Author:
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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To satisfy requirements of section 578 of the National Flood Insurance Reform Act of 1994, the Federal Emergency Management Agency (FEMA) contracted with PricewaterhouseCoopers (PwC) to study the economic effects of eliminating the government subsidies in the National Flood Insurance Program. Under current law, flood insurance premiums are generally subsidized for "pre-FIRM structures"--Those built before the completion of a participating community's Flood Insurance Rate Map (or before 1975, whichever is later). At the request of the Subcommittee on Housing and Community Opportunity of the House Committee on Banking and Financial Services, the Congressional Budget Office (CBO) has reviewed the resulting report, titled Study of the Economic Effects of Charging Actuarially Based Premium Rates for Pre-FIRM Structures. CBO's analysis included three components: Reviewing the report itself; Reviewing FEMA's own internally sponsored review commissioned from Professor Richard N. Boisvert of Cornell University of the report's "draft final" version; and sending three rounds of questions to FEMA and its contractor about assumptions and methods not adequately described or explained in the report.
Author: National Academies of Sciences, Engineering, and Medicine
Publisher: National Academies Press
ISBN: 0309380804
Category : Science
Languages : en
Pages : 151
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Book Description
When Congress authorized the National Flood Insurance Program (NFIP) in 1968, it intended for the program to encourage community initiatives in flood risk management, charge insurance premiums consistent with actuarial pricing principles, and encourage the purchase of flood insurance by owners of flood prone properties, in part, by offering affordable premiums. The NFIP has been reauthorized many times since 1968, most recently with the Biggert-Waters Flood Insurance Reform Act of 2012 (BW 2012). In this most recent reauthorization, Congress placed a particular emphasis on setting flood insurance premiums following actuarial pricing principles, which was motivated by a desire to ensure future revenues were adequate to pay claims and administrative expenses. BW 2012 was designed to move the NFIP towards risk-based premiums for all flood insurance policies. The result was to be increased premiums for some policyholders that had been paying less than NFIP risk-based premiums and to possibly increase premiums for all policyholders. Recognition of this possibility and concern for the affordability of flood insurance is reflected in sections of the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA 2014). These sections called on FEMA to propose a draft affordability framework for the NFIP after completing an analysis of the efforts of possible programs for offering "means-tested assistance" to policyholders for whom higher rates may not be affordable. BW 2012 and HFIAA 2014 mandated that FEMA conduct a study, in cooperation with the National Academies of Sciences, Engineering, and Medicine, which would compare the costs of a program of risk-based rates and means-tested assistance to the current system of subsidized flood insurance rates and federally funded disaster relief for people without coverage. Production of two reports was agreed upon to fulfill this mandate. This second report proposes alternative approaches for a national evaluation of affordability program policy options and includes lessons for the design of a national study from a proof-of-concept pilot study.
Author: Perry Beider
Publisher: DIANE Publishing
ISBN: 1437925499
Category : Business & Economics
Languages : en
Pages : 52
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Book Description
The vast majority of homes and small commercial buildings that are insured against flood damage in the U.S. are covered by the Nat. Flood Insur. Program (NFIP). Although the flood insurance (FI) program had been largely self-sustaining in the past, it had to borrow $17 billion from the federal Treasury to pay claims after the catastrophic hurricanes of 2005. That borrowing has highlighted questions about the program¿s financial health, including the actuarial soundness of the premium rates charged on policies that are not explicitly subsidized and the cost of paying claims for properties that have suffered multiple flood losses. This report explains how NFIP sets ¿full-risk¿ premium rates for the FI program. Charts and tables.
Author: National Research Council
Publisher: National Academies Press
ISBN: 0309371287
Category : Science
Languages : en
Pages : 232
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Book Description
The National Flood Insurance Program (NFIP) is housed within the Federal Emergency Management Agency (FEMA) and offers insurance policies that are marketed and sold through private insurers, but with the risks borne by the U.S. federal government. NFIP's primary goals are to ensure affordable insurance premiums, secure widespread community participation in the program, and earn premium and fee income that covers claims paid and program expenses over time. In July 2012, the U.S. Congress passed the Biggert-Waters Flood Insurance Reform and Modernization Act (Biggert-Waters 2012), designed to move toward an insurance program with NFIP risk-based premiums that better reflected expected losses from floods at insured properties. This eliminated policies priced at what the NFIP called "pre-FIRM subsidized" and "grandfathered." As Biggert-Waters 2012 went into effect, constituents from multiple communities expressed concerns about the elimination of lower rate classes, arguing that it created a financial burden on policy holders. In response to these concerns Congress passed The Homeowner Flood Insurance Affordability Act of 2014 (HFIAA 2014). The 2014 legislation changed the process by which pre-FIRM subsidized premiums for primary residences would be removed and reinstated grandfathering. As part of that legislation, FEMA must report back to Congress with a draft affordability framework. Affordability of National Flood Insurance Program Premiums: Report 1 is the first part of a two-part study to provide input as FEMA prepares their draft affordability framework. This report discusses the underlying definitions and methods for an affordability framework and the affordability concept and applications. Affordability of National Flood Insurance Program Premiums gives an overview of the demand for insurance and the history of the NFIP premium setting. The report then describes alternatives for determining when the premium increases resulting from Biggert-Waters 2012 would make flood insurance unaffordable.
