Federal Flood Insurance: The Repetitive Loss Problem

CRS Report for Congress
Federal Flood Insurance:
The Repetitive Loss Problem
June 30, 2005
Rawle O. King
Analyst In Industry Economics
Government and Finance Division

Congressional Research Service ˜ The Library of Congress

Federal Flood Insurance: The Repetitive Loss Problem
Historically, flooding has been the most common natural disaster in the United
States, costing more in property damages than any other natural disaster. In response
to the trend of building homes and businesses in flood-prone areas and the increasing
cost of damages caused by floods, Congress created the National Flood Insurance
Program (NFIP) in 1968. The object was to reduce future flood losses through flood
hazard identification, floodplain management (i.e., land use controls and building
codes), and insurance protection. NFIP coverage is available to all owners and
occupants of insurable property in a participating community.
Two flood insurance-related policy issues stand out in the 109th Congress. The
first issue is the high and continuing cost of paying for repetitively flooded
properties, and clarifying congressional intent with respect to restoring flood victims
to pre-flood conditions. The problem with repetitive loss properties (RLPs) is that
the vast majority of these older, generally less-safe properties were “grandfathered”
into the NFIP when the program was created, and these properties have been repaired
multiple times with subsidized flood insurance claim payments. Owners of RLPs
pay less than the full actuarial risk rates. Congress started looking at the RLP
problem (and other matters) several years before the National Flood Insurance
Reform Act of 1994. The Flood Mitigation Assistance (FMA) Program was
authorized as Section 1266 in 1994, and has largely been used to mitigate RLPs. The
Bunning-Bereuter-Blumenauer Flood Insurance Reform Act of 2004 (P.L. 108-264),
signed into law on June 30, 2004, doubled the authorization for that program but did
not change its focus, despite some adjustment of priorities. The 2004 Act also added
two new programs that are focused on RLPs — the Pilot Program and the Individual
Property program. Although the statute authorized $40 million a year for the Pilot
program, subject to annual appropriations, the Administration’s budget request for
FY2006 did not include funding. Legislation to appropriate the funds (H.R. 2360)
is pending.
The second issue, which involves the adequacy of payments and the clarity of
policies and procedures for filing and adjusting flood insurance claims after
Hurricane Isabel in September 2003, was initially addressed by provisions in the
2004 act that made some programmatic changes to the NFIP and required several
studies and reports.
This report traces the evolution of the NFIP and provides background
information on the program. This is followed by a brief discussion of the problem
of repetitively flooded properties and the mitigation program administered by FEMA.
A summary of the major provisions in the Bunning-Bereuter-Blumenauer Flood
Insurance Reform Act of 2004 is included. The report does not examine other
important NFIP-related issues involving coastal erosion, the Coastal Barriers
Resources System, market penetration, lender compliance, and NFIP financial
conditions and managing systems.
This report will be updated to reflect significant legislative action.

In troduction ......................................................1
Congressional Interest in Flood Insurance...............................1
Floods and Insurance Coverage.......................................5
National Flood Insurance Program....................................6
Identification and Mapping of Special Hazard Areas..................7
Accuracy of Flood Maps....................................8
Flood Map Modernization...................................8
Community Participation........................................9
Policy Issuance and Claims Adjusting.............................10
Hurricane Isabel Flood Insurance Claims......................11
Flood Insurance Rates and Subsidies..............................14
Premium Subsidy and Borrowing............................14
Subsidized (Chargeable) Rates..............................15
Actuarial Rates...........................................16
Mandatory Flood Purchase Requirements..........................17
Floodplain Management and Hazard Mitigation.....................18
Repetitive Loss Problem...........................................19
Factors Contributing to Repetitive Loss Properties...................21
Repetitive Loss Property Mitigation Strategy.......................23
Past Efforts..............................................23
Current Efforts...........................................24
FEMA Mitigation Programs........................................26
Basic Flood Mitigation Assistance (FMA) Program..................26
Pre-Disaster Mitigation (PDM) Program...........................27
Hazard Mitigation Grant Program (HMGP)........................27
Increased Cost of Compliance Coverage...........................28
IRS and Taxation of Mitigation Grant ............................28
Bunning-Bereuter-Blumenauer Flood Insurance Reform Act of 2004........29
Increase Funding for Mitigating Repetitive Loss Properties............30
Programmatic Changes to Flood Program..........................30
Legislative Response to Hurricane Isabel..........................32
Conclusion ......................................................33
List of Tables
Table 1. History of Treasury Borrowing and Repayments Under the National Flood
Insurance Program............................................16
Appendix A. National Flood Insurance Program Operating Results by Fiscal Year:

2000-2004 ..................................................35

Insurance Program by State, 1978-2004...........................37
Appendix C. Nationwide Total Federal Flood Insurance Claims Ranked By Insured
Repetitive Losses and By State: 1978-2002........................40
Appendix D. Number of Repetitive Loss Properties in FEMA’s Target Group
Special Direct Facility, By State.................................43

Federal Flood Insurance:
The Repetitive Loss Problem
Flooding in the United States is a recurring event, and the severity of flooding
varies from year to year and from location to location. Historically, floods have1
caused more economic loss to the nation than any other natural hazard. Almost 90%
of all declared disasters include a flooding component.2 Flood-related property losses3
have risen to $6 billion a year, from approximately $3.3 billion in the mid-1980s.
Combating the devastating effects of flooding has become a national priority
involving flood hazard identification, the purchase of federally-subsidized flood
insurance by homeowners, renters, and business owners, and state and local land-use
controls designed to minimize flood loss and guide development away from flood-
prone areas. In 1968, through enactment of the National Flood Insurance Act,4
Congress established a comprehensive risk management program to: (1) reduce
suffering and economic losses due to floods through the purchase of flood insurance;
(2) promote state and local land-use controls to guide development away from flood-
prone areas; and (3) reduce federal expenditures for disaster assistance and flood
This report provides an overview of the National Flood Insurance Program.
Also examined are the problems surrounding the settlement of claims stemming from
Hurricane Isabel in 2003 and recently enacted flood insurance reform legislation that
addressed the repetitive loss issue.
Congressional Interest in Flood Insurance
Congressional interest in U.S. flood control policy (flood hazard mitigation andth
insurance) began in the late 19 century when extreme floods along the Mississippi
River basin during the 1850s, 1860s, and 1870s caused calamitous socio-economic
and human losses. This situation led Congress in 1879 to create the Mississippi

1 U.S. General Accounting Office, Challenges Facing the National Flood Insurance
Program, GAO Report GAO-03-606T (Washington: April 1, 2003), p. 16.
2 Jeff D. Opdyke, “Underwater, With No Insurance; U.S. Pushes Homeowners to Expand
Flood Coverage in Wake of Recent Storms,” Wall Street Journal, November 16, 2004, p.
3 Alex Frangos, “U.S. Launching a Massive Effort to Redraw Nation’s Flood Maps.” Wall
Street Journal, September 19, 2003, P. A1.
4 P.L. 90-448, 82 Stat 573.

River Commission (1879-1928)5 to oversee the development of a levee system that
would confine the river’s natural flow. For almost 50 years, this seven-member
advisory board pursued a strategy for regulating the Mississippi River. As the levee
system neared completion in 1927, a massive flood overwhelmed the flood control
project, damaging the reputation of the commission. While the levee system failed,
the commitment to solve the flood problem solidified. The Flood Control Act of
19366 launched a national program of structural flood control works. Together, the
establishment of the commission in 1879 and the 1936 act highlighted a 60-plus year
period when the federal government dealt with the threat of flooding in two basic
ways: structural flood controls on rivers and shorelines (e.g., dams and levees), and
post-disaster assistance for flood victims.
By the 1950s, however, it had become clear to Congress that these approaches
left much to be desired. Public works were not always effective in the long run,
while private construction continued in vulnerable areas. Legislative relief payments
were problematic because they were unpredictable and necessitated bargaining after
each major natural disaster. Pre-funding via insurance began to look like an
attractive alternative to flood control or federal disaster assistance. Flood insurance
coverage was virtually unavailable from the private insurance markets, however,
because insurers could not profitably sell coverage at an affordable price due to the
catastrophic nature of flooding and insurers’ inability to develop actuarial rates that
reflected the flood hazard risk.7
The earliest effort to formulate a viable federal flood insurance program dates
back to 1951 when President Truman requested congressional appropriations for a
national system of flood disaster insurance.8 Congress did not approve that request.
Subsequently, however, in 1955 and 1956 the Senate Committee on Banking and
Currency undertook an extensive study of the feasibility of creating a federal disaster
insurance program.9 On the basis of that study, Congress passed the Federal Flood
Insurance Act of 195610 to establish a five-year, $3 billion federal flood insurance and
reinsurance program to be administered by the Housing and Home Finance Agency.
The Federal Flood Indemnity Administration was created within the agency to
perform the tasks authorized in the 1956 act. The 1956 act called for subsidized
insurance rates and policies marketed by private insurance companies. This first
flood insurance program, however, was short-lived. Not a single policy was written

5 Mississippi River Commission Act of 1879, 46th Cong., 1st sess., June 28, 1879, Chapter

43 (37-38).

6 49 Stat. 1570.
7 During the late 1920s several dozen fire insurers sold flood insurance, but due to extreme
riverine flood disasters during 1927 and 1928 in nearly all parts of the United States, all of
these insurers withdrew from the market. From the late 1920s until today, flood insurance
has not been considered profitable.
8 Howard Kunreuther and Douglas C. Dacy, The Economics of Natural Disasters (New
York: The Free Press, 1969), p. 259.
9 U.S. Senate Committee on Banking and Currency, “Federal Disaster Insurance Report of
the Senate Committee on Banking and Currency,” U.S. Senate Staff Study, January 1956.
10 P.L. 84-1016; 70 Stat. 1078.

because — perhaps partially in response to a significant downturn in the economy —
Congress did not appropriate any funds.11 Consequently, the agency ceased to exist.
Congressional concerns focused on the lack of a technical study to determine the
costs of starting a federal program for flood insurance.12
A series of natural disasters in the early to mid-1960s triggered a renewed
interest in Congress to create a comprehensive system of federal disaster insurance.
That interest began to move forward when Congress enacted the Southeast Hurricane
Disaster Relief Act of 1965.13 Primarily because of Hurricane Betsy and other
hurricanes that devastated the South in 1963 and 1964, and heavy flooding on the
upper Mississippi River in 1965, Section 5 of that act directed the Secretary of
Housing and Urban Development (HUD) to undertake a nine-month study of the
feasibility of alternative methods for providing assistance to those suffering property
losses in floods, and other natural disasters.
A 1966 HUD feasibility study of a flood insurance program, entitled “Insurance
and Other Programs for Financial Assistance to Flood Victims,” was submitted by
President Lyndon Johnson to the Senate Committee on Banking and Currency.14 The
study concluded that flood insurance was both feasible and could promote the public
interest, although the rates in certain flood-prone areas could be extremely high.15
After an analysis of alternative ways of helping flood victims, the HUD study
recommended providing a federal subsidy to existing occupants in high-risk flood
areas. As a way to discourage further development in hazard-prone areas, the HUD
study also suggested that the subsidy not be given to persons who proposed to
construct new homes in areas subjected to flood hazard risks. In essence, once
actuarial rates had been determined for a given area, no new flood insurance coverage
could be provided unless the community adopted and enforced permanent land-use
control ordinances, according to the study. In addition, the study asserted that
subsidies to some existing occupants of flood-prone areas should be viewed as part

11 Kunreuther and Dacy, 260.
12 Ibid.
13 P.L. 89-339; 79 Stat. 1310.
14 U.S. Senate, Committee on Banking and Currency, Insurance and Other Programs for
Financial Assistance to Flood Victims: A Report from the Secretary of the Department of
Housing and Urban Development to the President, as Required by they Southeast Hurricaneth
Disaster Relief Act of 1965 (Public Law 89-339, 89 Congress, H.R. 11539, November 8,thnd

1965), 89 Congress, 2 Sess., Sep.1966 (Washington: GPO, 1966).

