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Gvt report says NFIP still high risk program
WASHINGTON (6/27/11)--The National Flood Insurance Program (NFIP) has been on the Government Accountability Office’s (GAO) high-risk list since 2006, when the program had to borrow from the U.S. Treasury to cover losses from the 2005 hurricanes, and its outstanding debt and operational and management challenges keep it there, GAO said in a recently released report. The report outlines measures that could be taken to place NFIP on sounder financial footing “in light of public policy goals for federal involvement in natural catastrophe insurance,” the GAO said. It also highlights the operational and management challenges at FEMA that affect the program. Above all, the GAO report said, congressional action is needed to increase the financial stability of NFIP and limit taxpayer exposure. (Use the resource link to access the report.) NFIP reform has been the subject of hearings in both the U.S> House and Senate this year. On June 9, Senate Banking Committee Chairman Tim Johnson (D-S.D.) opened his panel’s hearing on the program saying that, while he hopes to ensure the future of NFIP--which provides more than $1.2 trillion in coverage to Americans in flood-prone areas--the program does need reforms. The program, he said, has a beneficial effect on both the insurance and housing markets. And on the House side in March, a Financial Services subcommittee conducted a hearing to look at reform proposals. Rep. Judy Biggert (R-Ill.), chairman of the subcommittee conducting the review, cited "inadequate management and insufficient funds," as key problems of the program. "It's crucial that we begin to restore the financial integrity of NFIP so that homeowners and businesses in flood-prone areas, like many in Illinois, are not left without any protection and taxpayers are not on the hook for the failings of NFIP," she said.
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