GAO Report on Flood Risk Mitigation, Fiscal Exposure, and Affordability

GAO Reports

Published March 25th, 2026

Detected March 26th, 2026

Summary

A GAO report highlights that while FEMA's new rate-setting methodology improves actuarial soundness for flood insurance, significant reforms are still needed. Repetitive loss properties, though a small percentage of policies, account for a disproportionate share of claims, contributing to the National Flood Insurance Program's fiscal exposure and highlighting challenges in mitigation efforts.

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What changed

This GAO report, based on testimony before the House Committee on Financial Services, addresses flood risk mitigation, fiscal exposure, and affordability within the National Flood Insurance Program (NFIP). It identifies that repetitive loss properties, while comprising only about 2.5% of NFIP policies, are responsible for 48% of claims by dollar value. The report notes that FEMA's mitigation efforts, primarily through property acquisitions (72.5% of mitigated properties), face challenges such as lengthy processes, limited capacity, and financial constraints. The NFIP's statutory requirement to charge rates that do not fully reflect risk creates fiscal exposure, and without addressing mitigation challenges, costs to policyholders and taxpayers will continue to rise.

The report implies that targeted mitigation efforts, particularly on repetitive loss properties, are crucial for reducing NFIP's fiscal exposure and potentially addressing long-term affordability concerns. While FEMA has addressed some previous recommendations, others remain outstanding, and the GAO has made recommendations for congressional consideration and offered policy options. Regulated entities and stakeholders involved in flood insurance and mitigation should review the referenced GAO reports (GAO-23-105977, GAO-22-106037, GAO-20-508) for detailed findings and recommendations, particularly concerning FEMA's mitigation strategies and program reform needs.

What to do next

Review GAO reports GAO-23-105977, GAO-22-106037, and GAO-20-508 for detailed findings and recommendations.
Assess current flood mitigation strategies and their alignment with FEMA's approaches.
Monitor potential legislative or policy changes related to NFIP reform and flood risk management.

Source document (simplified)

GAO-26-109045 Published: Mar 26, 2026. Publicly Released: Mar 26, 2026.

Fast Facts

We testified on flood risk mitigation before the House Committee on Financial Services, Subcommittee on Housing and Insurance.

Our testimony is based primarily on the following reports:

Flood Insurance: FEMA's New Rate-Setting Methodology Improves Actuarial Soundness but Highlights Need for Broader Program Reform

Flood Mitigation: Actions Needed to Improve Use of FEMA Property Acquisitions

National Flood Insurance Program: Fiscal Exposure Persists Despite Property Acquisitions

Additionally, it updates some data and figures we reported in our prior work.

The Federal Emergency Management Agency has addressed some of our recommendations but still needs to address others. We have also made recommendations for congressional consideration and offered policy options related to these issues.

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Highlights

What GAO Found

The Federal Emergency Management Agency (FEMA) administers three primary programs that mitigate flood risk for properties insured by the National Flood Insurance Program (NFIP). A small number of these properties—known as repetitive loss properties, which have flooded and received claim payments multiple times—contribute to the program’s fiscal challenges. According to FEMA, unmitigated repetitive loss properties make up about 2.5 percent of NFIP policies, but 48 percent of NFIP claims by dollar value have been paid to properties with two or more losses.

From 1989 through 2025, 77 percent of the properties FEMA mitigated were funded by the Hazard Mitigation Grant Program. FEMA supports four mitigation strategies—acquisition, elevation, relocation, and floodproofing. FEMA has mitigated flood risk primarily through acquisitions, which accounted for 69,415 (about 72.5 percent) of the properties mitigated from 1989 through 2025.

FEMA Hazard Mitigation, by Grant Program and Method, Fiscal Years 1989–2025

While acquisitions offer benefits, the process faces significant challenges that can discourage communities and homeowners from participating. These challenges include a lengthy and complex process, limited state and community capacity, and financial constraints.

NFIP represents a fiscal exposure to the federal government because FEMA is statutorily required to charge premium rates that do not fully reflect flood risk. Although mitigation reduces flood losses, it also requires substantial investment. Without addressing mitigation challenges, the number of repetitive loss properties will continue to grow, increasing costs to NFIP policyholders and federal taxpayers. One way to address the program’s fiscal exposure is to target mitigation efforts to those properties contributing most to the premium shortfall. These may disproportionately include repetitive loss properties, which face greater flood risk and higher full-risk premiums. By reducing risk, mitigation could also address affordability in the long term.

Why GAO Did This Study

Flooding is the most expensive natural disaster in the U.S., and in 2024, it caused over $8 billion in damages, according to FEMA. Congress created NFIP in 1968 to protect homeowners from flood losses, minimize property exposure to flood damage, and limit taxpayers' fiscal exposure to flood losses. However, the program faces multiple serious and longstanding challenges, primarily because it has two competing goals: keeping flood insurance affordable while maintaining the program’s fiscal solvency.

This statement discusses (1) the role of mitigation in addressing NFIP’s fiscal exposure from repetitive loss properties and (2) how targeting mitigation efforts could reduce NFIP’s exposure and address affordability.

This statement is based on GAO work issued in 2017–2023, including GAO-17-425, GAO-20-508, GAO-22-106037, and GAO-23-105977. Detailed information on the objectives, scope, and methodology can be found within each report.

Recommendations

GAO has made nine recommendations to FEMA and eight to Congress related to improving the mitigation process, addressing challenges in property acquisitions, and reducing NFIP’s fiscal exposure while addressing affordability for policyholders. As of March 2026, FEMA has implemented four of these recommendations.

Full Report

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Highlights Page (1 page)

Full Report (18 pages)

GAO Contacts

Alicia Puente Cackley Director Financial Markets and Community Investment cackleya@gao.gov

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Sarah Kaczmarek Managing Director Office of Public Affairs media@gao.gov

Public Inquiries

Topics

Economic Development Floods Grant programs Hazard mitigation Homeownership Property losses Insurance claims Flood insurance Communities Taxpayers Flood damage