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Message from Jim

Since our last newsletter, I have attended two flood related classes: one pertaining to the Community Rating System (CRS), and the other for insurance agents trying to improve their understanding of the flood program. I had the pleasure of sitting next to Sue Baker, the Maine NFIP Coordinator, in both classes as we listened to instructors very knowledgeable of the content they delivered, a true win-win to satisfy professional continuing education requirements while improving the ability to better serve clients and students.

With the new knowledge gained, I once again reflect on the Nelson Mandela quote “Education is the most powerful weapon which you can use to change the world”, as this is a concept that will benefit each of us in all parts of our lives. This concept should also be recognized as an important strategy to gain comfort in the flood program. Fear of the flood program can be reduced with education. It is never too late for educational self-improvement in our adult lives.

The good news for the program pertains to the recently launched FEMA webpage “Children and Disasters”, with intention to start the process of educating the approximately 69 million children under 18 years of age. In my opinion, the creation of this new website is arguably the most important strategy the NFIP has created in recent years. Though I have developed a big interest in understanding how and why adults learn, which is very different than children, it should come as no surprise that the best strategy for long term change in society must start with educating our children. After all, many adolescent habits, personalities, and behaviors are coincidentally very similar to the adults in their lives. We are often reminded of this as we see images of young children throughout the world walking the streets with various types of weapons, none of them being education.

Our planet has large challenges ahead of us to conquer, and we will not have success without inclusion of our children. FEMA, great job adding our children as a strategy to improve the obstacles we face in the flood zone. As we all know, life is just a bunch of habits; getting to our children through education to create good habits is a marvelous idea.

Resources

Update on the NFIP's New Elevation Certificate

After months of reformatting the new Elevation Certificate (Form 086-0-33), it is now available on FEMA's website, with an expiration date of November 11, 2018. However, it appears that the PDF is not yet in a fillable format, so it must be printed and completed by hand. The older fillable form, which was still being accepted throughout the transition as of a couple weeks ago, is no longer available on the website. We will keep you updated as to when the fillable form is released, or you can click here to check back on FEMA's website.

Flood Insurance Q & A:

Q: My home was damaged in a flood and I received federal disaster assistance. Am I required to now carry a flood insurance policy?

A: YES. If you live in an SFHA and have received disaster assistance in the form of a federal grant or loan, you must cover the building for flood insurance for as long as you own it. Should you sell the building, you are required to inform the new owner of the necessity to purchase and maintain flood insurance. Failure to carry flood insurance could result in the denial of future federal disaster assistance.

From Floodsmart.gov, "Frequently Asked Questions"

Real Estate Corner

7 Things Buyers Should Never Overlook At Open Houses

Forbes, May 10, 2016
Clients may be disappointed to find out their dream home, so seemingly perfect on the surface, has underlying issues that could mean complications with financing, or expensive repairs. But they will certainly thank you for helping them see it before it is too late. We are pleased to see that inquiring about insurance claims and looking for indications of water issues have made the list. Check it out!

In the News: The Privatization of Flood Insurance

More plans to reform the flood insurance market are underway. A bill called the Flood Insurance Market Parity and Modernization Act was recently passed by the House in a unanimous vote, and now rests in the hands of the Senate. This bill is intended to give lenders the option to accept flood insurance policies written by private insurers, given that they "do not affect or conflict with any state law, regulation, or procedure concerning the regulation of the business of insurance".

Privatization of the flood insurance market has been considered for some time, as stakeholders continue to look for alternatives to NFIP policies. What are the pros and cons? How does this effect the real estate and mortgage industries? Below are a few articles showcasing different opinions on the topic:

House Passes Private Flood Insurance Bill

Shawn Selby, Property Casualty 360, April 28, 2016
"Supporters say the bill will foster more competition in the flood insurance market, and provides an alternative for 5 million property owners who rely on the U.S. government's National Flood Insurance Program, which is $23 billion in debt." Read more...

Flood Insurance Bill Could the Threaten the GSEs

Brian Collins, National Mortgage News, May 9, 2016
"The Consumer Mortgage Coalition is arguing that the bill has serious flaws by allowing private insurers to undercut pricing on federal flood insurance policies by offering high deductibles and exclusions to homeowners with mortgages guaranteed by the government-sponsored enterprises." Read more...

Pricing Flood Insurance: How and Why the NFIP Differs from a Private Insurance Company

Carolyn Kousky and Leonard Shabman, Resources for the Future Discussion Paper 14-37, October 2014
This paper does not reflect some of the most recent changes in flood insurance reform, especially in regard to the phasing out of subsidized premiums, but it provides a comprehensive analysis of the differences between the NFIP and private insurance. Click here to download the PDF.

Letting the Floodplain Perform Its Natural Function

When designing a subdivision, avoid building in the floodplain. Use that space for recreation, natural buffers, gardens, pastures, etc. It will keep property owners safer, reduce potential insurance costs, and allow the floodplain to serve its purpose.

Interested in learning more about the beneficial functions of the floodplain? The Association of State Wetland Managers just published "Definition of Wetland, Floodplain, Riparian 'Functions' and 'Values"'.

May Flood Funny

This image was borrowed from an article in "The New Yorker" called "Accidental Houseboat", by Robert Mankoff, which highlighted a history of cartoons depicting flood victims stranded on their roof. According to the article, this image was created by Richard Decker in 1935.