15 On August 10, 1966, President Lyndon Johnson also submitted a presidential special task
force report to the Speaker of the House of Representatives that examined ways the federal
government could decrease flood losses without spending heavily on flood controls. Like
the HUD study published that same month, the task force report concluded that a national
program of flood insurance should be implemented and an integrated program be established
to mitigate losses. The report warned, however, that an insurance program could aggravate
rather than reduce development of the nation’s floodplains, and estimated that subsidies for
existing high-risk properties would be required for approximately 25 years. See,
Communication from the President of the United States, Transmittal of A Report by the Task
Force on Federal Flood Control Policy: A Unified National Program for Managing Floodth
Losses, 89 Congress, 2d Session, House Document No. 465, August 10, 1966.

of an overall program of land-use management designed to reduce the exposure to
flood hazard risks.16
The recommendations from the HUD feasibility study led Congress to pass the
National Flood Insurance Act of 1968,17 which authorized the creation of the
National Flood Insurance Program (NFIP). The NFIP incorporated most of the
recommendations of the 1966 HUD feasibility study. It was expected that managing
flood hazard risk through insurance would greatly reduce the reliance on federal
disaster relief assistance. Property and business owners would in effect pre-fund
their own flood-related property losses. Existing buildings in flood risk areas would
receive subsidies on premiums because these structures were built before the flood
risk were known and identified on flood insurance rate maps. Owners of structures
built in flood-prone areas on or after the effective date of the initial Flood Insurance
Rate Maps (FIRM) or after December 31, 1974, whichever was later, would have to
pay full actuarial rates. The program also called for the development of flood hazard
maps to identify flood risk areas and the requirement that local communities
voluntarily adopt and enforce floodplain management ordinances that met or
exceeded minimum NFIP standards.
Since its creation in 1968, the laws and regulations governing the NFIP’s
implementation have undergone many changes. Major revisions were enacted in
1973, 1977, 1994, and 2004. Today, the NFIP is the largest, single-line property
insurer in the United States. Insurance claims payments, low-interest loans provided
by the Small Business Administration (SBA), casualty loss deductions for uninsured
losses on income tax, and Individual and Family Grants provided by the Federal
Emergency Management Agency (FEMA) are the major elements of the federal
government’s efforts to deal with the financial effects of flooding.18 FEMA asserts
that insurance claims payments minimize public expenditures for recovery while
providing an efficient way to compensate victims of flood damage.19
The major flood insurance-related policy issues before the 109th Congress are:
!the cost of repetitive loss properties (RLP) and the effectiveness of
FEMA’s efforts at implementing its strategy for reducing losses
associated with RLPs;
!making the program more fiscally sound; and

16 Ibid.
17 P.L. 90-448; 82 Stat. 573.
18 On March 1, 2003, President George W. Bush signed into law the Homeland Security Act
of 2002 (P.L. 107-296) that transferred the Federal Emergency Management Agency
(FEMA) to the Emergency Preparedness and Response Directorate (EP&R), a component
of the U.S. Department of Homeland Security (DHS). Only the acronym FEMA was
19 U.S. General Accounting Office, National Flood Insurance Program: Actions to Address
Repetitive Loss Properties, GAO Report GAO-04-401T (Washington: March 25, 2004), p.2.

!resolving allegations against FEMA and the NFIP stemming from
the adjustment, processing and settlement of Hurricane Isabel
The cost of paying RLP claims has placed a financial strain on the program.
From a community standpoint, residents’ lives are disrupted and may be threatened
by repeated flooding. On the other hand, owners of RLPs view NFIP payments as
a benefit they have purchased that enables them to remain in their homes. For over
a decade, FEMA has actively pursued a variety of mitigation strategies to reduce
flood-related losses. The NFIP had a program, known as “Section 1362”, under
which funds were made available to buy repetitively flood insured properties and
transfer the land to communities. Critics, however, claimed it was cumbersome
having the federal government buy the land. Congress eventually repealed the
Section 1362 program and replaced it in 1994 with the Flood Mitigation Assistance
(FMA) program that was originally authorized at $20 million per year transferred
from the National Flood Insurance Fund (NFIF). The funds are taken from the
income associated with the flood policy service fees. Also, over the years FEMA has
encouraged states and communities to use its other mitigation programs for RLPs,
including the post-disaster Hazard Mitigation Grant Program (HMGP) and Pre-
Disaster Mitigation (PDM) funds. On June 30, 2004, President Bush signed into law
the Flood Insurance Reform Act of 200420 to reauthorize the NFIP through
September 30, 2008, augment the FMA program, establish a five-year pilot program
(through FY2009) for reducing severe RLPs, and make some programmatic changes
to the NFIP intended to address administrative problems which came to light
following Hurricane Isabel in September 2003.
Floods and Insurance Coverage
Of the two types of floods — riverine or inland stream flooding and coastal
flooding — riverine floods typically cause the highest economic losses. On the other
hand, coastal floods often cause greater loss of life. The Great Flood of 1993 that
occurred along the Missouri and Upper Mississippi River basins is considered the
most costly and devastating flood to ravage the United States. Its size and impact
surpassed the 1927 flood disaster, noted earlier, in most categories: number of record
river levels; the number of persons displaced, amount of crop and property damage;
and, duration. A tragic combination of unique extreme weather and hydrologic
conditions led to the flood of 1993.
Flooding is not confined to just a few geographic areas; almost every region of
the country is subject to flooding. Some of the principal economic consequences of
flooding are: (1) the cost of emergency services borne by state and local
governments; (2) reductions in government revenue due to business interruption or
business destruction (sales taxes) foregone and lower property tax revenues; (3)
dollar value of flood-related deaths, bodily injury and mental anguish suffered by
victims; and (4) post-disaster outlays by the federal government, such as loans and
direct financial assistance to individuals for emergency housing, food, and clothing.

20 P.L. 108-264; 118 Stat. 712.

Property damage caused by a general condition of flooding is explicitly
excluded under most homeowner insurance policies sold in the private sector.21
Property insurance companies insist that flood insurance is not commercially
feasible. As a general rule, property insurance markets will provide coverage
(capacity) when insurers are confident that they can identify the risk and set insurance
rates that cover expected losses. Insurers generally lack the ability to spread flood
hazard risk sufficiently to safeguard their assets against catastrophic flood losses.
Moreover, only people living in flood hazard areas would be expected to purchase
flood insurance (so-called adverse selection) and these people would have frequent
claims, making the coverage prohibitively expensive and, hence, not marketable.
Private insurance companies have been unable or unwilling to pre-fund and diversify
flood risks through insurance, reinsurance agreements or securitization.
National Flood Insurance Program
In 1968, Congress created the NFIP in response to the trend of development and
redevelopment in flood-prone areas, the increasing damages caused by floods, and
rising cost of taxpayer funded disaster relief for flood victims. Today, the NFIP is
among the nation’s largest domestic liabilities, along with the Social Security System
and federal health programs such as medicare and medicaid. The NFIP involves a
partnership among FEMA specialists and contractors, thousands of insurance agents
and claims adjusters, private insurance companies, floodplain managers, and other
public officials, lenders, and real estate agents. Federal flood insurance is currently
offered to homeowner, renters, and business owners in over 20,000 participating
communities that adopt and enforce floodplain management regulations which
conform to NFIP standards.
Appendix A shows that by the end of the FY2004, almost five million
(4,498,324) flood insurance policies were in effect for homeowners, renters, and
business owners, representing $723 billion of insurance in force.22 Federal flood
insurance coverage is available on almost all types of buildings up to $350,000 for
residential types ($250,000 for residential building coverage and $100,000 for
residential contents coverage), and $1,000,000 for non-residential structures
($500,000 building and $500,000 contents.)
The NFIP serves two major functions: underwriting flood insurance and leading
floodplain management. Various entities have specific roles to play under the NFIP.
The federal government assumes all liability for the insurance coverage, sets the
rates, coverage limitations, and eligibility requirements, designates special flood
hazard areas (SFHA) with the issuance of flood insurance rate maps (FIRMs) and
provides grant funding for mitigation planning activities. The private insurance
sector sells insurance, adjusts and pays claims, and performs engineering and

21 It is because flooding is so predictable along many bodies of water that made private
insurers avoid coverage.
22 For more information on flood insurance policy and claim statistics see data provided by
FEMA, available at [http://www.fema.gov/nfip/pcstat.shtm], visited on April 20, 2005.

planning studies. The states coordinate the program and provide technical assistance
to local participating communities. Finally local communities with jurisdiction over
land use adopt, administer, and enforce floodplain development regulations.
The NFIP does not operate on the traditional insurance definition of fiscal
solvency; rather, it operates under a statutory mandate that premiums on pre-FIRM
structures — i.e., structures built before the issuance of a FIRM or before 1975,
whichever is later — must be reasonable and, if necessary, be subsidized. The
subsidy is provided by charging premium rates discounted from full actuarial rates.
In order to make up the subsidized premium shortfall, NFIP has established a rating
methodology consisting of a target level of premium income for the program as a
whole that is at least sufficient to cover expenses and losses relative to what FEMA
calls the “average historical loss year.” The premium level generated to cover the
average historical loss year must accommodate the combined effect of the portion of
NFIP business paying less than full risk premiums and the portion of the business
paying full risk premiums. In the event that premium and investment income are
inadequate in a given year, the NFIP can exercise its statutory authority to borrow up
to $1.5 billion from the U.S. Treasury to cover losses. Borrowed funds must be
repaid with interest.
Identification and Mapping of Special Hazard Areas
The first step in assessing a community’s flood hazards is identifying and
mapping the special flood hazard areas.23 Flood maps provide the basis for
establishing floodplain management ordinances (i.e., building standards), setting
insurance rates, and identifying properties whose owners are required to purchase
flood insurance.
FEMA issues FIRMs that delineate areas within the “100-year flood” boundary,
called Special Flood Hazard Areas (SFHA), and flood insurance risk rate zones. The
SFHA is based on NFIP’s “1%-annual chance flood” standard commonly called the
“100 year flood.” A “100-year flood” is a calculation of the maximum stream
discharge or coastal storm surge and resultant level of flood water that has a “one
chance in 100” of occurring in any given year. The occurrence of a flood of this
magnitude is independent of all other floods; indeed, a “100-year flood” may occur
more than once in a given year, and even a number of times in a 10 or 20 year period.
FEMA uses statistical methods or hydrologic calculations to determine the 100-year
stream flow or coastal storm height based upon stream gauge records of river flows,
storm tides, and rainfall. That information is related to topographic maps and field
surveys using hydraulic analysis to then determine the predicted elevation of
Based on the expected flood elevation for a 100-year flood, the NFIP then
delineates the area of inundation (i.e., SFHA) relative to elevation above sea level.
These SFHAs receive a particular insurance risk zone designation.

23 See 44 CFR § 65.1.

FIRMs also serve as guiding documents for communities as they regulate
development in floodplains and for lenders that enforce mandatory flood insurance
purchase requirements. Insurance companies and agents use the FIRMs as the source
of risk information for underwriting and rating applications for flood insurance under
the NFIP.
Accuracy of Flood Maps. An important policy issue for state and local
officials, insurers, mortgage lenders, and property owners is that many flood maps
have not been updated with detailed topography or more accurate methodologies or
reflect real estate growth. Growth tends to increase runoff and alter drainage patterns
on floodplains and, thus, increase flood hazard risk. An inaccurate flood map could
result in flood damages to uninsured properties and larger than expected expenditures
of federal disaster assistance.
Not all structures that lie within the same flood zone on a FIRM are subject to
the same risk. The flood risk depends on factors such as how the home is built,
elevation, and drainage. There are also instances where individual properties are
inadvertently shown on a SFHA. The NFIP has made it possible through a flood
zone correction process for homeowners to remove their homes from the SFHA,
removing the mandatory flood insurance purchase requirement.
Flood Map Modernization. In May 1997, FEMA announced a flood map
modernization initiative to update, revise and convert over 100,000 paper flood maps
to new maps in digital electronic format that are more accurate, more accessible, and
easier to keep current.24 Some floodplain management experts agree that the updated
flood hazard maps may have financial implications for homeowners and property
developers in terms of insurance and construction costs. It is not certain, however,
whether the map modernization process will increase or decrease the number of
properties in the flood zones, or whether insurance premiums will rise or fall when
the maps are updated.
In January 1999, FEMA requested that Congress authorize the agency to charge
a transaction fee of $15 for each federally insured mortgage to fund the NFIP’s map
modernization program. Congress did not approve the request. Instead, it authorized
$5 million to begin updating flood maps. Congress also instructed FEMA to evaluate
alternative ways to fund the cost of modernizing flood maps. The options developed
by FEMA included a map-user fee; an increase in the fee charged for each flood
insurance policy; supplemental appropriations; and use of the NFIP’s borrowing
authority. In Fiscal Year 2003, Congress authorized $150 million in general funds
for map modernization and an additional $200 million each in FY2004 and FY2005.
For FY2006, the Bush Administration has requested an additional $200 million.
Building on its flood map modernization efforts from the late 1990s, in August

2004 FEMA published its FY2004-FY2008 Multi-Year Flood Hazard Identification

24 For more information on FEMA Map Modernization Program, see CRS Report RL31691,
FEMA’s Flood Map Modernization Initiative, by Wayne A. Morrissey.

