FLOOD INSURANCE SUBCOMMITTEE MONOGRAPH
A disaster declaration only can come in response to a request by the governor of the state affected by the disaster. A gubernatorial request typically is based on a damage assessment to determine loss and recovery needs. The gubernatorial request is evaluated by a group of regional FEMA representatives, which makes a recommendation to the President. Localized flooding usually does not qualify as a major disaster. Flood insurance policyholders are eligible to receive government aid, but that aid typically is reduced by the amount of any insurance proceeds a claimant receives. Assistance from FEMA may be provided to cover losses that are uninsured and are otherwise eligible for aid. But insurance deductibles, paid for by insureds, are not covered under FEMA’s programs. If a claimant does not have NFIP flood insurance, and he/she receives government aid for flood damage, he/she is required to obtain flood insurance coverage for the future. Excluding the aid available through the NFIP’s enabling statute and the statutes that have modified it since, other government assistance, when and if available, comes primarily in the form of low-interest loans that must be repaid.64 The U.S. Small Business Administration may make federally subsidized loans to repair or replace homes, personal property, or businesses that sustained damages not covered by insurance. Disaster grants and housing from FEMA might be available to meet serious disaster-related needs that are not met in other ways, including but not limited to:
Temporary housing, Repairs to or replacement of damaged property, Medical costs, Clothes and household items, Limited disaster grants.
Only a relatively small fraction of overall disaster assistance overlaps with the insurance coverage available from the NFIP. Outright grants, provided by FEMA’s Individuals and Households Program, usually are small and intended to meet only essential needs that are not otherwise covered.65 Financial assistance to repair property damage is limited to an amount that will make a home inhabitable as quickly as possible. Replacement of damaged personal property is limited to “items or services that help prevent or overcome a disaster-related hardship.”66 There is no focused, institutionalized oversight or accountability for the money made available by the federal government for post-disaster assistance. The Government Accountability Office (GAO) recommends that Congress identify and track the types and amount of federal assistance provided for addressing catastrophic events and develop metrics to inform its oversight.67
64
http://www.iii.org/media/updates/archive/press.739566 (last visited on June 29, 2011). http://www.fema.gov/pdf/assistance/process/help_after_disaster_english.pdf (last visited on June 29, 2011). 66 http://www.fema.gov/assistance/dafaq.shtm#qd_15 (last visited on June 29, 2011). 67 http://www.gao.gov/new.items/d07235r.pdf (last visited on June 29, 2011). 65
American Academy of Actuaries
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www.actuary.org