FEMA has some homework to do on its rate-setting policies, a federal report found. Before new rates can be rolled out to homeowners, the agency has to take a look at how it comes up with those prices.
Posted: Thursday, May 5, 2016 10:30 am
A congressional report has found the Federal Emergency Management Agency still has work to do on its rate-setting methods for flood insurance policies.
The report, issued by the Government Accountability Office, states that FEMA must do the following to ensure its rate-setting methods are in line with actual flood risks:
• finish collecting flood probability and damage estimate data;
• collect information on all grandfathered policies and determine the financial impact of those policies on NFIP; and
• determine full-risk rates for subsidized properties.
The report was requested by members of Congress in 2014 shortly after they voted to delay drastic premium hikes authorized by the Biggert-Waters Act of 2012, passed weeks before Superstorm Sandy.
Rep. Gregory Meeks (D-Queens, Nassau) was one of the members who requested the congressional probe.
“The GAO report shows that FEMA’s NFIP has made progress but there is still room for improvement,” Meeks said in a written statement. “I’ll continue to actively monitor FEMA and NFIP to make sure it fully actualizes the GAO’s recommendations.”
The federal agency is in the middle of forming new flood maps which, if approved as first drawn, would put thousands of homes in Queens and elsewhere in updated flood zones — and put many homes in a zone when they previously weren’t in one — changing the cost of flood insurance for many residents.
The city has challenged parts of the maps, saying they do not accurately portray flood risk in those areas.
Regardless of the city’s appeal, FEMA still has to address some issues before those rates can be considered accurate, the GAO report said.
Many of the recommendations were made in previous reports by the GAO, which says they haven’t been fully implemented.
For example, the agency has not updated information on flood probability for certain areas — a 2008 GAO report found FEMA was using statistics from the 1970s and ’80s to determine the likelihood of a flood.
FEMA promised to update that information but as of the latest report “did not have enough [information] to conduct a statistically valid assessment of flood probability curves.”
Furthermore, GAO found damage estimate data was potentially “inaccurate” and “outdated.” FEMA states it is in the process of updating that information.
The report also states FEMA must keep better track of properties with grandfathered policies so it could know what financial impact those homes will have on the NFIP, something the agency said it is in the process of doing.
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