The Federal Emergency Management Agency (FEMA) may request the US government to provide a bailout of its flood insurance operations to help deal with increasing claims from superstorm Sandy.
FEMA’s deputy associate administrator for federal insurance Edward Connor was quoted by Reuters as saying that the number of claims is four times bigger than the capacity of the National Flood Insurance Program (NFIP).
NFIP is only able to borrow $2.9bn, while destruction caused by Sandy can touch $12bn from $6bn.
"As we go into this, we are looking at Sandy and the numbers are staggering," Connor told the news agency.
In 2005, the NFIP- received a bailout after Hurricane Katrina, subsequently increasing its debt to $18bn.
Connor also said that it would be essential to obtain US Congress approval to increase the NFIP borrowing capacity ahead of the existing $20.7bn limit.
The NFIP is a government managed program and the only flood insurer for residential properties in the US, which has agreement with private underwriting companies to write and administer many of the policies on its behalf.