Recommendation
G. Flood Insurance NFPPR 2015 11-20-14
Explanation/rationale
Insurance related to Mapping
1. Require mapping of other related flood-risk
areas, include in the mandatory purchase
requirement-if not already, and charge
appropriate rate:
a. Coastal Zone A – require mapping the
LiMWA and either create a new zone
(e.g., AC) or provide a surcharge in the
storm surge zones,
b. Erosion zones – already a zone
designation (E); create rates and make
it a mandatory purchase zone
c. Behind levees (and other structural
projects) – stop the use of Zone D and
replace with a new zone designation
such as AL that would carry equivalent
PRP rates;
d. Dam inundation zones – require the
mapping of these areas and the
mandatory purchase of flood insurance;
e.g., create a new zone like AD; perhaps
have the similar rates as PRP
e. Any mapped moderate risk flood area
(e.g., Zone B, shaded X) not described
above have its designation change to
something like AM and have rates
similar to PRP rates
f. Create a surcharge for buildings in the
floodway once they have 2 paid claims
of more than $1,000 each
NFPPR Rec and rationale
Research shows that people may think that even
though their community may have a risk of
flooding, they (and their property) does not. And
while FEMA’s national marketing campaign
attempts to help shift that attitude, property
owners still do not fully understand their risk,
especially in areas where they may not be properly
identified on flood maps.
a) Coastal Zone A – research and post-storm
analysis shows that greater damage occurs in
the 1 ½-3 foot wave zone. NFIP building
requirements should change to address this
risk (e.g., build higher) and the insurance rates
should also reflect this increase risk (but also
benefit if properly built).
b) Erosion zones – these should be mapped as a
Special Flood Hazard Area (hence mandatory
purchase) and flood insurance required to
protect both the lender and the property
owner; rates should be charged accordingly
c) Behind levees – levees do not provide 100%
protection and history shows over and over
again how they can be overtopped and fail.
The risk is real living and working behind a
levee and to protect the interests of the lender
and the property owner, flood insurance
should be required (i.e., AL Zone). The rate
could be equivalent to a PRP, but still required.
The use of Zone D should not even be started
as there are no building or insurance
requirements.
d) Dam inundation zones – like levees, there is a
risk of dam failure and the properties
downstream could face catastrophic damage.
And since it is not mapped, people are less
aware. It should be mapped and assigned as a
Special Flood Hazard Area (i.e., AD zone) and
rates similar to a PRP be provided.
e) Moderate risk zone – statistics show that
nearly 25% of all flood claims have been on
policies with a B/C/X zone designation…and
those are just ones that had flood insurance.
Where the Zone B or shaded X is mapped,
flood insurance should be required (and new
maps show it as an AM Zone?)
f) Buildings in the floodway are at a higher risk
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Recommendation
G. Flood Insurance NFPPR 2015 11-20-14
Explanation/rationale
than others not in the floodway; however,
there is no rating differentiation between the
two. On the insurance application, it should be
captured that it is in the floodway and if it has
claims as described that a surcharge be applied
so more adequate rate is paid for the risk.
Full Risk Rates v. subsidized
2. Ensure the movement towards premiums
being based on actuarial rates continues,
both for pre-FIRM subsidized rates and for
grandfather rates where losses have
occurred
a. After the second paid claim of over
$1,000 on a pre-FIRM building (not
already on a 25% annual rate increase
path), or on a grandfather-rated
building, rates for those structures
would increase at 25% a year until they
reach full-risk rates.
Lender Compliance
3. Strengthen lender compliance
a. Federal lender regulators and FEMA
work together to do an annual sweep of
the NFIP policy with their lenders’ book
of business (need to say this better)
b. Federal lender regulators publish an
annual report to Congress of lenders
who have been out of compliance,
causes of their non-compliance, the
fines paid, and corrective action taken
c. Require all federally regulated and
insured lenders to pay the flood loss up
to the replacement cost of the home or
commercial structure (or up to the
maximum limit of available flood
insurance from the NFIP) in an SFHA, if
there is no flood insurance on the
building.
d. Require flood insurance equal to the
replacement cost on any structure
outside the SFHA for which two or more
damage claims or federal disaster
assistance have been paid due to
NFPPR Rec and rationale
With the Program in debt of $24 B, the drain on
reserves and Program income needs to be reduced
and eventually eliminated. While the reform
legislation helps with that, additional teeth are
needed. If a subsidized premium not at 25%
increases continues to have losses, it should at
least be put on the same path as the maximum
increase already provided by Congress (25%).