Plan (MHIP). The Plan outlines five years of flood mapping activities.25 The MHIP
was envisioned by FEMA as a planning tool for identifying a long-term strategy for
addressing the scope and sequence of the map modernization effort, but state
floodplain managers say the MHIP has become something else. Rather, they see it
as an implementation document dictating costs based on outdated estimates, rather
than a planning tool. More important, they insist that the MHIP’s implication that
FEMA can map all communities in the nation with the current funding levels is
erroneous. Instead, they argue that policymakers and stakeholders need to consider
the total scope of the long-term effort to map the nation’s floodplains, what priorities
will be addressed in the initial effort, and the long-term plan to update the remaining
flood maps, as well as a plan to maintain and update the maps in the future. The
President’s Map Modernization budget totals $1.475 billion for the six-year period
beginning in FY2003 and ending in FY2008.26
Finally, FEMA has developed mapping partnerships with many states and some
communities. While many partnerships are expected to be active during map
modernization, some states and communities have expressed an interest in
maintaining an ongoing role in maintaining the maps, including reviewing
engineering reports that support map revisions and issuing letters of map change.
Community Participation
The NFIP has two phases in a community’s participation in the program: the
“emergency program” phase and the “regular program” phase. The emergency
program was established in 1969 as the initial phase of a community’s participation,
during which insurable structures are eligible for limited amounts of cross-subsidized
insurance before the effective date of the issuance of the community’s FIRM.27
Communities in the emergency program phase are not required to meet the NFIP’s
minimum floodplain requirements.
A community is eligible for the “regular program” when a FIRM has been
completed and the community adopts the NFIP’s minimum floodplain management
standards in its local ordinances. FIRMs become the official zone designation that
serves as the guiding document for communities developing land-use plans and for
lenders in enforcing mandatory flood insurance purchase requirements. In the regular
program, the NFIP authorizes the sale of additional flood insurance that is actuarially
determined to reflect the probability of flood damages. Insurance on newly
constructed buildings or substantially improved structures must be based on actuarial
rates if construction work begins after the area is identified as having special flood

25 For more information on FEMA’s Multi-Year Flood Hazard Identification Plan, see
FEMA’s Flood Hazard Mapping Web Site, available at [http://www.fema.gov/fhm/
mh_mhip.shtm], visited on April 12, 2005.
26 Ibid.
27 P.L. 91-152; 82 Stat. 397. Section 408 authorizes the “emergency implementation of a
flood insurance program.”

Policy Issuance and Claims Adjusting
Unlike the practice in private insurance markets, the NFIP accepts all insurance
applicants and is not selective in evaluating individual applicants for flood insurance
coverage. There is no individual risk analysis to determine the likelihood of a future
loss, and individual property loss experience is not used as a rating criterion.28 The
sole criterion for accepting an applicant is that the insured property is located in a
community that participates in the NFIP. The Standard Flood Insurance Policy
(SFIP) is issued for all insured properties.
Federal flood insurance coverage is sold to eligible homeowners, renters, and
business owners, either directly from the NFIP or through the “Write Your Own”
(WYO) program. Under the WYO program, private insurers enter into a “Financial
Assistant/Subsidy Arrangement” whereby they agree to issue flood policies in their
own name and take responsibility for policy administration, claims processing,
marketing and sales. Private insurers handle all claims issued in their name, and
adjust and settle flood loss claims consistent with their general claims practices. In
adjusting flood insurance claims, which are binding upon the federal government, a
WYO insurer is authorized to use staff adjusters or independent contractors selected
and supervised by the company. The WYO insurer also determines when and how
adjusters will be compensated for their work on flood claims.
WYO insurers are compensated by the federal government for providing
services, but assume no financial risk in settling claims. First, the WYO insurers
collect the flood premiums and retain approximately 30% as an administrative fee to
pay general administrative expenses associated with issuing the policy (e.g., agent
commissions, marketing, operations). Second, they are reimbursed for loss
adjustment expenses (i.e., direct and indirect expenses associated with settling
claims). Third, WYO insurers are reimbursed by the NFIP for the services provided
by claims adjusters according to a fee schedule. The balance of the premium that
remains, if any, is sent to the NFIP. In the event retained premiums are not sufficient
to pay claims and cover expenses, the WYO insurers may draw against Letters of
Credit made available by FEMA with a bank.
WYO insurers are subject to certain standards and oversight as detailed in the
NFIP’s “Write Your Own Program Financial Control Plan Requirements and
Procedures” (FCPRP) manual. WYO companies must comply with monthly
financial and statistical transaction reporting requirements. They are also subject to
a review of operations — claims, underwriting, customer service, marketing, and
litigation activities — every three years to assure that each company is meeting its

28 Individual properties can be precluded from purchase of flood insurance under what is
called “Section 1316”. It is a process by which communities and states can report to FEMA
that an individual property is in violation of state/local floodplain management requirements
and that efforts to get the property owner to bring the property into compliance have failed.
FEMA then puts the property on a master list. If the property owner or a future property
owner buys a policy, at some point it gets identified and the NFIP policy is rescinded. The
idea is that a recalcitrant owner may refuse to comply with floodplain ordinances, but
eventually the owner will find it hard to sell if flood insurance is not available.

performance objectives and adhering to program standards and policies. In addition,
WYO insurers are subject to a “Biennial Claims Audit” every three years, and a
“Claims Reinspection Program” that randomly reviews a percentage of WYO
insurers’ claims settlement practices. State insurance regulators have some limited,
indirect supervisory role over the financial aspects of the flood insurance operations
of WYO insurers.
FEMA has outsourced most management and operation functions of the NFIP
to Computer Sciences Corporation (CSC). CSC serves as the liaison between the
federal government and WYO insurers. CSC provides FEMA with actuarial,
financial and statistical analyses, and delivers flood-related training, consultation,
support material and information clearinghouse services. Employees of CSC serve
as claims managers for the WYO program and they handle requests for information
and complaints by homeowners. Most of CSC’s operations associated with the NFIP
are handled out of its Lanham, Maryland facility and involve systems engineers,
software developers, flood insurance underwriters and claims adjusters, actuaries,
accountants and other specialists. The company also processes flood insurance
transactions for the NFIP from the Lanham facility.
Hurricane Isabel Flood Insurance Claims. On September 18 and 19,
2003, Hurricane Isabel struck several states along the East Coast, including
Maryland, North Carolina, Virginia, West Virginia, New Jersey, Delaware and the
District of Columbia. Historically high storm surges caused widespread flood
damage to residential properties. Approximately 25,000 flood insurance claims
related to Hurricane Isabel were filed during the weeks after the storm.
In the aftermath of Hurricane Isabel, concerns were expressed by policyholders,
local and state officials, and Members of Congress about deficiencies in claims
adjustment, processing, and settlement of flood insurance claims related to Hurricane
Isabel. Some flood victims from Hurricane Isabel contended that receipts from flood
insurance policies often failed to cover repair costs.
In response to complaints from flood victims and criticism from Members of
Congress, the officials at the NFIP in April 2004 began offering independent reviews,
if requested, of Hurricane Isabel claims. Claims were readjusted if review revealed
that flood victims had not receive fair payments pursuant to the coverage. FEMA
created a task force that undertook a review of 2,267 Hurricane Isabel claims and
awarded $8.6 million in 1,101 cases.29 Critics, however, quickly charged that the
NFIP claims review process was inadequate, and some flood victims had still not
recovered the amount to which they are entitled.
According to FEMA, the reason that flood victims received claims settlementsth
below the cost of repairing their homes was that the NFIP (and the 90 Congress)
never intended to give victims full compensation for their flood-damaged homes or

29 “Congress members Demand Probe of FEMA Claims,” Washington Times, December 5,

2004, p. B5.

restore policyholders to “pre-flood conditions.”30 Agency officials, under their
reading of the NFIP, contend that the NFIP was designed only to help victims recover
by imposing low-cost premiums, not to make them whole.
This position, however, differs from those held by previous presidential
appointees responsible for the NFIP. J. Robert Hunter, former director of the Federal
Insurance Administration (FIA) in the Ford and Carter Administrations, stated that
the government “always restored victims to their pre-flood condition, less their
deductible.”31 Similarly, Jo Ann Howard, who served as FIA director under
President Clinton from 1998 until 2001, stated that her staff paid claims in a manner
that restored damaged homes to their pre-flood condition. Further, according to Ms.
Howard, the NFIP’s regulations provide no incentive for WYO companies to
undercut a claim as they pass through the premiums and losses to the federal
program, less their commissions for placing the coverage.32
Resolving the policy issuance and adequacy of payment issues could require the
courts to interpret the intent of Congress. In May 2004, several policyholders filed
a class-action lawsuit in the U.S. District Court in Baltimore against eight WYO
insurers.33 The lawsuit alleges that these eight WYO34 insurers used inaccurate and
unrealistic pricing data to calculate repair and replacement costs on covered flood
losses” and that this method of calculating claimants’ losses “systematically and
uniformly undervalued the repair and replacement costs” which generated artificially
low damage estimates and settlement offers.35 In addition, the plaintiffs in the

30 Testimony of David I. Maurstad, Acing Director and Federal Insurance Administrator,
Mitigation Division, Federal Emergency Management Agency, Emergency Preparedness
and Response Directorate, Department of Homeland Security before the House Financial
Services Committee, Subcommittee on Housing and Community Opportunity, Review andthst
Oversight of the National Flood Insurance Program, hearings, 109 Cong., 1 sess., April

14, 2005 (Washington: GPO, 2005), p. 5.

31 Letter from J. Robert Hunter, Director of Insurance, Consumer Federation of America, to
Steven J. Kanstoroom, Pattern Recognition and Fraud Detection Expert, November 18,


32 Letter from Jo Ann Howard, Jo Ann Howard & Associates, P.C. and former Federal
Insurance Administrator, to Steve Kanstoroom, Pattern Recognition and Fraud Detection
Expert, March 7, 2005.
33 Catherine Howell, et al v. State Farm Insurance Companies, et al, Civil Action No. 1:04-
34 These eight WYO insurers are State Farm Fire and Casualty Company, Omaha Property
and Casualty, Standard Fire Insurance Company, USAA General Indemnity Company,
Selective Insurance Company of The Southeast, Indemnity Insurance Company of North
America, Harleysville Mutual Insurance Company, and Allstate Insurance Company
35 Insurance adjusters typically use price data and construction estimating software that
incorporate information and data published by The Craftsman Book Company. The
Craftsman Book data, however, reflect the costs of new construction, not the cost of repair
and renovation work following a natural disaster. The Company recommends that its labor
and material cost estimates should be increased by 25% to 50% for work done following a
major disaster. In addition, the company warns that their estimates are those of the

lawsuit argued that insurers failed to advise claimants that FEMA had extended the
60-day limit for filling an insurance claim to 120 days. Claimants were reportedly
pressured to sign adjusters’ proof of loss within 60 days of the flood even though
they believed the adjusters had underestimated both the scope of damage and the
associated costs of repair of their properties. Moreover, the WYO insurers are
alleged to have compensated adjusters in a manner that created a conflict of interest
between policyholders and adjusters, and this situation deprived policyholders of
contract benefits. The lawsuit seeks injunctive relief requiring insurers to review and
recalculate all claims using price data and construction estimates that reflect the
actual cost of repairing and renovating flood-damaged housing, rather than the cost
of new construction.
The 109th Congress faces seven issues that were revealed by Hurricane Isabel.
These issues, which, on the whole, have led to artificially low damage estimates and
settlement offers, include (1) controversy over FEMA’s current interpretation of
legislative intent with respect to the restoration of claimants to their pre-flood
conditions; (2) lack of trained agents and adjusters; (3) training disparities between
NFIP sales agents and adjusters; (4) compensating adjusters in a manner that creates
a conflict of interest between policyholders and adjusters, thereby depriving
policyholders of contract benefits; (5) lack of uniformity in claims estimates — e.g.,
adjusters taking depreciation on Replacement Cost Value (RCV) losses — and
appeals; (6) calculating repair and replacement costs by using unrealistic construction
pricing guidelines that do not reflect the actual costs of repair and renovation; (7)
FEMA’s failure to advise policyholders about the extended limit for filing an
insurance claim and pressuring flood victims to accept the WYO company’s claim
estimate with an implicit threat of not receiving insurance benefits under the policy.
Meanwhile, Congress has taken some steps to address this issue with the
enactment of the Bunning-Bereuter-Blumenauer Flood Insurance Reform Act of 2004
(FIRA).36 FIRA made some programmatic changes to NFIP to help address
administrative problems related to Hurricane Isabel-related flood insurance claims.
The new law, for example, requires the Director of FEMA to develop minimum
educational requirements for insurance agents and brokers who write flood insurance
policies, as well as to develop new forms, handbooks, and regulations governing the
information given to policyholders regarding flood insurance and the processing of
The 109th Congress might choose to clarify whether WYO insurers are subject
to state insurance laws and the jurisdiction of state insurance regulators. Among the
policy options potentially available to Congress are establishing standards for settling

35 (...continued)
installing contractor, and do not reflect the contractor’s overhead and profit, which increases
the consumer’s cost by another 25% to 50%.
36 P.L. 108-264, 118 Stat. 712.

