National Flood Insurance Program 2001 Year In Review
Release Date: December 28, 2001
Release Number: HQ-01-177
Washington, DC - Under the new leadership of FEMA Director Joe M. Allbaugh, the Federal Insurance Administration and the Mitigation Directorate merged to form the Federal Insurance and Mitigation Administration (FIMA), bringing together once again the insurance, floodplain management and flood mapping components of the National Flood Insurance Program (NFIP) to ensure fuller coordination of program initiatives and messages.
"The NFIP is central to FEMA's mission of reducing the impact of natural disasters," Allbaugh said. "Pre-disaster, community-based mitigation is the key to minimizing property and economic damage and loss of life, and insurance is the best protection against the financial risks. No amount of federal assistance after a flood disaster can match the speed and thoroughness of flood insurance. Flood insurance is effective, fair, and promotes accountability," he said.
Federally backed flood insurance is now available in more than 19,700 communities that have adopted floodplain management ordinances designed to reduce future flood losses by regulating new construction. This year, the number of policies in force increased to more than 4.3 million, representing nearly $589 billion worth of coverage. (Color maps with state-by-state policy, coverage and claims figures are on FEMA's website at http://www.fema.gov/nfip/pcstat.shtm )
Following are brief highlights of some significant NFIP developments in 2001:
- Map Modernization - "During Fiscal Year 2001, FEMA's flood-hazard mapping program produced more than 2,500 Digital Flood Insurance Rate Maps for use by 447 communities and banks and insurance companies for floodplain management and flood insurance purposes. These state-of-the-art, "smart" maps are produced using Geographic Information System technology." The need to update maps to reflect changes in flood hazards caused by recent development in many communities is greater than currently available funding. FEMA estimates it would need $800 million over seven years, in addition to the $50 million it now obtains from map fees each year. But full map modernization using emerging technologies could help prevent $48 billion in flood damages to new buildings and infrastructure over a 50-year period. This year, nearly 20 national, state and local organizations---representing state and local officials, realtors, builders, surveyors and others with a stake in floodplain management, emergency response, mitigation, land-use planning and environmental protection---formed a coalition to support additional funding for map modernization.
- Cooperating Technical Partners (CTP) - Under this initiative, communities, states and/or regional agencies perform all or portions of data collection and mapping tasks according to FEMA standards. The partnership stretches available dollars and expands and accelerates map modernization efforts. In Fiscal Year 2001, FEMA allocated $8 million of flood study funding for CTP activities. The most extensive such partnership to date is with the state of North Carolina, which has initiated a $65 million flood data and flood mapping update.
- Flood Map Store - As an added convenience to the public, customers now can place orders for flood mapping products online at the new FEMA Flood Map Store, http://web1.msc.fema.gov. The secure site allows for quick credit card ordering and features three easy searching methods. Check the Catalog for brief descriptions of all FEMA map products. Map Search helps customers find products by a street address or specified area on the map. Quick Order allows customers knowledgeable about FEMA products to enter a map panel number or community number directly. Customers still can speak with a Map Service Center service representative toll-free by calling 1-800-358-9616. Hardcopy maps are currently being scanned and will be available in digital format via the internet in February.
- National Flood Conference - Seven hundred representatives of the insurance and lending industries and federal, state and local officials attended the annual conference in Minneapolis, Minn., May 22-25, which focused on the use of existing and future technology to increase policy growth and retention. In his keynote address, Deputy FIMA Administrator Howard Leikin said technology has transformed the marketing, rating and delivery of insurance. "We want to ensure that information, policies and technical assistance are delivered to our customers and partners efficiently and accurately, and we want to build a program that is financially sound," he said.
- Cover America II - This nationwide ad campaign recently moved from increasing public awareness of flood risks and flood insurance to generating call-in responses from interested consumers to facilitate customer-agent contact and boost policy sales. The response to two TV spots that cable stations began carrying in October has been outstanding---close to 9,500 calls the first month, an increase of more than 5,000---and resulted in the highest percentage of agent referrals ever. In November, the NFIP held a brainstorming session for representatives of the insurance and lending industries and other federal agencies that produced fresh ideas and new tactics for increasing sales.
