Flood damage mitigation and insurance

Federal Advisory Committee on Insurance

Feb. 22, 2018, U.S. Treasury, Wash. D.C.

Amy Bach, UP Co-Founder and Executive Director

NAIC Consumer Representative

FACI Member

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About United Policyholders

• A non-profit consumer organization

• Expertise in insurance (buying, claims, legal)

• Supported by donors, grants and volunteers

• A trusted source for the media 

– http://uphelp.org/news/up-in-the-news

• A respected voice and help resource for 

consumers

• Active at the NAIC, coordinating with state ins. 

Regulators on a regular basis

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26 years of experience:

• Guiding consumers on insurance decisions

• Improving disaster recovery for individuals, 

businesses and communities 

• Advocating for coverage in claim scenarios

• Keeping tabs on insurance prices and policies

• Advancing solutions to problems

• Partnering with public officials, professional 

associations and businesses 

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Our Three Programs 

• Roadmap to Recovery

– Helping people and businesses solve insurance problems.

• Roadmap to Preparedness

– Increasing insurance literacy and preparedness by sharing 

lessons learned by disaster survivors.

• Advocacy and Action

– Standing up for consumers in courts of law, legislative and other 

public policy forums, and in the media.

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Flood Preparedness Messages:

• Just b/c you’re not legally required to buy it 

doesn’t mean you shouldn’t. Get a quote

• Keep coverage up to date

• Inventory your assets

• Scan important documents and store offsite

• Invest in improvements that will make it less 

likely your home will be damaged and qualify 

you for better insurance coverage and pricing

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Imperatives:

• Get more homes insured for flood (aim: all-risk policies)

• Preserve everything about the NFIP that’s working, fix 

what’s not

• Maintain and increase affordable flood insurance options 

for property owners through expanded private options

• Enforce standards, partnerships and build viable 

mitigation support programs public AND private:

• Increase private insurers role in facilitating and 

rewarding mitigation
• Unless a lender, agent/broker or financial 

advisor requires or recommends buying flood 

insurance, most do not buy flood insurance

• That often does not happen:

– “Bank Hit with 7 Figure Fine for NFIP Violations” 

https://www.insurancebusinessmag.com/us/news/

breaking-news/bank-hit-with-seven-figure-fine-fornfip-violations-69830.aspx

Reality:

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The NFIP = more than an insurer

• Mission is MITIGATING and

INSURING flood risk

– Home and business owners

– Lenders

– Communities/Infrastructure

• 40 years on and off the political 

hot seat

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• Essential. Must be reauthorized, reformed 

and protected against unfair competition 

• Only insuring 5 million of the 117 million 

households in the U.S 

• Strong on mitigation, rate-making very 

challenging

NFIP realities

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State of Private Flood Options

• Limited number of hybrid products (e.g., Coastal American) that 

cover wind and flood are becoming available in Coastal States – limited policy count, 

• Flood endorsements sold by some carriers, surplus lines

• Increased interest/engagement by reinsurers

• Multi-state consortium (Alabama, Mississippi) looking at ways to 

create a multi-state or national “all perils” product

• Continued lender reluctance to accept private flood policies, even if 

they are equivalent or more favorable than the NFIP (SFIP). http://uphelp.org/sites/default/files/attachments/fha_private_flood_let

ter_1_1.pdf

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• Effective fed/state regulation

• Privates must help fund mapping, 

insolvency funding

• Privates should share public burden re: 

income/needs-based mitigation financing 

support

Private flood market imperatives:

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• Resistance (aesthetics, political views)

– Flood map appeals

– “Stop FEMA Now”

• Cost of elevating, retrofitting

• Lack of information/support/financing help

• Staying in harm’s way

– Political, environmental, developer sector

Consumer challenges related to mitigation:

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Before and After

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Increasing affordability via 

mitigation

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475 32%

202 14%

223 15%

50 3%

176 12%

133 9%

327 22%

64 4%

244 16%

48 3%

18 1%

1485 100%

FEMA Good Case

LOMA

Grandfathering

Flood Vents & Less 1ft Fill

Quote Only (NO EC,/ X zone)

NOT EC Rated (Misrated)

Compliant

Remove Part of Structure

LIFT 

Loading Factor

Over 1 ft Fill Required
1485 Reviews / Total Customer Premium Reductions = $2,344,252.00

32% of our reviewed cases can pay lower premiums with reasonable 

mitigation.

The Reasonable Mitigation Cases saved $843,503.00 this year.

FEMA Good Case: This is a simple combination of the sections below:

LOMA: Structure is eligible to apply for a LOMA with FEMA and be placed into the X Zone.

Flood Vents: These are structures where the addition of compliant Flood Vents and less than 1’ of fill/LAG change, will 

lower flood premiums. 

Not EC Rated: Policy in force does not use the existing Elevation Certificate for rating, which would reflect a 

lower premium. As well as other misratings.

Top Errors on Policies (Misratings) :

• Residency status incorrect (Primary/Non-Primary)

• Pre-FIRM structures not rated off EC, when it would be more beneficial to the owner.

• Floor Elevation difference is misrated (compared to BFE)

• Some cases are eligible for LOMA’s and still have high policies. Agents don’t catch this info.

475 32%

202 14%

223 15%

50 3%

176 12%

133 9%

327 22%

64 4%

244 16%

48 3%

18 1%

1485 100%

FEMA Good Case

LOMA

Grandfathering

Flood Vents & Less 1ft Fill

Quote Only (NO EC,/ X zone)

NOT EC Rated (Misrated)

Compliant

Remove Part of Structure

LIFT 

Loading Factor

Over 1 ft Fill Required
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Mitigation/ICC/State Programs

• New Jersey’s RREM program gave $150,000 grants for home- raising for properties damaged by Superstorm Sandy ( if you took 

the money, it’s raise it or lose it – your house, that is)

– The program was not available for second homes or properties that were 

“substantially damaged” (i.e., cost of repairs exceeds 50% of the the pre- flood market value, regardless of cause!)

• Increased Cost of Compliance (“ICC”)

– $30,000 may be applied to mitigation measures that will reduce flood risk to 

“substantially damaged” or repetitive loss properties (ICC could be a 

duplication of benefits if you participated in the RREM program)

• What type of mitigation results in premium discounts?

– Proper venting below Base Flood Elevation (“BFE”) (e.g. SmartVent – ICC/FEMA approved), filing in crawl spaces, raising basement machinery 

can all reduce an NFIP flood insurance premium (see next slide)

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“[F]looding . . .has affected more people than any other natural 

hazard. Modernizing our flood maps is one massive but essential 

undertaking currently under way; an exposure analysis of all 

buildings, critical infrastructure and other assets in flood-prone 

areas is also key.... new remote-sensing techniques, such as 

laser and radar-based measurements collected by aircraft, drones 

or satellites, makes it feasible. And as this technology continues to 

develop, it will become cheaper.” Erwann Michel-Kerjan, Exec. 

Dir. of the Ctr. for Risk Management & Decision Processes, 

Wharton Sch. of U. of Penn., 

- Better understanding of flood risk = more people will buy it

- More options will create a bigger pool of insureds, spread risk 

and help with affordability

Onward:

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https://www.uphelp.org/guide/fix

ing-flood-insurance

- Buying tips

- NFIP reform

- Reports and 

links

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