This report examines (1) how the Federal Emergency Management Agency's Federal Insurance Administration establishes rates for the National Flood Insurance Program, (2) whether it is possible to eliminate the Federal subsidy and make the program self-sustaining, and (3) if the flood insurance revolving fund is an appropriate mechanism for financing the program. GAO is recommending that the Agency improve its ratesetting process to collect adequate premium income and that the Congress review how flood insurance is financed because of the reduced congressional control inherent in using a revolving fund. Eliminating the subsidy could negatively affect participation in the program. Therefore, GAO believes the Congress needs to consider careful elimination of the subsidy.
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