NFIP insurance claims compared to state law, or creating an institution to provide
some independent oversight for compliance with those standards.37
Flood Insurance Rates and Subsidies
The NFIP has two general classes of properties and a corresponding system of
pricing: those insured at full actuarial rates and those insured at “subsidized” rates.
Congress authorized subsidized rates on buildings constructed before the effective
date of a community’s FIRM or before the application of the NFIP construction
standards on December 31, 1974 (the so-called “pre-FIRM” structures). Owners of
“pre-FIRM” structures pay rates that are less than full actuarial rates and are
exempted from the NFIP’s floodplain management requirements unless they are
substantially damaged or substantially improved, which triggers a requirement to
rebuild to current construction and building code standards.
Premium Subsidy and Borrowing. Subsidies of premiums for pre-FIRM
structures were envisioned to be important aspects of the NFIP’s start-up process.
The subsidy was necessary because it was felt that (1) occupants did not understand
the flood risk when they built in these areas (flood maps were not available); (2)
occupants were not aware of flood hazard risk and there were no public safeguards
prohibiting the occupancy of this land; (3) funds were already invested in the single
largest family investment — the home; (4) subsidized premiums could have proved
to be less costly to the federal government than disaster assistance; and (5) subsidies
of pre-FIRM structures could provide an incentive to local communities to participate
in the program and discourage unwise future floodplains construction.38
By authorizing subsidized rates for pre-FIRM structures without providing
annual appropriations to fund the subsidy, Congress did not set up the NFIP on an
actuarially sound basis.39 In 1981, FEMA shifted policy by increasing premium rates
for pre-FIRM structures and establishing a goal of collecting sufficient revenue each
year to at least meet the expected losses of an average historical loss year based on
experience under the program since 1978. The goal, accomplished in 1988, has
allowed for some accumulation of reserves during years when the NFIP experienced
losses lower than average historical loss year. At present, the pre-FIRM subsidy is,
on average, covered by the post-FIRM revenues.

37 Steven B. Larsen, Report to the County Executive of Baltimore County, Maryland on the
Response to Flood Victims of Hurricane Isabel by Insurance Companies and Agencies of
the State and Federal Government, Baltimore, Maryland, Feb. 2, 2004.
38 PriceWaterhouseCoopers, Study of the Economic Effects of Charging Actuarially Based
Premium Rates for Pre-FIRM Structures, Washington, May 14, 1999, p. 1-2.
39 U.S. General Accounting Office, Flood Insurance: Information on Financial Aspects of
the National Flood Insurance Program, Statement of Stanley J. Czerwinski, Associate
Director, Housing and Community Development Issues, Resources, Community, and
Economic Development Division, GAO/T-RCED-00-23, October 27, 1999, p. 7.

NFIP’s premium subsidies were intended to be phased out over time.40 When
the National Flood Insurance Act of 1968 was passed, it was expected that the
number of pre-FIRM properties (and accompanying subsidies) would gradually
diminish as they were damaged and rebuilt/relocated and subject to stronger
floodplain management and building codes. According to FEMA, the subsidized rate
for existing structures has dropped from 75% in 1978 to about 28% in 2004. Further,
the premium paid by pre-FIRM structures is estimated to be less than 30% of the full
actuarial rate.
Although the NFIP has been able to cover losses through the premiums charged
to all policyholders, total income generated from insurance premiums and
investments has at times been insufficient to pay claims in heavier loss years. The
program has had to borrow from the U.S. Treasury to cover losses and other expenses
in the short term. Table 1 shows the history of Treasury borrowing and repayments
under the NFIP from 1981 to 2005. When flood losses exceed the program’s
revenue, the NFIP is authorized to borrow up to $1.5 billion from the U.S. Treasury,41
but must repay with interest what is borrowed. In 2004, the program had to borrow
$200 million from the U.S. Treasury, due primarily to an historic hurricane season.42
Subsidized (Chargeable) Rates. Chargeable rates are set through the
federal rule-making process, which includes provisions for advance publication of
proposed rates and a period for comment by interested parties. In developing
chargeable rates, FEMA first determines the revenue needed to meet an historical
average loss year based on its current number of policies in-force and its expected
loss and underwriting/administrative expenses. FEMA determines the revenue it will
receive from policies with actuarially based rates. The expected revenue from
actuarially based policies is then subtracted from the historical average loss year to
determine the minimum premium income needed from policies with subsidized rates.
The subsidized rate is then computed based on the minimum revenue needed and the
number of subsidized policies. The proposed subsidized rate is published in the
Federal Register for public comment and subsequently submitted for congressional
approval as part of NFIP’s budget and authorization proceedings.

40 See “Study of the Economic Effects of Charging Actuarially Based Premium Rates for
Pre-FIRM Structures,”PriceWaterhouse Coopers, May 1999.
41 P.L. 104-208; 110 Stat. 3009. The Omnibus Consolidated Appropriations Act of 1997
included a provision to increase the NFIP’s borrowing authority for FY1997 to $1.5 billion
from $1 billion.
42 Testimony of Anthony S. Lowe, Federal Insurance Administrator, Director Mitigation
Division, Federal Emergency Management Agency, Department of Homeland Security,
before the Committee on Housing and Urban Affairs, Subcommittee on Economic Policy,thnd

108 Congress, 2 sess., March 25, 2004, p. 2.

Table 1. History of Treasury Borrowing and Repayments
Under the National Flood Insurance Program
(As of April 15, 2005)
Fiscal yearAmount borrowedAmount repaidCumulative debt
Prior to FY1981 *$ 917,406,008$ 0$ 917,406,088
1981 164,614,526 624,970,099 457,050,435
1982 13,915,000 470,965,435 0
1983 50,000,000 0 50,000,000
1984 20,000,000 36,879,123 213,120,877
1985 0 213,120,877 0
1994 **100,000,000100,000,0000
1995 265,000,000 0 265,000,000
1996 423,600,000 62,000,000 626,600,000
1997 530,000,000 239,600,000 917,000,000
1998 0 395,000,000 522,000,000
1999 400,000,000 381,000,000 541,000,000
2000 345,000,000 541,000,000 345,000,000
2001 600,000,000 345,000,000 600,000,000
2002 50,000,000 640,000,000 10,000,000
October 2002010,000,0000
February 2005200,000,0000200,000,000
To tal $4,259,535,534 $4,059,535,534 $200,000,000
Source: Federal Emergency Management Agency’s Office of Legislative Affairs.
Note: Borrowings through 1985 were repaid from congressional appropriations. Borrowings since
1994 have been repaid from premium and other income.
* Balance forward from U.S. Department of Housing and Urban Development.
** Of the $100 million borrowed, only $11 million was needed to cover obligations.
Actuarial Rates. The NFIP method of establishing actuarial rates is based on
the hydrologic method of estimating flooding damage risk outlined in the 1966 HUD
report.43 The hydrologic method was adopted for the NFIP as a way to overcome the
difficulty of applying the traditional rate-making techniques to the risk of flooding.
The problem was that actual flood loss history was not necessarily an accurate
predictor of future flood damages. Engineering studies were needed to assess the
probable risks of flooding for different locations — i.e., risk zones. The hydrologic
method uses the techniques of analysis developed and used by hydrologists and
hydraulic engineers to determine the economic feasibility of flood protection and
flood-abatement projects. The approach is essentially a traditional benefit-cost
analysis of the damages to property that would be prevented by the proposed flood-
abatement project.
By combining information on the probability that floods of different severities
will occur in a given year, and on the structural damage that will be suffered when

43 U.S. Senate, Committee on Banking and Currency, Insurance and Other Programs for
Financial Assistance to Flood Victims, pp. 49-63.

a flood occurs, the NFIP is able to determine the actuarial rates for different types of
property for different flood risk zones. Given that floods of different heights recur
at different time intervals or frequencies in different geographic areas, hydrologists
were able to derive probable damages for flood-prone areas which are divided into
zones; each zone is defined by the frequency with which the zone will be flooded.
Once the average percentage of the property’s value that will be damaged due to a
flood of a particular elevation is known, the NFIP is then able to determine an
expected loss per $100 property value covered by insurance. This per annum
expected loss provides the “manual rates” for flood insurance premium.
In calculating the actuarial rates, the NFIP uses several factors: (1) the
probability of the full range of possible floods and flood damages, including
catastrophic levels; (2) hydrologic (water distribution) data; (3) mathematical and
computer simulation of flood insurance claims; and (4) actual risk exposures that
vary according to several risk-related features, such as the location of the property in
relation to the flood hazard, the value of such property, and the average annual
amount of damage that such property would suffer from flooding.44 Based on this
information, FEMA develops the pure premium portion of the actuarial rates (i.e.,
average annual damage) for different types of properties in different risk zones.
FEMA continually reviews its NFIP loss history and adjusts NFIP rates to reflect
From the owner’s perspective, the factors used to determine the premium rate
for flood insurance coverage are: the amount of coverage purchased; location, age of
the building, occupancy, the design of the building, and the building’s elevation.
Mandatory Flood Purchase Requirements
The purchase of federal flood insurance was voluntary from the inception of the
NFIP in 1968 through 1973. During this period, communities faced no economic
consequences for not participating in the NFIP, and property owners in flood-prone
areas were not required to purchase coverage. Congress had assumed that
communities in flood-prone areas would immediately avail themselves of federally
subsidized flood insurance. By 1973, however, only 5,500 communities participated
in the NFIP.45 This low participation rate, and the fact that so few flood victims had
flood insurance following major flooding in the early 1970s, led to the enactment of
the Flood Disaster Protection Act of 1973.46 The 1973 act revised the earlier law to
make the purchase of flood insurance mandatory for certain property owners to
remain eligible for loans from federally regulated lending institutions.

44 U.S. General Accounting Office, Flood Insurance: Information on Various Aspects of the
National Flood Insurance Program, Statement of Judy A. England-Joseph, Director,
Housing and Community Development Issues, Resources, Community, and Economic
Development Division, GAO/T-RCED-93-70, pp. 6-7.
45 Congressional Quarterly Weekly Report, “Disaster Response: Does the Country Need a
New National Strategy?” October 15, 1993, vol. 3, p. 895.
46 P.L. 93-234; 87 Stat. 975.

Between 1973 and 1994, many policyholders continued to find it easy to drop
policies, even if required by lenders. Federal agency lenders and regulators47 did not
appear to strongly enforce the mandatory flood insurance purchase requirements.
The Midwest Flood of 1993 highlighted this problem and reinforced the idea that
reforms were needed in order to compel lender compliance with the flood insurance
purchase and retention requirements of the 1973 Act. In response, Congress passed
the National Flood Insurance Reform Act of1994 (NFIRA)48 to make adjustments to
the mandatory purchase requirements. Under the 1994 law, if the owner failed to get
the coverage, lenders were required to purchase flood insurance on behalf of the
property owners, and then bill the property owner. Lenders became subject to civil
monetary penalties for not enforcing the mandatory purchase requirement.
In August 2000, the U.S. Senate Committee on Banking, Housing, and Urban
Affairs released a GAO study of rate of compliance with federally regulated lending
institutions on the NFIP’s mandatory purchase requirement. That study was followed
by a FEMA Inspector General report on compliance with the purchase requirement.
Both reports concluded that the lenders were not meeting their obligation under the

1994 NFIRA to purchase flood insurance coverage.

Floodplain Management and Hazard Mitigation
In addition to mapping flood hazard areas and underwriting flood insurance,
FEMA’s other major role in the NFIP is to provide leadership in a nationwide effort
to reduce future flood damages and protect the natural and beneficial functions of the
floodplains. There is a division of responsibility in floodplain management. FEMA
establishes the floodplain management requirements to be applied within the special
flood hazard areas (SFHA) to prevent or reduce future flood damage. States and
participating communities adopt these NFIP standards in their local ordinances.
Compliance is achieved through the building permit process. State governments
serve as an intermediary between participating communities and the federal
government by providing technical assistance and training to local governments,
floodplain managers, insurance agents and engineers. Participating communities
regulate the location and design of floodplain construction in order to minimize flood
loss and guide development away from flood-prone areas. The “100-year flood” is
used as the standard for floodplain construction which requires elevation of the
lowest floor of a structure above the level of the base flood as determined by the
Flood Insurance Rate Study and shown on the FIRM.
Communities can be placed on probation for not adequately enforcing their
ordinances or can be suspended from the program for failure to take corrective action.
During probation a surcharge is added to insurance premiums in all policies in the
community. Suspension from the program means insurance coverage is denied to
property owners in the community.

