On Feb. 12, the Government Accountability Office (GAO) released a report on extreme weather events and how the Federal government can limit its financial risk, especially in light of climate change. According to the report, the National Flood Insurance Program (NFIP), managed by the Federal Emergency Management Agency (FEMA), creates significant “fiscal exposure.”
In 2012, the NFIP had property coverage of over $1.2 trillion, and as of December 2013, FEMA’s debt related to flood insurance payments totals about $24 billion. The program has received criticism for subsidizing insurance rates, masking the true economic cost of floods in high-risk areas.
The Biggert-Waters Flood Insurance Reform Act of 2012 is an effort by congress to reassess rates based on updated flood maps that reflect climate change predictions. However, implementation will be paramount. In January, the Senate passed a bill that would delay certain rate increases, and the House approved that legislation in early March. If passed, however, the bill will place further burden on taxpayers in the long-term, Gaffigan said.