American Property Casualty Insurance Association Issues Public Comment on FEMA Notice
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On behalf of the members of the
Representing nearly 60 percent of the
With over 3.6 Million policy holders -- accounting for more than 70 percent of all NFIP flood insurance polices -- the 1,250 CRS communities are an integral part of national efforts to mitigate the damage floods inflict on homes across the country./1
According to the
The most significant and important impact of flooding is the loss of life, a fact we have been so recently reminded of with the loss of as many as 82 lives in
As the waters subside and rebuilding efforts begin, the devastating loss of homes and property come into focus along with the long-term financial impacts to communities and individuals.
As planning and modification of the CRS program are undertaken, we are mindful that flooding along with other natural catastrophes have been shown to disproportionately impact minority and vulnerable communities due to longstanding systemic inequalities concentrating populations in high-risk areas./4
Recent history has shown that direct and cooperative action is needed as the number and severity of disaster related events is increasing, with flooding events being the most common of such disasters./5
Between 2017 and 2019 there have been 44 events with damage greater than
There is no reason to believe that these trends will subside with increasing evidence that changing climate conditions are contributing to the frequency and cost of flooding events./7
To contribute the
APCIA believes that the CRS program's most effective and important contribution to responding to national flood issue is its effectiveness in increasing adoption of flood insurance. With more than 69 percent of all flood insurance policies coming from CRS communities,
The current framework utilizing a class rating system based on four creditable activities: public information gathering and dissemination; mapping and regulations adoption; flood damage reduction; and flood preparedness is an effective structure around which a holistic response to flood risk is being implemented throughout the country.
With this holistic framework, CRS programs are not only an integral part of the NFIP but also a vital part of
Question 2: What are the challenges with the current CRS program that need to be addressed and why? How can the CRS program be modified, expanded, or streamlined to better address or resolve these challenges?
APCIA believes that the most significant challenges of the current CRS program are the obverse of its most effective qualities. CRS communities not only take direct action through adoption of creditable activities, but the insurance uptake rates in those communities is also significantly higher than other communities. Only 5 percent of the 22,000 communities participating in the NFIP are CRS communities. Because more than 69 percent of all flood insurance policies are written in CRS communities, increased participation is an effective means of protecting homeowners and communities./8
APCIA believes that an increase in the number of CRS communities, resulting in greater quantities of flood insurance policies being purchased will have the benefit of increasing the spread of risk, making the peril of flood more readily insurable. This in turn will reduce loss ratios over time and motivate additional insurance carriers to offer flood insurance in the future, increasing capacity and helping to reduce premiums. Increased participation in CRS programs can be achieved through greater focus and financial support by
The interrelationship between flood risk, community involvement, incentivization and insurance coverage is clear, and increased involvement in CRS programs by NFIP communities will help protect vulnerable communities in the future.
Voluntary participation in CRS programs lends itself to greater local community investment on supported activities, however greater encouragement by
Additionally, APCIA believes that modification of creditable activities to reflect current priorities will be needed to help change behavior of the current, and hopefully growing number, of CRS Communities. Among the modifications which should be made is that Activity 370: Flood Insurance Promotion, should be given greater weight in determination of CRS class rating. According to the 2017 Community Rating System Coordinators Manual only 110 points are available to communities for "assessing flood insurance coverage in the community and implementing a plan to promote flood insurance."/10
Even more discouraging is that only 4% of participating communities were credited with this activity with 39 points earned on average./11
These numbers demonstrate that insurance adoption has been largely sidelined by decision makers in the CRS programs despite the significant benefits to individual property owners, and the NFIP as a whole.
While APCIA makes no recommendations of how the entirety of the allocation of points within the CRS class rating system should be structured, we do believe that adjustments should be made from time to time, and that increasing the available point allocation for Activity 370 - Flood Insurance Promotion, should be include in those changes.
Question 5: How could the CRS program better address the mitigation of repetitive loss/ severe repetitive loss / properties and how could
The problems presented by repetitive loss properties to the NFIP have shown themselves to be difficult and incredibly costly with just 1 percent of properties within the NFIP accounting for about 25-30 percent of flood claims./12
While it is clear that no single solution from any one actor is capable of resolving the issue, APCIA supports the CRS program prioritization of Activity 520: Acquisition and Relocation, to acquire and/or relocate flood-prone buildings so that they are out of the floodplain. With an allocation of 2,250 possible points, it is rightfully one of the leading priorities of the program. Additionally, APCIA appreciates efforts to remove severe repetitive loss properties through grant programs and believes that continued support for those programs is a worthwhile use of funds.
We recommend that Activity 520: Acquisition and Relocation, should be evaluated in a comprehensive manner which accounts for improved construction within floodplains and SFHA. Activity 520 adjusts the credit-based points through the ratio of the number of buildings cleared out of the regulatory floodplain to the number of buildings remaining in the SFHA, allowing for point allocations to decrease because of new construction./13
APCIA believes that qualitative as well as quantitative measurements should be incorporated into Activity 520's point credit determinations.
Question 6: How can the CRS program be modified, expanded, or streamlined to best incentivize participation by communities and flood insurance policyholders to become more resilient and lower their vulnerability to flood risk?
APCIA recommends greater attention and resources should be provided to encourage more in-depth participation by communities in Activity 330: Outreach Projects. While 93 percent of communities participating in CRS programs are credited with receiving points, the point total in the 2017 Community Rating System Coordinators Manual shows that the average points earned by communities is 87. This significant difference in participation rate and depth of participation signals an opportunity to increase the degree of involvement through outreach projects.
As is often discussed in issues surrounding flood damage prevention, understanding flood risk is fundamental to preparedness, and most individuals and communities underestimate their risk. They often underestimate the likelihood of a flooding event, and the amount of damage a flood can cause. Additionally, many individuals falsely assume that public assistance money provided by
We believe that an increase in emphasis on outreach projects constitute "low hanging fruit" for communities to improve their classification.
Additionally, APCIA believes that Activity 360: Flood Protection Assistance, which gives points for "advising property owners and renters about how to protect buildings from flooding and publicizing that service" should be increased in weight and significance in total point allocations. With only 110 points available, communities are likely overlooking one of the most direct and significant ways to mitigate flood damage and its financial impact./15
Home and building protection can often be undertaken with small and relatively inexpensive steps readily within reach of property owners./16
With a relatively low point allocation, CRS participants are likely overlooking the potential impact that adoption of property specific protection measures can have when flooding events occur. APCIA recommends that
We appreciate the opportunity to provide you with input to strengthen
Sincerely,
Manager, Personal Lines & Counsel
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Footnotes:
1/ https://www.fema.gov/fact-sheet/community-rating-system
3/ https://www.cbsnews.com/news/hurricane-ida-death-toll-update-82-louisiana-northeast/
4/ https://www.scientificamerican.com/article/flooding-disproportionately-harms-black-neighborhoods/
5/ https://www.who.int/health-topics/floods#tab=tab_1
8/ http://www.fbfl.us/DocumentCenter/View/17848/NFIP_CRS_Fact_Sheet_2017_508OK?bidId=
9/ https://www.dcr.virginia.gov/dam-safety-and-floodplains/fp-crs
11/ Id.
12/ https://www.pewtrusts.org/-/media/assets/2016/10/repeatedly_flooded_properties_cost_billions.pdf
14/ https://www.fema.gov/pdf/floodplain/nfip_sg_unit_8.pdf
16/ https://disastersafety.org/flood/protect-your-home-from-floods/
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The notice can be viewed at: https://www.regulations.gov/document/FEMA-2021-0021-0001
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