 236 study to  permit additional funding ($2.5 million) for the draft affordability study and  extended the time for completing it until September 2015, and HFIAA  Section 9 permitted FEMA to contract with another federal agency to  complete the study. HFIAA Section 9 also required FEMA to prepare a  draft affordability framework to be provided to Congress no later than 18  months after the study was completed. FEMA estimated that the draft  affordability study (Section 16) was 40 percent complete and the draft  affordability framework (Section 9) was 5 percent complete (see fig. 5) as  of December 2014.
A FEMA official said that the agency will consider the affordability study  requirement fulfilled after the issuance of two NAS studies. First, in  February 2015 NAS will deliver a report that will describe methods for an  affordability framework and discuss program policy options—it is to  address the question of who should have to pay for the full flood risk  associated with where they live and who should be provided assistance.  The FEMA official noted that this study will be a key component when  they begin work on the draft affordability framework, which will commence  after the NAS studies are completed. Second, in September 2015 NAS  will deliver a report on approaches that could be used in conducting an  affordability study, taking into consideration the lack of data. The study  will also include results from a pilot affordability study for the state of  North Carolina, which has readily available elevation data on structures.  After the completion of NAS’s two studies, a FEMA official told us that the  agency will review these studies and make a decision about conducting a  nation-wide affordability study based on the results of the studies and  taking into account available funding and resources.
FEMA is also developing criteria to begin conducting the affordability  study for small businesses, nonprofits, and others. HFIAA Section 29  requires a study of affordability and semi-annual reports thereafter, for  small businesses with fewer than 100 employees; nonprofits; houses of  worship; and residences with a value equal to or less than 25 percent of  the median home value of properties in the same state. HFIAA set a  due date for the study of September 2015. FEMA estimated that this  study was 5 percent complete as of December 2014. As discussed  earlier, FEMA currently cannot distinguish among nonresidential  structures, such as businesses and nonprofits. FEMA anticipates  finalizing criteria and collecting data on nonresidential properties  beginning in October 2015 and implementation of the study will be  delayed until data are collected. FEMA officials told us that because  reporting of data has a 2-month lag, the first data will arrive in December  2015. As a result, the spring or summer of 2016 will be the earliest any  preliminary analysis can be done.
section_title: Agency Comments
paragraphs: We provided a draft of this report to FEMA within DHS for its review and  comment. DHS provided technical comments, which we incorporated, as  appropriate.
We will send copies of this report to the appropriate congressional  committees and the Secretary of Homeland Security. In addition,   the report is available at no charge on the GAO website at  http://www.gao.gov.
If you or your staff have any questions about this report, please contact  Alicia Puente Cackley at (202) 512-8678 or cackleya@gao.gov. Contact  points for our Offices of Congressional Relations and Public Affairs may   be found on the last page of this report. GAO staff who made major  contributions to this report are listed in appendix III.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our objectives in this report were to describe (1) the Federal Emergency  Management Agency’s (FEMA) management of the implementation of the  Biggert-Waters Flood Insurance Reform Act of 2012 (Biggert-Waters Act)  and Homeowner Flood Insurance Affordability Act of 2014 (HFIAA) and  associated challenges and (2) the status of FEMA’s implementation of  selected requirements, including whether the agency has met required  time frames and established goals.
To address these objectives, we reviewed prior GAO reports and  academic and industry studies (identified in a literature review or in  interviews) on the National Flood Insurance Program (NFIP) and  analyzed relevant laws and regulations. To respond to the first objective,  we obtained relevant FEMA documentation on Biggert-Waters Act and  HFIAA implementation priorities and status, and we interviewed FEMA  officials responsible for managing and executing FEMA’s implementation  of these requirements. We compared FEMA’s processes for managing its  implementation of Biggert-Waters Act and HFIAA requirements to  relevant federal internal control standards. There are five internal control  standards—control environment, risk assessment, control activities,  information and communications, and monitoring—that are used to  assess federal agencies and programs. Given the smaller scope of the  activity being reviewed—i.e., a specific process within a program rather  than the federal program itself—we limited our comparison to the three  federal internal controls standards that we determined to be most  appropriate—risk assessment, control activities, and information and  communications. We compared information provided in our interviews  with relevant FEMA officials and documentation on their management  processes to these three internal control standards.
