Local Government Challenges in Dealing with Rising Seas

Yulee, Florida

October 28, 2013

National Flood Policy: The Biggert-Waters Flood Insurance Reform Act of 2012

Association of State Floodplain Managers

2

Mission: Mitigate the losses, costs, and human suffering caused by flooding.

and

Protect the natural and beneficial functions of floodplains.

Briefing Overview

3

Background: Federal Flood Policy

Biggert-Waters NFIP Reform 2012

Flood Insurance Affordability Principles

Briefing Overview

4

Background: Federal Flood Policy

Biggert-Waters NFIP Reform 2012

Flood Insurance Affordability Principles

$2.2

$2.0

$2.9

$2.4

$3.4

$2.2

$4.9

$3.3

$5.6

$10.0

0 2 4 6 8 10 12

1910s

1920s

1930s

1940s

1950s

1960s

1970s

1980s

1990s

2000s

Billions (adjusted to 1999 dollars)

Average Annual Flood Damages

• $10+ billion annually by

2010

• Three-fold increase

from early 1900s

• Per capita damages

increased by more than

a factor of 2.5 in the

previous century--in real

dollar terms

Average Annual Flood Losses

Damage Drivers

Current Federal Policies:

• Allow intensification in hazardous areas

• Ignore adverse impacts to existing assets and properties, and

• Undervalue natural floodplain services

But, changes are already underway…

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Federal Policy Responses to Flood Disasters

Federal Sandy Rebuilding Task Force

• Sea Level Rise Planning Tool – http://www.globalchange.gov/what-we-

do/assessment/coastal-resilience-resources

• Uniform Flood Risk Reduction

Standard:

– Best-available-data for elevation

plus 1’ freeboard – http://portal.hud.gov/hudportal/HUD?src=/sandyre

building/FRRS

Water Resources Development Act

Senate WRDA S.601

• Creates strong National

Levee Safety Program

• Increases authorizations

for USACE technical

assistance programs

(PAS, FPMS)

House WRRDA HR 3080

• Amends the PAS program to

include State levee safety

programs as an eligible activity

but with no additional

authorization for appropriations

• Promotes best modeling

practices, including 3-D digital

modeling

Both versions

• Accelerate environmental review and other project processes;

• Deauthorize certain projects;

• Promote alternative project finance;

• Provide for increased nonfederal participation in projects; and

• Explore changes to P.L. 84-99 to allow modification

Briefing Overview

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Background: Federal Flood Policy

Biggert-Waters NFIP Reform 2012

Flood Insurance Affordability Principles

BW-12 and Insurance Affordability

• Philosophy behind Biggert-Waters – Majority of reforms focused on financial

solvency of the program • Federal insurance subsidies mask actual risk

• Actions to reduce risk => Lower Premiums

• Higher Risk => Higher Premiums

• Reduce program debt

– National Flood Mapping Program

BW12 – Changes to the NFIP

• Flood Insurance

• Mapping

• Mitigation Programs

• Levees and Flood Protection

• Building Code Enforcement

• Assortment of Studies, including:

– Flood Insurance Affordability

– Building Codes and the NFIP

– USACE Levee Programs and NFIP 65.10

BW12 – Changes to the NFIP

Section 205 – Phases out many policy discounts for Pre-FIRM structures, either

immediately or incrementally.

– Discounted Pre-FIRM policies losing their discount include non-

primary residences (e.g., second homes), severe repetitive loss

properties, business properties, and homes which have had

substantial damage or improvements.

– About 400,000 non-primary homes will move toward actuarial rates

with a permissible increase of 25% per year or until full-risk rates are

achieved.

– In addition, pre-FIRM properties that on or after July 6, 2012, have a

new policy written on them or are newly purchased or had a policy

and it lapsed and a new one is written, will be written at full-risk

rates.

BW12 – Changes to the NFIP

• Section 207 calls for eliminating grandfathering

and replacing it with a 20% increases for 5 years

starting in October 2014. FEMA has not yet

been determined how or if it can implement this

provision.

• All NFIP policies will see an average flood

insurance rate increase of approximately 16%

due to other provisions of BW-12 including the

reserve fund, new formula for calculating rates,

etc.

BW12 – Implementation Timeline

DATE BW-12 IMPLEMENTATION STEP

July 6, 2012 BW-12 enacted; reauthorizes the NFIP for five

years and requires FEMA to eliminate certain

discounts and subsidies

January 1, 2013 Upon policy renewal, subsidized rates began to

phase out for non-primary residences

October 1, 2013 Upon policy renewal, subsidized rates will begin to

phase out for business properties, SRL properties,

and others. Immediate move to full-risk rates

after sale/purchase of property, or policy lapse.