- Concept of Operations - To achieve its goals in a web-oriented world, FIMA engaged its Write Your Own company partners to help develop a conceptual technical architecture design, or Concept of Operations, that will use emerging technologies to make the entire process of writing flood insurance-accessing, sharing and using flood data, and adjusting claims-more user-friendly and information-oriented, thereby increasing program efficiency and decreasing costs. Further discussions with an expanded group of WYO partners are scheduled in January.
- Training - In Fiscal Year 2001, the NFIP trained 12,722 agents at 398 Insurance Agent seminars throughout the country and held 133 Lender Workshops for 2,433 participants. A new web-based training module, Surveyor's Guide to the Elevation Certificate, became available online at http://training.nfipstat.com/ecsurveyor/ in two versions to cover the needs of surveyors, engineers, architects, community officials and insurance agents. A total of 2,715 agents used the Agent Training Station at http://training.nfipstat.com for the basic and/or advanced version of the state-of-the-art, interactive Agent Tutorial module.
- Rule Changes - In August, following a thorough review by FIMA, a final rule was published in the Federal Register allowing a one percent increase in the expense allowance paid to private insurers that sell and service flood insurance to reflect more accurately their costs in writing policies and servicing claims. In November, a final rule was published revising NFIP regulations to include definitions for future-conditions hydrology and for the floodplains that may be shown on Flood Insurance Rate Maps for informational purposes at the request of a community. In December, the Federal Register published a proposed rule that will enable the NFIP to increase rates charged for pre-FIRM, V-zone properties-older structures built in high-hazard coastal areas---that currently are eligible for so-called "subsidized" rates. This would bring their premiums more in line with their actual risk, and also reflects last year's findings of a Congressionally mandated study that without such changes, V-zone rates will seriously underestimate the increasing flood risks from steadily eroding coastlines.
- Risk Pools - Under another proposed rule published in the Federal Register, the NFIP would launch a three-year pilot project that would permit governmental risk pools to sell flood insurance to public entities to cover their public buildings. This would allow this market segment to be protected against flood losses under the same mechanism local governments typically use for other coverages. Participants in the pilot would be limited to no more than six, and they must comply with the eligibility criteria and performance standards that are required of private insurance companies participating in the Write Your Own program.
- NFIP Extinguishes Debt - During times of unusually heavy losses, the NFIP exercises its statutory borrowing authority with the U.S. Treasury. Then, as claims subside, it repays borrowed funds, with interest, from premium income. By the end of June, the NFIP had repaid the last of some $1.6 billion borrowed incrementally over the previous five years.
- Tropical Storm Allison - The costliest single flood event in NFIP history, Allison caused major flooding in Texas and Louisiana and heavy losses in other states as distant as Pennsylvania. Flood damage resulted in over 30,000 claims and the final payout will exceed $1 billion. Through its insurance industry partners, the NFIP moved swiftly to respond. Adjustors from all parts of the country traveled to affected areas to meet the needs of stricken policyholders.
- Multi-Billion-Dollar Storm Conference - In April, FIMA hosted a conference in Charleston, S.C., to review our readiness to respond to catastrophic damages resulting from multi-peril events. For exercise purposes, FIMA posed having to respond to a pair of massive hurricanes that might strike the U.S. in rapid succession. Participants included federal and state agencies, insurers, independent adjusting firms, wind pool associations, departments of insurance and others, who studied scenarios detailing damage to real property and infrastructure from two simulated Category V hurricanes--one devastating parts of Florida and causing massive flood and wind damage to other southeastern states, followed days later by another coming ashore at Brownsville, Texas, and moving through Houston. Insurance claims from such storms could number in the millions, and 70-80 percent of these areas' infrastructure could be destroyed. Many recommendations emerged, among them the creation of a Super Catastrophe Claims Office outside but near the affected areas, with private insurance companies and the NFIP co-located to service their customers. Another major meeting/exercise is being scheduled for 2002.
Last Modified: Tuesday, 23-Sep-2003 13:26:11