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. 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. 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. 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. 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).