47 The federal entities for lending regulation are the Board of Governors of the Federal
Reserve System, the Office of Comptroller of the Currency, the Office of Thrift Supervision,
the Federal Deposit Insurance Corporation, the National Credit Union Administration, and
the Farm Credit Administration.
48 P.L. 103-325; 108 Stat. 2255.

Over the years, concerns have been expressed about the effects of subsidized
flood insurance on the occupancy and use of the nation’s floodplains.49 The broad
policy question in the occupancy and use of floodplains debate is whether flood
probability assessment techniques, land-use planning methods, and damage-reducing
land management policies have had the intended results. In other words, has the
NFIP resulted in appropriate land use adjustments to slow (or reduce) the
development of land that is exposed to flood damage, and thus minimize damages
caused by floods nationwide?
Land-use planning techniques are used to influence and manage the type and
density/intensity of uses and development on the land. The NFIP has implemented
a number of tools and oversight systems to monitor, support and evaluate the quality
of floodplain enforcement at the local community level. The NFIP, by statute, can
only encourage states and local communities to adopt and enforce certain minimum
floodplain management regulations. FEMA has consistently taken the position that
federal land-use regulation should not be forced on local communities because this
practice would be unworkable.50
Repetitive Loss Problem
A major public policy issue before the 109th Congress is the cost to the NFIP of
paying for repetitively flooded properties.51 According to FEMA, a relatively small52
number of RLPs account for a disproportionate share of paid flood claims.
Insurance market analysts insist that by reducing the number of RLPs, actual flood
insurance claims will be reduced, and this will both diminish the upward pressure to
raise flood insurance rates and stabilize, in the long run, the financial condition of the
Appendix B shows that a total of 112,540 properties nationwide have sustained
repetitive losses, but only 50,644 of these properties had insurance, as of September

30, 2004. Appendix C shows that of these 50,644 RLPs, 11,706 are considered

49 Joseph J. Cordes and Anthony M. J. Yezer, “In Harm’s Way: Does Federal Spending on
Beach Enhancement and Protection Induce Excessive Development in Coastal Areas?” Land
Economics, vol 74, p. 128; Owen Ullman, “High Risk Life, High Expense to Taxpayers:
Federal Disaster Aid Makes It Feasible to Build In Harm’s Way,” USA Today, July 24,
2000, p. 6A.; Owen Ullman, “Growth Reshapes Coasts: A Wave of Development
Overwhelms the Shore,” USA Today, July 21, 2002, p. 1A.
50 David M. Bush, “Coastal Hazard Mapping and Risk Assessment,” Insurance Institute for
Property Loss Reduction, National Committee on Property Insurance: Proceedings of the

1993 Annual Forum, San Francisco, CA: Dec. 9, 1993, p. 19.

51 This problem first received public attention during the 106th Congress following the
publication of the 1998 National Wildlife Federation report entitled, “Higher Ground: A
Report on Voluntary Property Buyouts in the Nation’s Floodplain.”
52 U.S. Congress, Senate, Committee on Banking, Housing and Urban Affairs, Flood
Insurance Reform Act of 2004, report to accompany S. 2238, 108th Congress, 2nd sess.,
S.Rept. 108-262 (Washington: GPO, 2004), p. 2.

severe repetitive loss properties (SRLP) that were placed in FEMA’s Target Group
Special Facility. In total, there were 4,498,324 flood insurance policies — so RLPs
are 1% of the total policies nationwide. Yet, according to FEMA, this 1% accounts
for an annual average of 30% of amounts paid in claims.53 Since 1978, RLPs have
cost the NFIP about $2.7 billion.54 Appendix D shows that although RLPs exist in
all 50 states, five states — Louisiana, Texas, Florida, North Carolina, and New Jersey
— accounted for 63% of all repetitive loss payments from 1978 through 2004. The
top 10 states accounted for 78% of all repetitive loss claims; and the top 25 states55
account for 96% of all repetitive loss claims.
The majority of existing flood-prone structures are residences (not vacation or
income-producing homes) “grandfathered” into the NFIP when the program was
created. These properties have been repaired multiple times with subsidized flood
insurance claim dollars. FEMA estimates that 90% of RLPs were built prior to
December 31, 1974, before the preparation of flood insurance rate maps (FIRM) and
building codes that adequately reflected the probability of flooding in special flood
hazard areas (SFHA). These older, generally less-safe pre-FIRM buildings were built
before flood hazard risks were fully known and not constructed to resist flood waters.
Moreover, most of the owners of RLPs pay subsidized rates for flood insurance.
FEMA has sought over the years to prioritize RLPs and pursue a variety of insurance
and mitigation strategies to stem the disproportionate costs to the NFIP associated
with these properties.
As indicated above, conforming with congressional intent, flood insurance rates56th
are subsidized. The record indicates that Members understand that when the 90
Congress enacted the National Flood Insurance Act it was aware that pre-FIRM
properties would experience a higher loss rate, and that flood insurance on these
structures would be prohibitively expensive if the premiums were not subsidized.57
It was thought that properly implemented building ordinances, the natural turnover
of property, and rating and coverage changes would eventually produce cost savings
to the NFIP from reduced flood damage. In addition, policy makers thought that
providing subsidized insurance for existing buildings would lead to a dramatic

53 S.Rept. 108-262, p. 2.
54 U.S. General Accounting Office, National Flood Insurance Program: Actions to Address
Repetitive Loss Properties, GAO Report GAO-04-401T (Washington, Mar. 25, 2004), p. 2.
55 All data come from the National Flood Insurance Program.
56 U.S. Congress, Senate, Committee on Banking and Currency, Housing and Urban
Development Act of 1968, report to accompany S. 3497, 90th Cong., 2nd sess., S.Rept. 1123
(Washington: GPO, 1968). See also Conference Report No. 1785, July 23, 1968, to
accompany S. 3497; and House Report (Banking and Currency Committee) No. 1585, July

25, 1968, to accompany H.R. 17989, which can be found at U.S. Code Congressional andthnd

Administrative News, 90 Cong., 2 sess., 1968, vol. 2, pp. 1599-3202.
57 U.S. Senate, Committee on Banking and Currency, Insurance and Other Programs for
Financial Assistance to Flood Victims: A Report from the Secretary of the Department of
Housing and Urban Development to the President, as Required by they Southeast Hurricaneth
Disaster Relief Act of 1965 (Public Law 89-339, 89 Congress, H.R. 11539, Nov. 8, 1965),thnd

89 Congress, 2 sess., September 1966.

increase in the number of property owners contributing to their own recovery through
insurance, rather than relying on disaster assistance funded by taxpayers.
Factors Contributing to Repetitive Loss Properties
Most insurance market analysts agree that there are four factors contributing to
the RLP problem. First, the NFIP has not effectively excluded pre-FIRM structures
from receiving premium subsidies, as the program was initially envisioned by
Congress, and thus RLPs have received a disproportionate share of NFIP payments
for flood losses. Recall that the vast majority of RLPs are older pre-FIRM properties,
which were initially constructed before the establishment of FIRMs and NFIP
building standards.
Since the 1980s, FEMA has pursued a policy of encouraging states and local
communities to remove damaged properties from the floodplain or elevate them
above the 100-year flood level. Some critics of the effectiveness of this policy note
that many buildings have been repaired at original elevations and continue to be
classified as pre-FIRM properties eligible for subsidized insurance. These pre-FIRM
properties contribute to a disproportionate share of flood losses under the NFIP.
Second, properties that sustained “substantial damage” are not subject to NFIP
hazard mitigation requirements, and this has led to a disproportionate share of NFIP
payments for flood losses. According to FEMA, a disproportionate share of NFIP
claims are for RLPs that suffer less the 50% damages and, therefore, are not required
to be rebuilt to appropriate floodplain management standards designed to reduce
future losses. Communities must require that owners bring into compliance any
building that is substantially damaged by any cause. Repetitive flood losses occur,
in part, because this requirement is difficult to administer.
The cost of paying for RLPs is driven up because RLPs are damaged repeatedly
but typically not beyond 50% of their value — the threshold that triggers the
“substantial damage” standard requiring that structures be rebuilt to meet the
program’s elevation standards.58 Substantial damage means damage whereby the cost
of restoration to the pre-damage condition would equal or exceed 50% of the market
value of the structure before the damage occurred.
Many RLPs never reach the 50% threshold because a majority of the target
buildings are in shallow flooding areas flooded only to the depth of a few feet;
consequently, such flooding does not result in “substantial” damage. Thus, it is the
number and cumulative amount of these losses that is the problem. Insurance market
analysts have suggested that it might make better public policy to eliminate (e.g.,
buy-out, elevate, relocate) these potential future losses now rather than wait for these
buildings to be substantially damaged. In September 1999, FEMA’s Inspector
General published an audit which noted that many communities participating in the

58 44 CFR § 60.3(c)(2).

NFIP did not enforce substantial damage rules, with the result that subsidized rates
were being provided to structures that should have been rated on an actuarial basis.59
Officials in local participating communities typically encourage owners to use
the Increased Cost of Compliance (ICC) coverage in NFIP policies to bring their
buildings into compliance. ICC coverage, part of the Standard Flood Insurance
Policy, pays towards the costs of bringing insured flood damaged homes and
businesses into compliance with their community’s floodplain ordinance. FEMA
charges policyholders from $3 to $75 per year for ICC. The coverage limit is
Some floodplain management specialists insist that the ICC coverage has not
been used as much as it should because it requires claims adjusters to know what they
are doing; because adjusters are among the first professionals the owner sees after a
flood, an adjuster is really in the optimal position to foster mitigation and use of ICC.
Floodplain managers argue that FEMA and WYO insurers might need to do more to
ensure that adjusters are properly identifying likely candidates and directing owners
to the permit officials for required permits and evaluation of mitigation options —
if buildings appear to be close to substantially damaged. Sometimes it is months
before an owner gets around to seeking permits. (It should be noted that permit
officials in small towns are quickly overwhelmed when they have many damaged
buildings to be inspected.)
Third, a large share of RLPs are classified as being outside the designated 100-
year floodplain, which raises concerns about the accuracy of flood insurance maps
(see previous discussion on mapping) and the fact that the NFIP has not assessed the
degree to which residents living in flood-prone areas purchase policies. The
Government Accountability Office (GAO) has reported that FEMA’s data on the
total number of uninsured and insured structures in flood-prone areas are limited.60
While FEMA tracks data on the number of insurance policies in these areas, data on
the overall number of structures are incomplete. In response to congressional
concerns stemming from the GAO study, FEMA announced has taken steps to
improve the quality of its data on the number of structures in flood-prone areas and
is participating in the development of new mapping technologies that could facilitate
the collection of such data.
Fourth, the accuracy of flood maps which capture actual risks facing properties
in flood zones is a contributing factor for repetitive losses. According to FEMA, the
number of homes (both insured under the NFIP and uninsured) damaged or destroyed
from flooding after some recent hurricanes (e.g., Hurricane Isabel in 2003) was
higher than most experts had predicted. Some observers note that the unexpected

59 Federal Emergency Management Agency, Office of Inspector General, Audit of the
Effectiveness of the Substantial Damage Rule, H-03-99, Sept. 1999.
60 U.S. General Accounting Office, Flood Insurance: Emerging Opportunity to Better
Measure Certain Results of the National Flood Insurance Program, GAO Testimony GAO-

01-736T (Washington: May 12, 2001), p. 23.

losses were due to inaccurate flood maps, including instances of buildings simply not
being shown in flood zone areas of the FIRM.61
Repetitive Loss Property Mitigation Strategy
There have been efforts over the years by FEMA to reduce both the number and
vulnerability of repetitively flooded properties.62 FEMA’s Repetitive Loss Strategy
is a cost containment initiative designed to benefit all NFIP policyholders. The
following is a brief summary of FEMA’s past and current efforts to address the
problems associated with existing flood-prone structures.
Past Efforts. In July 1998, the National Wildlife Federation published a
report entitled, “Higher Ground: A Report on Voluntary Property Buyouts in the
Nation’s Floodplains,” that analyzed the NFIP’s claims data on repetitively flooded
properties and discussed voluntary buyout and relocation programs in the context of
restoring the natural flood protection capacity of floodplains. The report outlined a
compelling argument for non-structural measures and the restoration of the nation’s
floodplains. In response to criticism of the NFIP found in the report, FEMA
announced a series of proposals designed to reduce disaster losses, including attempts
to reduce the subsidy provided to repetitive loss properties (particularly vacation
homes, rental properties, and other non-primary residences) that experience repetitive
losses, as well as attempts to terminate flood insurance coverage for the worst
offending repetitive loss properties.63
In December 1993, Congress passed the Hazard Mitigation and Relocation
Assistance Act of 1993 that included a provision to increase the formula for post-
disaster HMGP support for mitigation to 75% from 50%.64 The law clarified what
constituted acceptable conditions for the purchase of damaged homes and businesses.
In addition, the law clarified that purchased land be dedicated in perpetuity for open
space uses.
The National Flood Insurance Reform Act of 199465 made comprehensive
changes to the NFIP, including establishment of the Flood Mitigation Assistance
program to provide grants to states and communities based on a 75%-25% cost share

61 Federal Emergency Management Agency, Office of Inspector General, Audit Division,
Audit of FEMA’s Cost Estimate for Implementing the Flood Map Modernization Plan, H-09-

00, Sept. 2000, p. 44.

