Flood Insurance

Pursuant to a congressional request, GAO reviewed property owners' and lenders' compliance with the mandatory flood insurance provisions of the Flood Disaster Protection Act of 1973.

GAO found that: (1) the provision required flood insurance coverage only for properties in special flood hazard areas secured by federally regulated or secured loans; (2) in Maine and Texas, about 22 percent and 79 percent, respectively, of properties for which flood insurance was required were not covered; (3) the Federal Deposit Insurance Corporation reported that, in 95 percent of the cases it examined in the last 3 years, the properties were covered by the required flood insurance; (4) of the lenders the Federal Reserve System examined for compliance in 1988, 83 percent had no violations of flood insurance regulations; (5) many homeowners in special flood hazard areas found flood insurance premiums too expensive and allowed their policies to lapse; (6) lenders reported that flood insurance rate maps were difficult to read, not always accurate, and expensive to maintain; and (7) the Federal Emergency Management Agency's Federal Insurance Administration took such actions as publishing guidance, sponsoring conferences, and collecting and reporting compliance information to improve compliance with the provision.