1. Preparing for NFIP Reauthorization Washington, D.C.  September, 2016
The National Flood Insurance Program: What Should Florida Want out of the Upcoming Congressional Reform Bill?
Preparing for NFIP Reauthorization
Washington, D.C.  September, 2016

2. 20% of all flood claims arise outside of the floodplain
Where do floods occur?
NFIP Reauthorization
December 10, 2018
4.9 million housing units are within the riverine floodplain
3.8 million housing units are within the coastal floodplain
20% of all flood claims arise outside of the floodplain

3. NFIP Facts Established in 1968 5.1 million policies nationwide today
NFIP Reauthorization
December 10, 2018
Established in 1968
5.1 million policies nationwide today
All properties within the flood plain that carry federally- backed mortgages are required to have flood insurance.
Private insurers to not adequately cover flood risk.
Flood Insurance Rate Maps (FIRMs) drawn in Properties built prior to drawing of flood maps and their community’s adoption of floodplain regulations are considered Pre-FIRM.
Risk is borne by federal government. NFIP is administered by private “Write-Your-Own” companies.
Coverage is limited to $250,000 per residential structure, $500,000 per commercial structure.

4. Where are there flood policies?
NFIP Reauthorization
December 10, 2018
94% of all NFIP policies are in coastal states.
Florida
has more coastline than
any other state except
Alaska.

5. Coastal Floodplain Counties
NFIP Reauthorization
December 10, 2018
17 million properties lie in
the 100-year flood plain.
16.4 million people live in the
coastal floodplain.
12% of them live below the poverty level
23% of them are under age 5 and over age 65.
Private insurers don’t adequately cover flood in the floodplain.
FEMA is redrawing flood maps in coastal floodplain counties.
SOURCE: and FEMA

6. About Coastal Shoreline Counties
NFIP Reauthorization
December 10, 2018
Home to 39% of Americans
Generate $6.6T in GDP –46% of national GDP
House 51M jobs
Generate 56% of our nation’s energy Home to all of our ports, responsible for $1.16T in imports
Home to our commercial and recreational fishing industries
If America’s coastal shoreline counties were their own country, that country would rank third in global GDP, behind the U.S. and China.
More than half of Florida’s counties are coastal shoreline counties. 80% of Florida’s GDP is generated there.
SOURCE:

7. Covered properties, residential and commercial
Top 10 NFIP States
NFIP Reauthorization
December 10, 2018
Covered properties, residential and commercial

8. Top 10 NFIP States
NFIP Reauthorization
December 10, 2018

9. Top 10 NFIP States
NFIP Reauthorization
December 10, 2018

10. Top 10 NFIP States
NFIP Reauthorization
December 10, 2018

11. Covering Historical Claims
NFIP Reauthorization
December 10, 2018
Assuming a 35% administrative (WYO) expense, no new floods and 2015 premiums, how long would it take to cover all losses since 1978?
Nationally, 22 years.
In Florida, 6 years.
In Mississippi, 106 years.

12. Perceptions of Florida: Top Ten 2014 Flood Claims?
NFIP Reauthorization
December 10, 2018
In discussions of NFIP, Florida is sometimes portrayed as the biggest problem, the state that all others “subsidize.” This argument recently appeared in an online insurance industry blog, PropertyCasualty360.com.
from PropertyCasualty360.com

13. Perceptions of Florida – Bad Analysis
NFIP Reauthorization
December 10, 2018
Since 1978, Florida has paid nearly $16B in premiums and collected under $4B in claims. Florida is an NFIP asset, and was a net contributor in 2014 as well.
(What you might call “gross profit.”)
from PropertyCasualty360.com and FEMA

14. Premium increased from $1,989 to $49,252
Recent History
NFIP Reauthorization
December 10, 2018
Biggert-Waters (BW12) passed in 2012
Reaction to high claims from Katrina
Resulted in significant increases in premiums for some homeowners
Affordability Study required by BW12 (underfunded and never completed)
Homeowners Flood Insurance Affordability Act (HFIAA) passed in 2014
Addressed the most onerous aspects of BW12
Added some consumer-focused initiatives
Still allows an uncertain – and expensive – future
Premium increased from $1,989 to $49,252