62 U.S. Federal Emergency Management Agency, Memorandum to National Flood Insurance
Program Stakeholders from Jo Ann Howard, Administrator of Federal Insurance
Administration, on FEMA’s Repetitive Loss Property Strategy (Washington: May 2000), p.


63 U.S. General Accounting Office, Flood Insurance: Information on the Financial
Condition of the National Flood Insurance Program, GAO Report GAO-01-9992T
(Washington: July 19, 2001), p. 13.
64 P.L. 103-181; 107 Stat. 2054.
65 P.L. 103-325, 108 Stat. 2255.

for mitigation plans and projects; creation of the National Mitigation Fund; and,
provisions of additional coverage for compliance with land-use control measures.
In 2004, FEMA was granted statutory authority to penalize policyholders who
refused government assistance to elevate, floodproof, demolish or relocate a structure
that has been substantially or repetitively damaged by flooding. Some observers have
argued, however, that FEMA was not given sufficient financial resources to
successfully administer a flood mitigation program designed to target repetitive flood
loss properties.
Current Efforts. FEMA’s congressional budget justification for FY2006
proposes that the agency approve grants to states and communities to undertake
mitigation action on 750 repetitive loss properties, using Flood Mitigation Assistance
(FMA) grants to address the RLP problem. For FY2005, all funding for the FMA66
was directed towards mitigating RLPs. Also, since 1990, FEMA has offered
incentives under the NFIP’s Community Rating System (CRS) to communities to67
address the issue locally. Through the CRS, the NFIP provides discounts on flood
insurance premiums in communities that voluntarily initiate activities over and above
the NFIP minimums that reduce flood losses or that increase the number of flood
insurance policies.
Under the CRS, communities receive flood insurance premium discounts based
on their implementation of local mitigation activities that reduce flood losses.
Communities that exceed the NFIP minimum mitigation standards can apply for a
rating from Class 1 (45% premium reduction) to Class 10 (0% premium reduction),
which is based on the total number of points the community accumulates for
implementing various mitigation activities. The higher the number of points, the
greater the premium reduction. Class 1 reflects the highest number of possible points
and hence the highest premium discounts. According to FEMA, there are over 1,000
communities receiving flood insurance premium discounts. These communities68
represent 66% of the NFIP’s policy base. The National Flood Insurance Reform
Act of 199469 codified the CRS with the goal to “provide incentive for communities
to reduce flood losses, to facilitate accurate insurance rating, and to promote
awareness of flood insurance.”
FEMA’s ongoing efforts also include the implementation of its Repetitive Loss
Strategy, whose objective is program cost reduction. Towards that goal, FEMA has
pursued the following strategy components:

66 U.S. Department of Homeland Security, Performance Budget Overview, Fiscal Year 2005
Congressional Budget Justification, Jan. 2004, p. FEMA-81.
67 Ibid.
68 For more information on the NFIP’s Community Rating System, see Flood Insurance:
Community Rating System, available at [http://www.fema.gov/nfip/crs.shtm], visited on
April 11, 2005.
69 P.L. 103-325; 108 Stat. 2255.

Target a Subset of Properties. FEMA’s repetitive loss strategy is to
identify the highest priority properties — those with four or more loss claims — that
would benefit from mitigation activities. As of December 31, 2004, FEMA had
identified 11,706 properties that were insured and which had four or more losses or
had two or three losses that cumulatively exceeded the apparent value of the building
as reported in the insurance policy. The aim of the NFIP is to target these properties
for mitigative action that will remove them altogether from the floodplains, elevate,
or floodproof them to reduce their exposure to flood risk.
Establish a Special Direct Facility (SDF). FEMA has set up a special
direct facility to service these 11,706 SRLPs and provide information about these
properties to state and local floodplain management officials. FEMA opened the
target group special facility program in order to allow the NFIP to provide consistent
control of claims, facilitate data collection, and more easily track mitigation offers
of assistance.
The monthly transfer of insured SRLPs to the facility started on May 1, 2000.
Properties are evaluated for inclusion in the SDF based on a cause-and-effect
relationship between construction characteristics and surrounding terrain as well as
the flood losses these properties have sustained. Homeowners who reside in
properties that become part of the facility typically receive a letter from the NFIP
informing them that their properties have been identified as SRLPs and that their
policies will be renewed with the SDF program established by FEMA. All standard
rates and periodic rate changes will still apply to policies transferred to the SDF.
Expand Flood Mitigation Funding. FEMA’s mitigation funds are available
to states and communities to target the riskiest RLPs and offer the owners financial
assistance to acquire, elevate, flood-proof, demolish, or relocate buildings out of the
floodplain. Current programs available for accomplishing this mitigation include an
annual $20 million transfer for the Flood Mitigation Assistance (FMA) program, the
post-disaster Hazard Mitigation Grant Program (HMGP) and Pre-Disaster Mitigation
Program (PDM), as well as Increased Cost of Compliance (ICC) funds for
substantially damaged structures covered by flood insurance.
Improve Identification of Risks. FEMA provided information and data on
the location of individual repetitive loss properties to state and community
government agencies.

FEMA Mitigation Programs
FEMA provides financial assistance to states and communities for a variety of
flood loss mitigation activities. Grant payments made under the Flood Mitigation
Assistance (FMA) program, the Pre-Disaster Mitigation (PDM) program, and the
Hazard Mitigation Grant Program (HMGP) are used to assist the communities with
such mitigation programs as elevating or relocating flood-prone homes, acquiring
vulnerable properties, retrofitting structures, drainage improvements, and other
effective measures.70
FEMA’s mitigation programs — with some exceptions71 — are funded on a
75% federal, 25% non-federal (i.e., state and local governments, private non-profit
organizations, etc.) cost share basis. In addition, by statute, mitigation projects must
be cost-effective and technically feasible. This means that the cost of funding of the
project must be less than the cost of damages expected to be incurred in future
disasters without the project, and that the project will substantially reduce the risk of
future damage, hardship, loss or suffering resulting frm a major disaster.
Basic Flood Mitigation Assistance (FMA) Program
The Basic FMA program is authorized by 42 U.S.C. §§ 410c-4104d, and was
created as part of the National Flood Insurance Reform Act of 199472 to assist states
and communities in implementing measures to reduce or eliminate the long-term risk
of flood damage to buildings, manufactured homes, and other structures insurable
under the NFIP. Eligible projects include elevating, relocating, floodproofing, or
demolishing insured structures and acquiring property, and other effective measures.
Basic FMA has been funded at $20 million annually by transfer from the NFIF. The
Flood Insurance Reform Act of 2004 (FIRA)73 increased that annual funding level to
$40 million.
Three types of Basic FMA grants are available: planning, project, and technical
assistance grants. FMA Planning and project grants are available only to NFIP-
participating community. FMA planning grants are used by states and communities
to prepare flood mitigation plans. After a community develops an approved flood
mitigation plan, it can then apply for a FMA project grant, which funds measures to
reduce flood losses. Finally, FMA technical grants are available to states to fund the
cost of administering their flood mitigation programs.

70 For more information on FEMA’s hazard mitigation programs, see FEMA’s Mitigation
Grant Programs, available at [http://www.fema.gov/fima/mitgrant.shtm], visited on April,

20, 2005.

71 For example, the Pre-Disaster Mitigation program projects allow small impoverished
communities to receive funding on a 90% federal, 10% non-federal cost share basis. The
Reform Act of 2004 provides opportunity for 90-10 funding under both FMA and the Pilot
Program if the state has added emphasis and provisions in its state mitigation plan.
72 S.Rept. 103-414, 103rd Cong. 2nd sess. (1994).
73 P.L. 108-264; 118 Stat. 712.

Since 1999, FEMA has encouraged the states to use FMA project funds to
purchase severe repetitive loss properties — those with four or more losses, and
structures with two or more losses where cumulative payments have exceeded the
property value.
Pre-Disaster Mitigation (PDM) Program
The pre-Disaster Mitigation (PDM) program is authorized by Section 203 of the
Robert T. Stafford Disaster Relief and Emergency Assistance Act,74 as added by
Section 102 of the Disaster Mitigation Act of 2000,75 to provide “technical and
financial assistance to state and local governments to assist in the implementation of
pre-disaster hazard mitigation measures that are cost effective and are designed to
reduce injuries, loss of life, and damage and destruction of property....”76 The PDM
program is due to expire on December 31, 2005.77 Eligible projects include
acquisition or relocation of vulnerable projects consistent with HMGP, retrofitting
for flood hazard, and localized flood control projects. The PDM program applies to
all types of natural hazards — hurricanes, earthquakes, tornadoes, etc., — not just
floods. The goal of the PDM program is to reduce future losses and cost for the
federal taxpayer. The PDM program marked the first time FEMA has implemented
a grant program that awards funds for mitigation activities on a nationwide,
competitive basis.
Hazard Mitigation Grant Program (HMGP)
The Hazard Mitigation Grant Program (HMGP) was created in November 1988
by Section 404 of the Robert T. Stafford Disaster Relief and Emergency Assistance
Act,78 to provide funds to each states for implementing long-term hazard mitigation
measures following a presidential disaster declaration. HMGP funds are used to
implement long-term mitigation solutions to problems, such as elevating and
acquiring and relocating structures in flood prone areas. This contrasts with short-
term solutions such as buying sandbags and pumps to fight floods. HMGP funds
have also specifically been used in recent years to buy out RLPs in the nation’s
HMGP grant applicants must work through their state officials because the
states are responsible for establishing mitigation priorities and selecting projects for
funding based on those priorities. Procedurally, following a presidential disaster
declaration, a local government will conduct a community outreach meeting, which
is usually attended by federal and state officials. At the meeting property owners
have an opportunity to express their interest in receiving mitigation assistance. The
local government completes the application and forwards it to the state government.

74 P.L. 100-707; 102 Stat. 4689.
75 P.L. 106-390; 114 Stat. 1553.
76 Ibid.
77 P.L. 108-447, 118 Stat. 3343.
78 P.L. 100-707; 102 Stat. 4689.

The state submits the application to FEMA and the agency then decides whether or
not to provide the hazard mitigation grant. If the grant is issued, the state acts as
grantee, receiving funds from FEMA, monitoring the progress of projects, and
submitting quarterly reports to FEMA indicating the status and completion date for
each approved project.
Increased Cost of Compliance Coverage
The NFIP includes compliance coverage (Increased Cost of Compliance, or
ICC) in all new or renewal flood insurance policies on buildings located in mapped
special flood hazard areas. This coverage pays policyholders up to $30,000 to bring
substantially damaged buildings into compliance with local ordinances and building
codes. The term “substantial damage” means the cost of repairing the damaged
building exceeds 50% of its market value (or a lower trigger if adopted locally). The
ICC coverage is designed to help offset the additional costs facing a property owner.
ICC is funded by a flood insurance surcharge which ranges from $3 to $75 per year,
contributing nearly $80 million a year to the insurance fund.
In order to access the ICC funds, the policyholder must file a separate claim
which is supported by documentation of the proposed mitigation method (i.e.,
physically elevating or relocating the building, or demolishing it and reconstructing
a fully compliant structure) and evidence that a permit has been or will be issued by
the community. Processing ICC claims involves careful coordination between the
policyholder, the adjuster and the local permit official. When the community seeks
mitigation grant funds from FMA, PDM or HMGP, the ICC claim can be used
towards the non-federal share of certain mitigation measures.
IRS and Taxation of Mitigation Grant
On April 15, 2005, President Bush signed into law legislation (H.R. 1134) to
amend Section 39 of the Internal Revenue Code (IRC) to exclude disaster mitigation79
payments paid to property owners from gross income. These payments are made
pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act or
the NFIP. FEMA provides flood mitigation grant payments to states, which then pass
them on to communities, so property owners can have the necessary resources to
reduce damage due to future flooding. The Internal Revenue Service (IRS) had ruled
that payments made to property owners to elevate (or otherwise improve through
mitigation) their property under FEMA mitigation grant programs were to be
included in the property owner’s gross income under Section 61 of the IRC.80 In
addition, state and local governments were required to file information returns for
payments made on behalf of a homeowner under §6041 in the year(s) that the
payment(s) is made if the payment(s) is $600 or more during any calendar year.

