Natural Disaster InsuranceFederal Government's Interests Insufficiently Protected Given Its Potential Financial Exposure Gao ID: T-GGD-96-41 December 5, 1995
Proposed legislation (H.R. 1856) would create a new corporation to provide protection against catastrophic losses from natural disasters for residential and commercial property owners. H.R. 1856 would establish (1) natural disaster mitigation programs to be run by the Federal Emergency Management Administration (FEMA) and (2) a federally chartered entity--the Natural Disaster Insurance Corporation (NDIC)--to insure residential property owners against losses arising from earthquakes, volcanos, and hurricanes and to provide reinsurance to protect insurers and large residential and commercial catastrophic losses arising from these same perils. GAO is concerned this unregulated, privately-owned enterprise not subject to oversight of its risk-taking or solvency, could expose the federal government to significant financial loss.