In addition, we interviewed representatives from 10 organizations with  flood insurance expertise and experience to obtain input on key changes  made by the Biggert-Waters Act and HFIAA and any challenges FEMA  may face in implementing these changes. We interviewed representatives  from the following 10 organizations: (1) American Academy of Actuaries;  (2) Association of State Floodplain Managers; (3) Center for Economic  Justice; (4) Congressional Research Service; (5) National Association of  Mutual Insurance Companies; (6) National Association of Realtors; (7)
Property Casualty Insurers Association of America; (8) Center for  Catastrophic Risk Management and Compensation, RAND Corporation;  (9) R Street Institute; and (10) Wharton Risk Management and Decision  Processes Center, University of Pennsylvania. The 10 organizations were  judgmentally selected based on criteria such as their breadth of flood  insurance expertise and type of organization (e.g., academic institution,  trade association, think tank) in order to obtain a broad range of views. To  select the 10 organizations, we reviewed prior GAO reports,  congressional testimony, and academic and public policy databases,  such as Google Scholar and PolicyFile. In conducting our reviews, we  identified organizations that were identified in multiple resources as  having expertise or experience in NFIP, in particular with the Biggert- Waters Act or HFIAA. In addition, we took into consideration the type of  organization, its role in implementing NFIP or other expertise, and  membership base. Our interviews with these organizations provided  further insights on the Biggert-Waters Act and HFIAA but are not  generalizable to the flood insurance community as a whole.
To respond to our second objective, we identified Biggert-Waters Act  requirements that FEMA was required to implement, changes that HFIAA  made to these requirements, and any new HFIAA requirements that  FEMA was required to implement. We interviewed FEMA officials  responsible for implementing the Biggert-Waters Act, as amended by  HFIAA, and representatives from the same 10 organizations discussed  above to obtain their perspectives on FEMA’s implementation efforts. To  identify important areas within the Biggert-Waters Act and HFIAA and  select key requirements for further review, we conducted legislative  analysis, reviewed prior GAO work, and conducted initial interviews with  FEMA on their implementation priorities. Specifically, in addition to our  own legislative analysis, we reviewed: (1) prior GAO reports for  discussion of Biggert-Waters Act and HFIAA requirements which may  require follow up; (2) reviewed FEMA documentation, including overviews  of the Biggert-Waters Act and HFIAA, to identify areas of focus; and (3)  analyzed our initial interviews with FEMA for requirements they  considered important. We compiled a list of these requirements and  obtained consensus for our selection through legal review and at internal  meetings. Appendix II contains a detailed chart of these requirements,  which covers the majority of Biggert-Waters Act and HFIAA requirements.  We conducted additional interviews with FEMA officials and reviewed  FEMA documentation on the status of these selected requirements.
We compared FEMA’s implementation status to time frames established  by the Biggert-Waters Act and HFIAA and to any goals FEMA has set  internally. In the report, we described FEMA’s status in implementing  requirements and when it did not meet required due dates, its updated  expected time frames for completion (if available). We also described any  challenges FEMA faced in implementing certain requirements. In addition,  where available, we obtained FEMA data relevant to the implementation  of the requirements. To assess the reliability of percentages of completion  reported in FEMA documents, we interviewed knowledgeable officials and  reviewed documents about the sources of the data. We found these data  sufficiently reliable for the purposes of reporting on FEMA’s progress in  implementing Biggert-Waters Act and HFIAA requirements. To assess  data on the percentage of subsidized policies as of September 30, 2013,  and estimates on future reserve fund contributions, we reviewed a recent  GAO assessment of the reliability of the data and conducted an interview  with the knowledgeable official. We determined that the data were  sufficiently reliable to report on the percentage of subsidized policies and  discuss FEMA estimates of future reserve fund contributions. To assess  the reliability of the mapping and mitigation funding data, we also  interviewed knowledgeable officials and reviewed relevant  documentation. We found these data sufficiently reliable for reporting on  FEMA’s funding for these activities.
We conducted this performance audit from March 2014 to February 2015  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix II: Selected Requirements from the Biggert-Waters Act and Homeowner Flood Insurance Affordability Act (HFIAA)
paragraphs: Appendix II: Selected Requirements from the  Biggert-Waters Act and Homeowner Flood  Insurance Affordability Act (HFIAA)
The following table contains selected requirements from the Biggert- Waters Flood Insurance Reform Act (Biggert-Waters Act) and the  Homeowner Flood Insurance Affordability Act (HFIAA) that the Federal  Emergency Management Agency (FEMA) is required to implement. The  requirements contained in the table, and discussed in the report, were  selected based on our legislative analysis, prior GAO work, and  interviews with FEMA through which we identified areas of priority (for  example, rate changes) and important requirements.
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact above, Paul Schmidt (Assistant Director), Allison  Abrams, Emily Chalmers, Pamela Davidson, Jonathan Harmatz, Scott  Hiromoto, Jessica Sandler, and Jena Sinkfeld made key contributions to  this report.