79 P.L. 109-7; 119 Stat. 21.
80 Memorandum from Robert M. Brown, Associate Chief Counsel (Income Tax &
Accounting), Internal Revenue Service, to Andrew E. Zuckerman, FEMA Director, June 29,


The concern about making mitigation disaster payments taxable was that the
IRS ruling could have resulted in long-term damage to the effectiveness and success
of using mitigation as a means of decreasing future cost to the NFIP and the nation
as a whole. The public law requires the exclusion of disaster mitigation assistance
from gross income and makes it retroactive to assistance received in 2004.
Flood Insurance Reform Act of 2004
During debate in the 106th through 108th Congresses on reauthorizing the NFIP,
Members also focused attention on establishing a framework for addressing the
repetitive loss problem. As indicated earlier, this debate was triggered largely by the
1998 National Wildlife Federation (NWF) publication entitled, “Higher Ground: A
Report on Voluntary Buyouts in the Nation’s Floodplains” which revealed that a very
small percentage of properties that suffered from repeated flooding were responsible
for some 40% of total NFIP loss payments. The study found that flood losses had
risen dramatically through the last century, despite huge expenditures on traditional
flood control (“structural”) projects. The NWF recommends “non-structural”
approaches to reducing flood damages.
In the aftermath of the NWF study, policymakers began to consider utilizing
existing FMA programs as the key mechanism to increase funding levels for
repetitive loss pre-disaster mitigation, particularly voluntary buyouts, demolition,
elevation, and flood-proofing. Most experts believed that using the FMA program
framework for repetitive loss mitigation would encourage communities and states to
be directly involved with the planning and implementation of their floodplain
management strategies. Policymakers also considered requiring homeowners who
refused a reasonable mitigation plan offer to pay rates that reflect the actuarial risk
associated with their properties. In addition, floodplain managers and disaster policy
experts explored ways to get FEMA to work directly with repetitive loss owners on
flood hazard mitigation where communities could not afford the minimum 25% cost-
share or did not have the capability to manage the mitigation project.
On June 30, 2004, President Bush signed into law the Bunning-Bereuter-
Blumenauer Flood Insurance Reform Act of 2004 (FIRA)81 to reauthorize the NFIP,
through September 30, 2008, increase funding for the Basic FMA program (discussed
below), create pilot and individual grant programs for reducing severe repetitive loss
properties (SRLPs),82 and make some programmatic changes to the NFIP to address

81 P.L. 108-264; 118 Stat. 712.
82 Under the Pilot Program a severe repetitive loss property is defined as NFIP-insured
single-family property that meets one of two triggers: four or more claims of at least $5,000
that cumulate to more than $20,000; or at least two claims with cumulative amount
exceeding the value of the property. Non-residential properties are not eligible for
mitigation under the Pilot Program. FEMA shall by regulation define SRLP for multi-family

administrative problems that came to light following Hurricane Isabel in September


Increase Funding for Mitigating Repetitive Loss Properties
FIRA athorizes transfers of funds (total of $90 million) from the National Flood
Insurance Fund into the National Flood Mitigation Fund to aggressively reduce the
number of SRLPs. These funds were authorized for three elements of the Flood
Mitigation Assistance (FMA) programs: Basic ($40 million/year),83 Pilot Program
($40 million/year through FY2009),84 and Individual Property ($10 million/year).85
The Basic FMA program funding represents an increase from the current $20 million
a year to $40 million a year. Most disaster policy experts believe that this $40
million amount will cover a small percentage of properties that need to be
mitigated.86 The Individual grant program authorizes FEMA to provide funding for
individual repetitive loss properties only if the state or community where the property
is located does not have the capacity to manage such activity.87
For FY2006, the Administration requested $28 million for Basic FMA or $8
million over the funding level of recent years. No funds were requested for the Pilot
Program and the Individual Property program. According to Michael Brown, DHS
Undersecretary for Emergency Preparedness and Response Directorate, the FY2006
budget request is limited to only the additional $8 million for the Basic FMA
program because the department is studying how to fund the repetitive loss effort
from fee income rather than premium income.88
Programmatic Changes to Flood Program
FIRA includes several other provisions that make programmatic changes to the
NFIP. They include provisions to:
!institute a formula for distribution of Pilot Program FMA funds to
states based on the percentage of the total number of SRLPs located
within a state;89
!amend FEMA’s ICC authority to clarify the definition of “repetitive
loss structures” and “substantially damaged structures” and that
additional insurance coverage is to help cover the cost of

83 P.L. 108-264; 118 Stat. 712, Section 103(d)(1).
84 Ibid., Section 102(k)(1).
85 Ibid., Section 104(b)
86 S.Rept. 108-262, p. 3.
87 P.L. 108-264, 118 Stat. 712, Section 104.
88 Executive Office of the President, Fiscal Year 2006 Budget Proposal for Federal
Emergency Management Agency, February 2005.
89 P.L. 108-264, 118 Stat. 712, Section 102(f)(5)(A).

implementing mitigation measures that are consistent with local
ordinances. 90
!submit a report to Congress on the use of ICC funds and
recommendations on ways to overcome any barriers facing flood
victims in accessing ICC funds when needed;91
!authorize actuarial rates on certain coastal and riverine properties
leased from the federal government;92
!recommend the creation in statute a state and community’s ability to
opt in or out of the FMA Pilot Program so no community will be
forced to participate regardless of the state’s participation;93
!allow ICC to be triggered by the definition of “substantial damage”
set forth in a community’s ordinance.94
!require FEMA to allow local decisions on the types of mitigation
offers that will be made to property owners;95
!require FEMA to notify property owners about the implications of
refusing a mitigation offer under the pilot program;96
FIRA requires FEMA to adjust NFIP’s insurance rules and rates to require
homeowners to pay actuarial rates in the event the policyholder refuses an offer of
mitigation under the five-year, FMA Pilot Program.97 Specifically, property owners
who refuse a reasonable offer of mitigation would have their insurance premiums
increased to 150% of the chargeable rate.98 In addition, the premium will be
increased another 150% following each future claim of more than $1,500.99 At no
time, however, can the premium be more than the actuarial rate for the property.100
Property owners are permitted to appeal insurance premium increases that result from
declining an offer based on the following grounds: (1) inability to purchase a
functionally equivalent replacement primary residence; (2) damaged property is a

90 Ibid., Section 105.
91 Ibid., Section 206.
92 P.L. 108-264; 118 Stat. 712, Section 106(a).
93 Ibid., Section 102(a).
94 Ibid., Section 105(a).
95 Ibid., Section 102(f)(4).
96 Ibid., Section 102(e)(1)(D).
97 Ibid., Section 102(h).
98 Ibid., Section 102(h)(1)(B).
99 Ibid., Section 102(h)(2).
100 Ibid., Section 102(h)(3).

historic property; (3) flooding that prompted designation as a SRLP resulted from
significant actions by a third party in violation of federal, state, or local law,
ordinance or regulation; (4) in purchasing, the owner relied on a FIRM that indicated
the property was not in the mapped flood hazard area; or (5) the owner demonstrates
that an alternative eligible activity is at least as cost effective as the initial offer.
Legislative Response to Hurricane Isabel
As a result of concerns raised by flood victims, consumer advocates, and some
Members of Congress about the adequacy of payments and the clarity of policies and
procedures for filing and adjusting flood insurance claims stemming from Hurricane
Isabel in September 2003, Congress included several provisions in FIRA to provide
assurances that agents are knowledgeable about flood insurance policies,
policyholders are advised and understand and the scope and limitations of the NFIP
coverage, and an appeals process exists for claimants. The FIRA requires FEMA to:
(1) design supplemental information forms to help policyholders better understand
the insurance coverage they buy or renew;101 (2) write a policyholder handbook that
describes procedures for filing a claim;102 and (3) establish a formal process by which
policyholders may appeal claims decisions.103 FEMA officials stated at the 22nd
Annual National Flood Conference held in Marco Island, Florida from May 31 to
June 3, 2005, that once the forms have been tested with focus groups and feedback
incorporated, these materials will be distributed and new processes implemented
beginning October 2005.
FEMA was also required under FIRA to establish insurance agent and adjuster
education and training requirements. FEMA is working with the National
Association of Insurance Commissioners (NAIC) and the National Conference of
Insurance Legislators to ensure that insurance agents have access to the flood
insurance that is necessary to meet the different regulatory requirements in their
In addition, FIRA directed the Government Accountability Office (GAO) to
undertake a study and report to Congress regarding coverage provided under the
NFIP’s flood insurance policies and payments made to policyholders who filed
claims for eligible damage.104
Finally, some of the ongoing issues and questions that might be examined in the
debate over Hurricane Isabel-related flood victims’ allegation that they did not
receive adequate payments from the NFIP include the adequacy of the scope of
meeting the intended goal of Congress that flood victims be restored to their pre-
flood conditions; should programmatic changes be made to ensure that flood victims
receive adequate payments under their flood insurance policies to allow them to

101 Ibid., Section 202(a).
102 P.L. 108-264, 118 Stat. 712, Section 204(a).
103 Ibid., Section 205.
104 Ibid., Section 208(a).

repair or rebuild their homes;105 whether the limitations on flood insurance coverage
work to the detriment of flood victims in their efforts to repair their homes; what are
the practices of FEMA and insurance adjusters in estimating losses incurred during
a flood; and, how such practices affect the adequacy of payment of flood victims.
Since the NFIP was enacted in 1968, Congress has pursued a policy of
encouraging property and business owners to manage their flood hazard risks through
insurance and other hazard insurance mitigation mechanisms. Today, approximately

4.5 million households and businesses in special flood hazard areas in all 50 states,

the District of Columbia, and territories have access to affordable federal flood
insurance protection.
FEMA is charged with reducing the nation’s risk and costs from flooding (and
other natural hazards). When FEMA first identified the disproportionate amount of
repetitive claims paid on a very small percentage of NFIP-insured properties as the
most significant cost factor in the program, the agency took steps to pursue a variety
of mitigation strategies to reduce future losses from flooding. In addition, Congress
revised the program several times, most recently in 2004, to reauthorize the program
through September 30, 2008 and provide additional funding and tools to mitigate
severe repetitive loss properties. FEMA has acknowledged, and policymakers agree,
that it may take several years to fully solve the RLP problem.
On September 18 and 19, 2003, Hurricane Isabel struck several states along the
mid-Atlantic coast. In the aftermath of Hurricane Isabel, flood victims received
claims settlements below the cost of repairing their homes, According to FEMA this
was because the NFIP was never intended to give victims full compensation for their106
flood-damaged homes or restore policyholders to “pre-flood conditions.” This
position, however, differs from those held by previous presidential appointees
responsible for the NFIP.
Congress has taken steps to address both the RLP and claims
adjustment/settlement issues with the enactment of various provisions in the Flood
Insurance Reform Act of 2004, but further legislative measures and/or regulatory
changes might be considered in the 109th Congress. Some Members of Congress
might call for major reforms of the NFIP, arguing that the NFIP is poorly managed
and lacks oversight. For example, there are certain limitations in the payments under
the SFIP that result in less than full reimbursement for flood losses. Congress could
revisit the scope of coverage for flood policy and the financial impact that broader

105 S.Rept. 108-262, p. 5.
106 Testimony of David I. Maurstad, Acing Director and Federal Insurance Administrator,
Mitigation Division, Federal Emergency Management Agency, Emergency Preparedness
and Response Directorate, Department of Homeland Security, before the House Financial
Services Committee, Subcommittee on Housing and Community Opportunity, Review andthst
Oversight of the National Flood Insurance Program, hearings, 109 Cong., 1 sess., April

14, 2005 (Washington: GPO, 2005), p. 5.

