FEMA's Technical Mapping Advisory Council (TMAC) will meet September 30th and October 1st at the United States Geological Survey Headquarters in Reston, VA to review and make changes to the national Flood Insurance Rate Maps (FIRMs).
The massive water flood damage caused by Hurricanes Sandy and Katrina have forced FEMA to reassess the funding process of flood insurance. During the council, TMAC will use risk data, performance metrics, and future projected climate change to reassess insurance premiums nationwide.
John Minor, an expert in property litigation and the New Home Buyers Warranty Act, says, "The major glitch with flood insurance has been that the program is not and has not been actuarially sound - it is hemorrhaging money and requiring bailouts from the reserve". Unlike private insurance, flood insurance is funded through the government and some policies are subsidized and the process of earning dividends from premiums is generally frowned upon.
This funding process worked fine... until Sandy and Katrina.
According to claimsjournal.com, as of June 30, 2011, the program had nearly 5.6 million policies in force with a total insured value of $1.246 trillion. 80 percent of policyholders (representing approximately 4.48 million of the 5.6 million policies in force) do not pay subsidized rates, but about 20 percent of all NFIP policies are subsidized. Only a portion of those policies that are currently subsidized will see larger increases of 25 percent annually starting this year, until their premiums are at full-risk rates.
With all of these changes happening, how can you navigate the waters of flood damage to your home or business?
Tips to Prepare for changes to water flood damage insurance and procedures:
- Participate in the open forum. FEMA will hold a public comment period starting on September 30th and they ask that you share your comments and concerns. To voice yours, click here. The questions and comments will be addressed at the council by industry experts both from the private and public sectors.
- Get to know your policies. If you already have a flood insurance policy or a home owner's insurance policy, take some time to read them-from top to bottom. Make note of your questions and schedule a policy review so that you understand what is covered by which policy and what is not, and what changes are headed your way.
- Do your homework and take time to educate yourself. The Biggert-Waters Flood Reform Act of 2012 (BW-12) and the Homeowners Flood Insurance Affordability Act of 2014 are the two biggest policy changes you need to be aware of. The BW-12 extends the National Flood Insurance Program for five years, but requires that it make significant program reform- starting with FIRMs and policy rates.
- Get physically and fiscally prepared! Being aware of the potential flood damage that storms cause is not enough- you must get and stay prepared. Storms strike when least expected and leave little to no response time. Get prepared ahead of time!