VFMA Workshop October 16, 2014 David M. Gunn, P.E., CFM Henrico County DPW
Agenda NFIP Virginia Statistics BW-12 GW-14 Community Actions
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.
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.
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
Virginia s NFIP Statistics Through May 2014 114,306 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 1978 - Average $14,344 Paid premiums are 2.3 times higher than Paid losses
Virginia Flood Insurance Statistics Community Premiums V-Zone Policies A-Zone Policies Total Policies Coverage # Claims Since 1978 $$ Claims Since 1978 Spotsylvania $180,191 0 41 328 $82,981,200 17 $61,839 Fredericksburg $319,940 0 131 197 $48,091,100 33 $133,262 Stafford $464,430 0 168 748 $187,265,100 98 $776,772 Henrico $864,123 0 311 1,130 $269,857,500 236 $2,978,972 Roanoke including City $1,620,157 0 802 1,157 $254,623,500 1,627 $24,623,909 Fairfax County $3,607,501 0 1,804 7,390 $1,692,067,800 926 $10,622,918 Hampton $9,264,761 13 7,851 11,420 $2,753,810,200 5,428 $70,784,389 Norfolk $9,474,304 2 7,070 12,308 $3,133,173,100 5,391 $61,721,397 Virginia Beach $14,289,695 341 9,208 24,737 $6,499,799,700 4,393 $46,876,608 Virginia $84,376,500 671 57,795 114,306 $28,213,114,300 43,618 $625,675,524 As of 5/27/14
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.
BW-12 Generally Decreased Subsidies Ended Grandfathering Increased rates on Pre-FIRM. Start a reserve @ 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%
BW-12 Specifically Section 205 - 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 207 - Rate increases for many categories - some can change up to 25%/year -most are 18-20%/yr - repealed by GW-14
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.
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
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
Write Your Own Memos FEMA Guidance to WYO insurance agents/companies rating, premiums, refunds W-13070 Dec 2013-271 Pages Changes due to BW-12 W-14014 April 2014 Phase I of GW-14 implementation - rolled back some premium increases use old tables W-14016 April 2014 more Phase I changes W-14026 May 2014 Refunds for those who renewed at rates increased by BW-12 & lowered by GW-14 W-14053 October 1, 2014 186 pages New Rules for April 1, 2015
WO Bulletin W-14053 Rating Tables
WO Bulletin W-14053 Rating Tables
WO Bulletin W-14053 Rating Tables
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