VFMA Workshop October 16, David M. Gunn, P.E., CFM Henrico County DPW

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1 VFMA Workshop October 16, 2014 David M. Gunn, P.E., CFM Henrico County DPW

2 Agenda NFIP Virginia Statistics BW-12 GW-14 Community Actions

3 Flood Damages are not the result of a Natural Disaster, They are the result of poor decisions. NFIP Started in 1968 and expanded ever since - many reforms over 50 years. Reduce/Avoid disaster relief for foreseeable events. Policies underwritten by Federal Flood Insurance Administration policy published in CFR Not traditional insurance uniform policies no reserve, no profits.

4 Three Supports Flood Insurance initially subsidized to encourage participation Added Mortgage Company Mandate & Periodic Portfolio Reviews Flood Insurance Rate Maps minor updates, GIS conversions still major issues Floodplain Management by locality follow minimum Federal rules in development decisions can & should enforce higher standards.

5 National Flood Insurance Program Federal Insurance only in participating communities Private flood insurance used for big mortgages Write-Your-Own (WYO) Insurance Companies Traditional insurance companies sell & service policies Underwritten by Feds policy language published in Fed regulations 44 CFR 61 Flood Insurance Manual has ratings tables and rules Many Recent Updates & Bulletins Direct Service Agent - for 2 below BFE & repetitive loss properties

6 Virginia s NFIP Statistics Through May ,306 NFIP Policies Statewide 32,682 policies added in ten years Almost 50% are optional 500 year floodplain Preferred Risk Premiums PRP Average Premium $738/yr - 10 yr increase $290/yr $28 billion in Coverage Statewide up by $15.2 Billion Average Coverage $247k up from $159k 43,618 Losses Paid Since Average $14,344 Paid premiums are 2.3 times higher than Paid losses

7 Virginia Flood Insurance Statistics Community Premiums V-Zone Policies A-Zone Policies Total Policies Coverage # Claims Since 1978 $$ Claims Since 1978 Spotsylvania $180, $82,981, $61,839 Fredericksburg $319, $48,091, $133,262 Stafford $464, $187,265, $776,772 Henrico $864, ,130 $269,857, $2,978,972 Roanoke including City $1,620, ,157 $254,623,500 1,627 $24,623,909 Fairfax County $3,607, ,804 7,390 $1,692,067, $10,622,918 Hampton $9,264, ,851 11,420 $2,753,810,200 5,428 $70,784,389 Norfolk $9,474, ,070 12,308 $3,133,173,100 5,391 $61,721,397 Virginia Beach $14,289, ,208 24,737 $6,499,799,700 4,393 $46,876,608 Virginia $84,376, , ,306 $28,213,114,300 43,618 $625,675,524 As of 5/27/14

8 Reason for Reform $24 Billion in Debt Katrina & Sandy Premiums don t meet Payments No Reserves in original NFIP Biggert-Waters 2012 Good Ideas affordability issues & politics. Grimm-Waters 2014 slows down some reforms, but keeps most.

9 BW-12 Generally Decreased Subsidies Ended Grandfathering Increased rates on Pre-FIRM. Start a 5% of Premium for residential. Accelerated Rate Increases 10%/year for most 25%/year for Second homes, Rep Loss & SRL New Maps trigger Actuarial (Full Risk) Rating Substantial Improvement/Damages 30% from 50%

10 BW-12 Specifically Section Immediate removal of Pre-FIRM subsidies on second houses, new policies, renewals after lapses, assignments re-rated to full-risk, Severe Repetitive Loss properties up 25%/yr until full-risk, changes in PRP Extensions (500-yr FP) Section Rate increases for many categories - some can change up to 25%/year -most are 18-20%/yr - repealed by GW-14

11 Elevation Certificates Premiums are headed to Full Risk Rating (FRR) & EC required for FRR so ECs now required for all renewals In A zone, homeowners can complete Section E w/o survey don t need Section C or D completed.

12 Grimm-Waters (GW-14) Generally Addresses affordability Extends Grandfathering and Subsidies, but adds surcharge Changes new FIRM triggering rate increases Slows annual increases for some (25% => 15-18%) (not for secondary homes or businesses) GAO says NFIP still on Crash Path

13 GW-14 Specifically Increases minimum deductibles ($500 => $1,000) Increases available deductibles (up to $10k) - up to 35% reduction from $1,000 deductible Decelerates rate increase from BW-12, but adds Reserve Fund Assessment (5%) Federal Policy Fee Other Surcharges (minimum $25) FEMA notifies policyholder of Full Risk Rate Validation of Primary Residences Eligibility

14 Write Your Own Memos FEMA Guidance to WYO insurance agents/companies rating, premiums, refunds W Dec Pages Changes due to BW-12 W April 2014 Phase I of GW-14 implementation - rolled back some premium increases use old tables W April 2014 more Phase I changes W May 2014 Refunds for those who renewed at rates increased by BW-12 & lowered by GW-14 W October 1, pages New Rules for April 1, 2015

15 WO Bulletin W Rating Tables

16 WO Bulletin W Rating Tables

17 WO Bulletin W Rating Tables

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20 Community Actions Discourage Floodplain Development Strictly Enforce Floodplain & Building Codes Encourage Retrofitting: flood vents, raise HVAC Implement Higher Standards - Freeboard, Setbacks, Assist with ECs, LOMAs - MT-EZ/attachments/ diagrams/firmettes New Flood Studies detail approximate areas Talk with Insurance Agents