Late 2014 FEMA anticipates implementing Section 100207

of BW12 (grandfathering, map changes, etc.)

BW12 – Changes to the NFIP

Certain subsidized policies will be phased out at a rate of 25% per year until they reach the full risk rate: Non-primary residences (January 1, 2013);

Business properties ; and

Severe repetitive loss properties (1-4 family residences), and properties where claims payments exceed fair market value

Primary residences in Special Flood Hazard Areas will be able to keep their subsidized rates unless or until: The property is sold / purchased;

There is a lapse in insurance coverage; or

They suffer severe, repeated flood losses.

The full risk rate will be immediately applied to properties with a sale or lapse in coverage on or after July 6, 2012.

BW12: When Maps Change

Phase in will apply for all new

Flood Insurance Rate Maps

(FIRMs) that are adopted by

communities on or after July 6,

2012

Expected to be implemented

late 2014

Premiums will transition from

the current premium to the new

premium over 5 years in 20%

increments.

BW12: Direct Move to Full-Risk Rates

Changes planned to start October, 2013

for pre-FIRM properties in Zones A, D or V

After the sale/purchase of a property Subsidized rates can no longer be assigned to the new owner.

After a policy lapse Policyholders should know that allowing a policy to lapse could be costly.

When a new policy is issued Policies for buildings uninsured as of the date BW-12 was enacted

BW12: Grandfathering

The charging of insurance premiums based on a prior FIRM – known as “grandfathering” - will be phased out with Section 100207

When a community receives new, effective Flood Insurance Rate Maps (FIRMs):

The Biggert-Waters Act Section 100207 calls for phase-out of grandfathering discounts for properties shown on Flood Insurance Rate Maps that are updated

New rates will be gradually phased in at 20% per year for five years

Section 100207 Implementation anticipated in late 2014

At this time, the future status of the Preferred Risk Policy Eligibility Extension has not been determined. PRP Extension rates will go up 20% starting October 1, 2013.

BW12: Today’s New Policies

Until specifically addressed as BW-12 is implemented, new and renewing policies are still eligible for:

•Pre-FIRM subsidies (except pre-FIRM non-primary

residences)

•Grandfathering

•Extension of Preferred Risk Policy Eligibility

FEMA will clearly communicate when these subsidies and discounts are no longer available, as

BW-12 implementation moves forward.

Other Changes

• Mapping Changes

– Residual Risk; Levees; Interagency Coordination, Others

• Flood Mitigation Programs Consolidation

• FEMA/USACE Levee Accreditation Task Force

• Lots of Studies

– Private Flood Insurance

– Affordability

– Pre-FIRM Data

Briefing Overview

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Background: Federal Flood Policy

Biggert-Waters NFIP Reform 2012

Flood Insurance Affordability Principles

Need to Build Higher!

ASFPMs Approach to Flood

Insurance Affordability

Principles

1. Entire nation must be treated the same.

2. Flood insurance premiums must move toward full-risk rates.

3. Address affordability for those who need it. Consider means tested voucher system.

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ASFPMs Approach to Flood

Insurance Affordability

Principles

4. Vouchers can combine with low-interest loans or grants

5. Loans can fund mitigation actions to help reduce risk and insurance premiums

6. Policy ratings should account for more mitigation actions

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ASFPMs Approach to Flood

Insurance Affordability

Principles

7. Flood Insurance Innovations Need To Be Investigated and Piloted

8. Hazard Mitigation Programs Need To Be Fully Leveraged (FEMA, HUD, EPA, USACE,…)

9. Federal Tax Code Changes To Promote Mitigation

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For More Information

• ASFPM BW12 Clearinghouse – http://floods.org/index.asp?menuID=651#BW-

12_Implementation

• ASFPM Policy Paper on Flood Insurance Affordability – http://floods.org/index.asp?menuID=651#Flood_I

nsurance_Affordability

• Flood and Hazard Mitigation Grants – www.fema.gov/hazard-mitigation-assistance

• Community Rating System – www.fema.gov/national-flood-insurance-

program/community-rating-system

Summary & Conclusion

• We likely have not seen the last word on NFIP and

insurance premiums.

• Federal policies increase emphasis on state and local

leadership in managing flood risk and adapting to climate

change.

• Project and program finance changes will require new

approaches.

• States and communities are leading the way.

Thank you!