Author: James P. Howard, II
Publisher: Springer
ISBN: 3319290630
Category : Political Science
Languages : en
Pages : 134
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Book Description
This Brief presents a benefit-cost analysis of the National Flood Insurance Program (NFIP) as well as an evaluation of its cumulative socioeconomic effects. Created by Congress in 1968, the NFIP provides flood insurance protection to property owners, in return for local government commitment to sound floodplain management. Since 1994, the NFIP has included a Flood Mitigation Assistance (FMA) program to provide local communities with support for flood mitigation. This book offers quantitative evidence of the net social benefit of the NFIP for the years 1996-2010, including an independent assessment of the consumer benefit. Second, it provides distributionally weighted analysis to show the socioeconomic effects of payments and claims. Finally, this Brief includes an analysis of the change in government revenue attributable to the NFIP and FMA programs. The models used in each component of the analysis are usable by others for extending and revising the analysis. Providing a comprehensive analysis of this increasingly important federal policy, this Brief will be of use to students of environmental economics and public policy as well as those interested in risk management in the era of climate change.
Author: Stanley J. Czerwinski
Publisher:
ISBN:
Category : Flood insurance
Languages : en
Pages : 16
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Book Description
Author: National Academies of Sciences, Engineering, and Medicine
Publisher: National Academies Press
ISBN: 0309374715
Category : Social Science
Languages : en
Pages : 141
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Book Description
River and coastal floods are among the nation's most costly natural disasters. One component in the nation's approach to managing flood risk is availability of flood insurance policies, which are offered on an individual basis primarily through the National Flood Insurance Program (NFIP). Established in 1968, the NFIP is overseen by the Federal Emergency Management Agency (FEMA) and there are about 5.4 million individual policies in the NFIP. The program has experienced a mixture of successes and persistent challenges. Successes include a large number of policy holders, the insurance of approximately $1.3 trillion of property, and the fact that the large majority of policy holders - 80% - pay rates that are risk based. NFIP challenges include large program debt, relatively low rates of purchase in many flood-prone areas, a host of issues regarding affordability of premiums, ensuring that premiums collected cover payouts and administrative fees, and a large number of properties that experience severe repetitive flood losses. At the request of FEMA, A Community-Based Flood Insurance Option identifies a range of key issues and questions that would merit consideration and further analysis as part of a community-based flood insurance program. As the report describes, the community-based option certainly offers potential benefits, such as the prospect of providing coverage for all (or nearly all) at-risk residents and properties in flood-prone communities. At the same time, many current challenges facing the NFIP may not necessarily be resolved by a community-based approach. This report discusses these and other prominent issues to be considered and further assessed.
Author: National Research Council
Publisher: National Academies Press
ISBN: 0309371694
Category : Mathematics
Languages : en
Pages : 167
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Book Description
Floods take a heavy toll on society, costing lives, damaging buildings and property, disrupting livelihoods, and sometimes necessitating federal disaster relief, which has risen to record levels in recent years. The National Flood Insurance Program (NFIP) was created in 1968 to reduce the flood risk to individuals and their reliance on federal disaster relief by making federal flood insurance available to residents and businesses if their community adopted floodplain management ordinances and minimum standards for new construction in flood prone areas. Insurance rates for structures built after a flood plain map was adopted by the community were intended to reflect the actual risk of flooding, taking into account the likelihood of inundation, the elevation of the structure, and the relationship of inundation to damage to the structure. Today, rates are subsidized for one-fifth of the NFIP's 5.5 million policies. Most of these structures are negatively elevated, that is, the elevation of the lowest floor is lower than the NFIP construction standard. Compared to structures built above the base flood elevation, negatively elevated structures are more likely to incur a loss because they are inundated more frequently, and the depths and durations of inundation are greater. Tying Flood Insurance to Flood Risk for Low-Lying Structures in the Floodplain studies the pricing of negatively elevated structures in the NFIP. This report review current NFIP methods for calculating risk-based premiums for these structures, including risk analysis, flood maps, and engineering data. The report then evaluates alternative approaches for calculating risk-based premiums and discusses engineering hydrologic and property assessment data needs to implement full risk-based premiums. The findings and conclusions of this report will help to improve the accuracy and precision of loss estimates for negatively elevated structures, which in turn will increase the credibility, fairness, and transparency of premiums for policyholders.
Author: Orice M. Williams
Publisher: DIANE Publishing
ISBN: 1437905412
Category : Business & Economics
Languages : en
Pages : 43
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Book Description
Disputes between policyholders and insurers after the 2005 hurricanes highlight the challenges of determining the cause and extent of damages when properties are subject to both high winds and flooding. Additionally, insurers want to reduce their exposure in high-risk areas, and state wind insur. programs have grown significantly. The Flood Insur. Reform Act of 2007, would create a combined fed. insur. program with coverage for both wind and flood damage. This report evaluates this potential program in terms of: (1) what would be required to implement it; (2) the steps FEMA would need to take to determine premium rates that reflect all future costs; and (3) how it could affect policyholders, insur. market participants, and the fed. gov¿t. Illus.
Author: United States. Congress. Senate. Committee on Banking, Housing, and Urban Affairs
Publisher:
ISBN:
Category : Business & Economics
Languages : en
Pages : 288
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