GAO Report Criticizes FEMA’s Management Of NFIP

According to an article published by Property Casualty 360, the Government Accountability Office has issued a scathing report on the management of the National Flood Insurance Program (NFIP). "There is no way the program will ever be “financially sound”, according to GAO. The report warns that unless FEMA - the Federal Emergency Management Agency, which administers the program, cleans up its act, it will be limited in its ability to manage NFIP’s operations or better ensure program effectiveness.

The report was issued in conjunction with a Senate Banking Committee hearing on the NFIP. The GAO report says that "the pressure on the NFIP to provide services for everyone limits FEMA’s ability to keep the program financially sound." Under present circumstances, “NFIP’s long-term financial solvency will remain in doubt.” The report points out weaknesses in the NFIP’s insurance policy and claims management systems, noting that FEMA cancelled a modernization initiative called “NextGen” in November 2009 -- because the system failed to meet “user expectations"
despite seven years of effort and the expenditure of $40 million dollars! (emphasis added)

FEMA "faces significant management challenges in areas that affect the NFIP, including strategic and human capital planning; collaboration among offices; and records, financial, and acquisition management. FEMA has not developed goals, objectives, or performance measures for the NFIP, and that the program faces high turnover and weaknesses in the oversight of its many contractors." Furthermore, “FEMA needs a plan that would ensure consistent day-to-day operations when it deploys staff to federal disasters.”

FEMA lacks a comprehensive set of processes and systems to guide its operations, in particular
"a records-management policy and an electronic document management system.” While FEMA has begun to address some of these challenges, including acquisition management, “...unless it takes further steps to address these management challenges, FEMA will be limited in its ability to manage NFIP’s operations or better ensure program effectiveness."