15. BW12 vs. HFIAA Rate Comparison
NFIP Reauthorization
December 10, 2018
Rating Type
Biggert-Waters
HFIAA
PRIMARY HOMES PRE-FIRM
Existing Policies
10% to 20% increase/year
Pre-2012 rate %/year
New Policies
Full risk rate
Sale of Property
Policy Lapse
NON-PRIMARY PRE-FIRM
Second homes, rentals
25% increase/year
Business properties
Severe Repetitive Loss
GRANDFATHERED PROPERTIES
20%+ increases; full risk in 5 years
Repealed
POST-FIRM PROPERTIES
Already paying full-risk rate
PREFERRED RISK POLICY EXTENSION (After year 1 of new map)
N/A
Up to 18% increase/year

16. HFIAA: What might premiums cost?
NFIP Reauthorization
December 10, 2018
$350,000 replacement cost
$250,000 coverage
$2,000 deductible

17. HFIAA: What might premiums cost?
NFIP Reauthorization
December 10, 2018
$350,000 replacement cost
$250,000 coverage
$2,000 deductible

18. HFIAA: What might premiums cost?
NFIP Reauthorization
December 10, 2018
$350,000 replacement cost
$250,000 coverage
$2,000 deductible

19. HFIAA: What might premiums cost?
NFIP Reauthorization
December 10, 2018
$350,000 replacement cost
$250,000 coverage
$2,000 deductible

20. HFIAA: What might premiums cost?
NFIP Reauthorization
December 10, 2018
Home formerly in X zone, now in AE zone due to re-mapping.
$350,000 replacement cost
$250,000 coverage
$2,000 deductible

21. HFIAA: What might premiums cost?
NFIP Reauthorization
December 10, 2018
HARDWARE
$500,000 coverage
$2,000 deductible

22. Impact on Property Values
NFIP Reauthorization
December 10, 2018
It is estimated that every $500 increase in property insurance premium equals a $10,000 decrease in property value*. Assuming that holds true, what would the value be of the properties in the previous slides in 10 years?
Property
10-year Premium increase
10-year Loss in Value
2015 Value
2024 Value
Pre-FIRM Primary, 5%/year
$ ,387.69
$ ,753.80
$ 350,000.00
$ ,246.20
Pre-FIRM Non-Primary, 5%/year
$ ,041.00
$ ,820.00
$ ,180.00
Pre-FIRM Primary, 18%/year
$ ,647.04
$ ,940.80
$ ,059.20
Pre-FIRM Non-Primary, 25%/year
$ 23,880.00
$ ,600.00
$ (127,600.00)
Preferred Risk, 18%/year
$ ,477.25
$ ,545.00
$ ,455.00
Commercial Pre-FIRM, 25%/year
$ 58,545.00
$ 1,170,900.00
$ 500,000.00
$ (670,900.00)
*National Association of Realtors

23. Florida NFIP Policies by Type
NFIP Reauthorization
December 10, 2018

24. NFIP Reauthorization
December 10, 2018December 10, 2018
Impact to Florida
Excluding increases attributable to future remapping, current proposed increases in NFIP rates on Pre-FIRM properties alone could cost Florida up to $68 billion dollars in lost property value.
Best Case Scenario
Worst Case Scenario
Property Type
Statewide Loss in Property Value
Pre-FIRM Primary Home, +5%/year
$6,114,162,140
Pre-FIRM Non-Primary Home, +5%/year
$1,502,176,000
Pre-FIRM Business, +25%/year
$12,762,810,000
TOTAL
$20,379,148,140
Property Type
Statewide Loss in Property Value
Pre-FIRM Primary Home, +18%/year
$38,098,858,240
Pre-FIRM Non-Primary Home, +25%/year
$17,575,680,000
Pre-FIRM Business, +25%/year
$12,762,810,000
TOTAL
$68,437,348,240

25. Issues to Consider in Reauthorization
NFIP Reauthorization
December 10, 2018
Transparency
How are NFIP rates established?
Affordability
What happens to the
economy if flood insurance
becomes unaffordable?
Equity
Should all properties be rated based on ability to withstand a hazard, or on other factors such as whether a property is a 2nd home, a business, or whether it is pre-FIRM or post-FIRM?

26. Issues to Consider in Reauthorization
NFIP Reauthorization
December 10, 2018
Efficiency
Is the current WYO structure cost-efficient?
Mitigation
What can/should be done to improve the ability to withstand a flood?
Participation
Should more properties be required or encouraged to participate in NFIP?
Data and Mapping
As maps are redrawn, how does FEMA ensure accuracy and incorporate local knowledge and coordinate with local governments?