Lender compliance still appears not be at or near
100%. While additional teeth were put into lender
compliance additional action is needed.
a) FEMA and the regulators need to share
information. There has to be a way for FEMA
to share their NFIP data base with lenders to
see which don’t have coverage as part of an
audit.
b) Lenders need to be held accountable and
Congress needs to know how well their
legislation is/is not working and be able to call
the violators on the carpet. In addition, if the
“shame” list is public enough, lenders will not
want that visibility.
c) A untold story of Katrina is not who did not
have flood insurance, but instead, who was not
fully insured. Many lenders require full
insurance for homeowners insurance (which is
not a federal requirement), why not flood
insurance? It is in the lender’s best interest to
require Replacement Cost as it helps ensure
the borrower has the means to recover and
they continue to have a client instead of just
covering their own interests
d) While Map Mod provided nearly a nationwide
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Recommendation
G. Flood Insurance NFPPR 2015 11-20-14
Explanation/rationale
flooding unless it is mitigated.
i. No future disaster assistance
due to flooding will be paid on
items that would be covered by
a flood insurance policy unless
coverage is in place
e. FEMA and the SBA need to develop
detailed tracking and enforcement of
required flood insurance after Group
Flood Insurance Policies expire and
during the life of a SBA disaster loan,
respectively.
Mitigation as part of insurance policy
4. Improve the use of ICC
a. Increase limits to $125,000 for
residential and $250,000 for nonresidential
b. Implement “Door #4” option from
NFIRA (need to spell this out more)
c. FEMA should release online an annual
report on the use of ICC, detailing the
funds expended and how they were
used
NFIP Training
5. Improved training of agents
a. FEMA should significantly expand the
agent training provided by NFIP Training
Contractor, both the number of courses
and topics (i.e., legislation changes, ICC,
mitigation options, non-reg products like
depth grids, Changes Since Last FIRM) as
well as in-person classroom instruction
courses. Agent training should also
incorporate more on floodplain
management, flood mapping familiarity,
NFPPR Rec and rationale
database of digitized maps, there were limited
number of detailed studies performed.
Consequently, many communities may have
“new” maps but still based on old studies and
properties that still show to be in moderatelow risk are actually in high-risk.
Consequently, they if they are flooding, they
should be required to carry flood insurance so
the taxpayer doesn’t continue to carry the
burden and the federal lender’s interests
(again, the taxpayer’s) are protected.
e) Larry: I did a study with Xtria several years ago
and even though the focus wasn’t on tracking
disaster loans, it turns out that neither the
NFIP nor SBA was tracking flood insurance on
disaster loans or post-GFIP expiration,
respectively. And supposedly, if they didn’t
have coverage the next time they were
flooded, they would not get aid or loan to
cover what a flood policy would cover…right!
(note heavy sarcasm on the !)
$30,000 no longer covers the cost of mitigating
many homes that are substantially damaged. The
limits need to be increased as well as applied fully
as directed by Congress in NFIRA (Chad can help
expand here).
In addition, FEMA should (be required to) release
an annual report on how ICC is being used, where
it is used and how much of the funding is being
used (and leveraged by supporting grants) needs
to be reported to show its benefits (or limitations
if not being used).
The amount of training for agents in the field has
been limited. While FEMA has expanded their
online training, the course selection has been
limited. More training to relevant and current
issues is needed. For example, while FEMA did
create several reform legislation informational
pieces, they provided no training to insurance
agents specifically on the implementation of the
reform legislation, let alone floodplain
administrators. As a result, property owners were
receiving conflicting information. FEMA should
have spent more money and time in this area as
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Recommendation
G. Flood Insurance NFPPR 2015 11-20-14
Explanation/rationale
and mitigation.
b. FEMA should encourage all states to
require at least 3 hours of continuing
education for license renewal by end of
2016 for those states that don’t already
require it (for some states, the licensing
requirement is to take a flood course just
once).
Incentives to maintain policies
6. Property owners should be more strongly
encouraged to continue coverage after
receiving a LOMA and not be allowed to
build below the BFE when receiving a
LOMR-F.
a. Policyholders should not be allowed to
drop their policy until its next renewal;
however, it could be converted to a
Preferred Risk Policy for the current
term. A separate mailing should be
sent to the policyholder explaining the
risk, the importance to continue
coverage, and how they can easily
convert their existing policy to a PRP.
Then at renewal they can decide
whether to keep it or not.
b. Anyone issued a LOMR-F (and LOMA
(?) other than a LOMA-OAS) should not
be allowed to build a basement or any
other addition below the BFE.
7. Use outreach, monitoring, and other
measures to enforce the NFIP requirement
to identify and insure state- owned and
locally-owned floodprone structures, with
required pay back to the federal treasury
and NFIP for non-compliance
Address Premium Affordability
8. Identify and implement affordable flood
insurance payment methods for fixed – and
low-income property owners who cannot
afford a policy (e.g., means tested
vouchers). These should not be limited to
pre-FIRM property owners, but also those
NFPPR Rec and rationale
fact sheets alone don’t educate. Likewise, better
internal FEMA training of the Region and the B&SA
field representatives is needed.