coverage could have on premiums, the overall costs of the NFIP, and financial
solvency and market penetration. The GAO studies required under the FIRA will
provide future guidance and possible recommendations for additional change to the

Appendix A. National Flood Insurance Program Operating Results by Fiscal Year: 2000-2004
(dollars in thousands)
2000 2001 2002 2003 2004
ber of Policies in Force4,269,6944,347,8554,390,0834,423,5054,498,324
ount of Insurance In Force$548,091,057$587,005,003$627,417,898$661,691,405$722,714,914
ium Revenue1,374,7401,501,1591,456,5181,652,7451,772,776
nvestment Revenue0001,3685,977
enue 6,2105,8876,5337,4826,097
iki/CRS-RL32972 Fee94,24596,02399,780102,957107,126Total income1,475,1951,603,0691,562,8311,764,5521,891,976
s.oransfer to National Flood Mitigation20,00020,00020,00020,00020,000
ansfer to Flood Map Modernizationn/a17,7305,720n/an/a
missions and Taxes14,09613,52612,68013,14212,563
Expenses 46,629 38,895 39,426 54,976 42,918
munity Rating System 3,4173,5453,6963,4603,306
417,845 421,078 434,832 519,017 521,635
Total Underwriting Expenses481,987477,044490,634590,595580,422
ustment Expenses302,4731,519,088191,078601,4161,484,868
terest Expense26,6038,19916,5501510
Total Insurance Expenses811,0632,004,331723,9821,212,1622,065,290
eys 46,121 47,831 49,090 49,161 48,842
ard Reduction7,2047,2327,1858,2619,282

2000 2001 2002 2003 2004
surance Activities5,8186,2206,3766,8427,780
tal Floodplain Management53,32555,06356,27557,42258,124
22,820 24,481 26,157 27,372 29,949
Total Administrative Expenses76,14579,54482,43284,79488,073
t income (loss)$567,987($518,536)$730,697$447,596($281,387)
Data provided by Federal Emergency Management Agencys Office of Legislative Affairs.


Appendix B. Nationwide Repetitive Loss Property Counts in the National Flood Insurance Program by State,
(As of September 30, 2004)
Total number of repetitive lossTotal number of repetitive
propertiesloss claimsTotal $ losses for
State nameTotal $ losses for RLPsinsured RLPsTotalInsuredTotalInsured
2,186 1,036 5,675 2,746 103,651,126 53,189,294
19 9 4 5 2 2 468,843 250,401
ona 218 39 486 84 5,869,172 1,024,476
iki/CRS-RL32972 390 104 1,108 301 14,405,843 5,280,867
g/w2,962 1,451 7,708 3,919 144,421,027 79,829,560
s.or 47 18 113 39 1,464,184 336,926
leak1,153 574 3,277 1,707 46,722,545 27,100,888
://wiki 312 154 813 417 22,134,473 16,084,566
http 10 2 25 8 585,392 262,095
9,678 5,987 23,921 15,026 455,851,366 292,261,012
i a 1,023 435 2,670 1,082 51,855,838 20,695,873
13 9 2 7 1 9 388,236 289,894
151 67 411 195 10,039,492 5,643,028
1 8 5 48 19 608,821 269,659
2,810 624 8,430 2,022 83,226,346 25,497,041
762 271 2,016 777 22,342,873 9,342,981
608 246 1,450 619 23,340,342 10,291,484

353 92 945 258 17,999,122 7,419,311

Total number of repetitive lossTotal number of repetitive
propertiesloss claimsTotal $ losses for
State nameTotal $ losses for RLPsinsured RLPsTotalInsuredTotalInsured
1,318 585 4,037 1,893 66,200,762 35,373,382
21,875 11,082 66,039 35,237 859,731,825 512,662,404
161 68 417 186 8,178,156 4,082,065
land 712 395 1,668 932 41,007,154 27,583,335
2,396 1,545 6,575 4,398 101,567,233 64,450,369
an 553 140 1,385 357 13,415,831 5,586,903
517 151 1,234 376 16,859,610 5,701,448
iki/CRS-RL329723,864 1,227 11,428 3,785 149,283,246 62,136,644
g/w4,851 886 15,454 3,159 229,297,164 66,068,956
s.or 42 9 92 20 845,214 228,189
leak 316 51 775 128 8,333,876 1,536,710
://wiki 35 12 85 28 2,465,832 827,427
http 107 45 258 119 2,945,926 1,813,318
ersey 6,565 3,639 19,626 11,253 281,925,863 166,908,438
i co 25 8 60 20 646,089 205,115
7,141 2,758 18,714 7,475 200,576,210 104,003,561
6,871 4,622 18,024 12,357 334,416,748 216,283,723
211 28 470 62 10,555,394 1,497,568
1,203 493 3,216 1,441 43,188,190 24,486,050
829 225 2,395 717 36,008,920 13,115,020
on 282 160 682 386 14,946,487 9,549,119
l vania 2,877 1,152 7,702 3,198 145,112,550 71,296,107

Total number of repetitive lossTotal number of repetitive
propertiesloss claimsTotal $ losses for
State nameTotal $ losses for RLPsinsured RLPsTotalInsuredTotalInsured
1,871 327 5,352 958 46,479,279 14,909,992
s land 169 75 488 235 9,930,123 4,980,642
1,396 650 3,389 1,669 78,687,781 34,262,502
80 23 170 53 2,460,619 989,248
702 318 1,965 876 25,984,223 14,890,963
as 17,129 5,894 49,263 17,611 1,155,911,731 509,918,097
23 3 5 8 7 1,087,641 150,394
iki/CRS-RL32972 51 22 118 56 1,467,482 875,499
g/win Islands1948850823821,882,01512,701,456
s.orinia 2,076 1,248 5,262 3,134 114,998,842 66,915,302
leakshingt on 796 370 2,129 1,000 43,494,636 21,396,822
://wikist Virginia2,1581,0015,4632,61385,591,21944,698,828
httpsconsin 422 219 949 499 13,126,470 6,490,184
oming 9 2 22 4 237,301 33,971
112,540 50,644 314,640 145,740 $5,174,222,683 $2,686,779,107
Data provided by Federal Emergency Management Agencys Office of Legislative Affairs.

Appendix C. Nationwide Total Federal Flood Insurance Claims Ranked By
Insured Repetitive Losses and By State: 1978-2002
Net paymentsaInsured losses for top
StatePoliciesPremiumPayments($)Insured repetitive lossesbstates
8,909,351 1,944,852,707 1,716,259,192 228,593,515 512,662,404
Top 5xas9,303,9711,998,838,6432,677,702,917-678,864,274509,918,09735,493,7327,267,542,3821,564,300,4405,703,241,942292,261,012
63%1,765,883 457,559,654 659,280,778 -201,721,124 216,283,723
e rsey 4,179,680 1,226,218,767 587,975,969 638,242,798 166,908,438
iki/CRS-RL329722,607,995 742,366,529 365,556,100 376,810,429 104,003,561
g/w6,655,640 1,756,762,158 363,930,283 1,392,831,875 79,829,560
s.orTop 10lvania2,077,521477,932,714340,169,013137,763,70171,296,107
leak 78%949,242 32,718,915 217,455,661 109,733,489 67,450,369
://wikii rginia 1,531,602 372,251,755 364,129,426 8,122,329 66,915,302589,453 157,355,075 418,861,329 -261,506,254 66,068,956
http1,207,071 240,970,189 275,793,799 -34,823,610 62,136,644
Top 15a778,760187,257,548254,997,487-67,739,93953,189,294
87%i rginia 545,336 126,277,645 209,321,008 -83,043,363 44,698,828
e ntucky 586,543 131,108,656 178,721,442 -47,612,786 35,373,382
2,367,397 628,098,142 419,158,240 208,939,902 34,262,502
Top 20land1,051,284209,037,377207,890,5991,146,77827,583,335673,517242,836,11098,231,095144,605,01527,100,888
93%1,121,298 283,972,185 209,368,840 74,603,345 25,497,041

787,564 204,340,986 118,900,116 85,440,870 24,486,050

Net paymentsabInsured losses for top
StatePoliciesPremiumPayments($)Insured repetitive lossesstates
ton 613,453 153,244,926 100,714,028 52,530,898 21,396,822
Top 25ia1,141,033321,376,452123,823,882197,552,57020,695,873315,70886,729,57541,056,87545,672,70016,084,566
96%1,050,256 187,505,926 100,384,348 87,121,578 14,909,992
nnessee 323,857 87,541,026 55,695,254 31,845,772 14,890,963
lahoma 397,932 $90,125,058 98,974,449 -8,849,391 13,115,020
irgin Islands74,597$19,590,31936,700,582-17,110,26312,701,456
wa 257,219 $65,286,028 60,414,867 4,871,161 10,291,484
iki/CRS-RL32972on 418,132 $120,638,379 52,034,870 68,603,509 9,549,119
g/w582,731 $157,842,408 65,606,120 92,236,288 9,342,981
s.ora nsas 280,361 $64,828,018 51,454,791 13,373,227 7,419,311
leak284,887 $72,363,862 28,630,785 43,733,077 6,490,184
://wiki246,693 $54,640,273 99,511,587 -44,871,314 5,701,448785,192 $178,112,909 58,039,997 120,072,912 5,643,028
httpTop 54an608,935$156,775,43237,463,815119,311,6175,586,903
100%a nsas 311,556 $70,466,272 34,102,958 36,363,314 5,380,867
s land 280,843 $105,327,844 19,373,716 85,954,128 4,980,642
190,272 $53,120,522 26,534,038 26,586,484 4,082,065
pshire 116,443 $34,299,548 9,616,591 24,682,957 1,813,318
a 327,819 $71,334,470 20,386,027 50,948,443 1,536,710
ota 226,515 $42,151,810 132,130,633 -89,978,823 1,497,568
ona 773,929 $162,147,589 22,987,493 139,160,096 1,024,476
ota 64,288 $16,300,808 13,659,006 2,641,802 989,248
e rmont 77,212 $21,410,049 6,495,785 17,914,264 875,499
a da 293,780 $71,887,752 25,935,984 45,951,768 827,427

Net paymentsabInsured losses for top
StatePoliciesPremiumPayments($)Insured repetitive lossesstates
366,004 $99,708,448 7,658,574 92,049,874 336,926
3,600 $1,519,837 1,497,638 22,199 289,894
aho 113,216 $26,896,321 4,172,694 22,723,627 269,659
bia 9,867 $1,539,969 924,117 615,852 262,095
Top 54a85,407$17,654,7082,586,08615,068,622250,401
100%,99,692 $19,426,154 5,277,094 14,149,060 228,189
continued244,464 $57,693,471 2,206,825 55,486,646 205,115
76,613 $15,733,166 4,792,367 10,940,799 150,394
iki/CRS-RL32972oming 51,979 $12,801,490 1,342,100 11,459,390 33,971
g/w94,277,325 $21,700,789,191 $12,600,189,704 $9,100,599,487 $2,686,779,107
leak Data provided by Federal Emergency Management Agencys Office of Legislative Affairs.
://wikiayments total is the difference between what residents in the state paid in premium payments minus payments or losses paid on all federal flood insurance claims.
httpnsured repetitive losses total is the total payments on FEMA-designated repetitive loss properties that are insured under the NFIP.

Appendix D. Number of Repetitive Loss Properties in FEMA’s
Target Group Special Direct Facility, By State
(As of December 31, 2004)
StateNumber of propertiesTotal premium ($)
Alabama 208 303,652
Arka nsas 24 23,917
California 298 255,664
Connecticut 156 181,811
Delaware 39 86,233
District Columbia27,113
Florida 921 953,389
Illinois 179 136,327
K e ntucky 204 173,950
Louisiana 3,208 2,311,476
Maryland 43 56,001
Massachusetts 359 427,018
Michigan 15 14,874
Minnesota 16 14,176
Mississippi 336 182,259
Missouri 400 351,772
New Hampshire42,834
New Jersey1,0341,039,831
New Mexico1193
New York554564,101
North Carolina790747,259
North Dakota1624
Oklahoma 6 9 39,939
Pennsyl va nia 214 207,249
Puerto Rico5869,933
Rhode Island2260,105
South Carolina111113,250
South Dakota33,375
T e nnessee 78 61,785
T e xas 1,573 1,177,550
V e rmont 5 6,187

StateNumber of propertiesTotal premium ($)
Virgin Islands1542,960
V i rginia 151 157,155
Washington 65 42,772
West Virginia147100,031
Wisconsin 12 7,902
Tot a l 11,706 $10,275,199
Source: Data provided by Federal Emergency Management Agencys Office of Legislative Affairs