Two hours of training is not enough these days for
NFIP Flood Insurance. Congress needs to direct
FEMA to work with states to make the licensing
requirement more uniform and required to renew
as well.
FEMA issues over 10,000 LOMAs and LOMR-Fs a
year, which act like a “Get Out of Flood Insurance”
Card and people drop their policy as they feel the
risk has been removed. They also are now free to
build as they want. FEMA needs to discourage
these practices.
This was an outside suggestion; don’t know much
details on this.
No explanation needed here; I am sure ASFPM has
plenty of existing verbiage.
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Recommendation
G. Flood Insurance NFPPR 2015 11-20-14
Explanation/rationale
who have an expiring GFIP certificate,
possibly affected by a map change, or other
scenario that results in unaffordable
premiums for the lower income property
owners.
Insurance Claims Coordination
9. Improve claims coordination for
substantially damaged buildings between
the claims adjuster and floodplain
administrator
c. Provide access to FEMA’s Quick Claims
data to local community officials and
NFIP State Coordinator to help identify
potential substantially damaged
buildings.
d. Require sign off of all claims over a
certain threshold (e.g., 35%) by
community floodplain administrator as
part of claims processing for
substantial damage determination and
mitigation
Elevation Certificates
10. Elevation Certificates
e. Require on all new floodplain permits
for structures and community must
keep them and be made available
(could be verified in CAVs)
f. Explore offering alternative rating that
would negate getting an EC for
insurance rating but instead might use
LiDAR and what might be available in
the data provided in the FIS (or
metadata).
Risk Communication and Marketing
11. Continue marketing campaigns for both
purchase and renewal of flood insurance
policies with target marketing towards
homeowners without mortgages and in
areas of low penetration.
NFPPR Rec and rationale
After a flooding disaster, community officials often
are unaware about insured buildings that have
been determined to be substantially damaged by
the claims adjuster. Improved communications
and coordination is needed between the claims
adjuster and community official and eventually the
property owner so the building is not
reconstructed to old standards if they have
changed.
Can you provide comment on the first one?
f. Obtaining an EC is time consuming and costly.
FEMA has shown through the use of LOMAs by
LiDAR that using elevation data from LiDAR can be
used in place of an EC. FEMA needs to explore
how alternative rating could be used to calculate
flood insurance premium to make it easier for the
insurance agent and policyholder. This does not
detract from the requirement to still have an EC
for building requirements in high-risk areas.
Communicating flood risk is a continual process
and FEMA needs to keep getting the word out.
Areas to target should be ones where there is not
a lender requirement. In addition, their marketing
efforts need to be shared more strongly with other
stakeholders to help carry their messages and
material. FEMA needs to work much more closely
with WYOs, state and national insurance
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Recommendation
G. Flood Insurance NFPPR 2015 11-20-14
Explanation/rationale
associations, FEMA Regions, CERC Contractor,
B&SA field reps, NFP Training Contractor, NFIP SCs,
and local communities where targeting is occurring
so they may locally/regionally leverage what is
being done. In addition, when map changes are
occurring, WYO insurance companies and agents
need to be proactively informed in advance of
these changes, planned outreach events, etc. so
they can be supportive in the local community’s
outreach efforts.
NFIP policy coverage
12. Provide optional basement, Additional
Living Expense (ALE) and Business
Interruption coverages based on actuarial
rates
Improve Rating of Premiums
13. Generally speaking, the closer you get to a
flooding source, the risk for flooding also
increases. Consequently, utilizing the new
Risk MAP datasets (i.e., Depth Grids),
determine a more refined rating process
based on the change in ground elevation
and depth of water; however, the process
needs to be easy-to-do as to not further
complicate an already-complicated
program.
Alternatives to the NFIP
14. Alternatives to the NFIP
g. As outlined in HFIAA, explore how a
community-based flood insurance
program be instituted
h. Continue to promote different ways
private industry can participate in the
flood insurance program (i.e.,
reinsurance, private insurance, TRIA-like
program)
NFPPR Rec and rationale
In an effort to more closely parallel a homeowners
and Business Owners policy, these additional
coverages should be provided as an option. In
many parts of the US, families have furnished
basements, yet most of what is there is not
covered by an NFIP policy. Likewise, a displaced
family/individuals must rely on Individual
Assistance to cover any out-of-home living
expenses. ALE (and the business equivalent, BI)
should be offered to help offset taxpayer funding
through IA.
This could be tied in with 9(f).
You may wish to expound/expand this.
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