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Message from Jim

Approximately six months after the passing of the Homeowners Flood Insurance Affordability Act of 2014 (HFIAA), I remember being astonished with the obvious decrease in flood program chatter as it pertained to insurance premiums and map weaknesses. The real estate industry became quiet and the quantity of newspaper articles pertaining to flood greatly decreased. It was like the HFIAA completely wiped out the Biggert-Waters Flood Insurance Reform Act of 2012 (BW12), which was not the case. So what happened to the flood buzz?

Logan Strother, a Ph.D. candidate in Political Science at Syracuse University, did a study on what influences Congress into passing certain reforms when it does, and used the two above mentioned reforms in the NFIP as an example. He created a graphic to show how public and media response dwindled dramatically after HFIAA (a.k.a. Grimm-Waters) passed, inferring that once people perceived the negative impacts of BW12 to be reversed, less attention was given to the implications of the reforms.

"The figure [above] presents the average daily number of newspaper stories covering the National Flood Insurance Program while reforms were being considered in Congress (“Before BW12”), after Biggert-Waters was passed (“Between BW12 and GW14”), and after the reforms were gutted in Grimm-Waters. The figure clearly indicates that the passage of Biggert-Waters made the National Flood Insurance Program salient. In short form, people who were negatively affected by the new policy (i.e. faced rising premiums, and in some cases, falling property values), became acutely aware of the National Flood Insurance Program and demanded Congress “fix” the rate hikes."

It is important to understand that regardless of how extensively the media covers the issues, flood reform remains in constant forward motion! In fact, the next phase of reform implementation, Clear Communication of Risk, just started in January 2017 in which the National Flood Insurance Program began writing each policyholder to explain current risk level as it relates to their premium. This letter will be received approximately two months after their policy renewal. Letters will also be sent to policyholders who renewed in the last three months of 2016. More information pertaining to this important communication process is described in the Resources section below.

So back to the lack of flood buzz! Of course, concepts such as optimism bias, denial, or moral hazard can be considered, but regardless of the applicable concept(s) which apply, fear and anger directed at the program is often based on personal behavior or lack of education in the program. Not being able to predict when a flood will occur should not create an expectation that it never will, because that will only create more turmoil when it does happen. It has been proven many times over that inaction often results in a predictable failure. Becoming proactive instead of reactive is the solution to minimize the impact of flood in both perceived risk from the maps and actual risk from the actual flooding event, since a proactive person will spend time on things they can control, and a reactive person will try to solve things out of their control. In my opinion, here lies much of the problem!

Many people feel helpless since size, frequency, location or type of event is basically impossible to predict, so because of this difficulty, they do nothing. Getting ready for the eventual storm is the key. This can be done in similar fashion to setting a house alarm because of the potential risk of a burglary. It doesn’t matter when the burglar arrives, since the security system will be ready. Doing things such as siting a home properly, exceeding minimum regulations, evacuating a dangerous area, obtaining insurance, or implementing mitigation strategies will change a reactive person to a proactive one. Become a product of your decisions and not of your circumstances. This is best achieved through self-education and preparation.

The good news! Any person seeking more knowledge pertaining to the flood program can easily find an endless amount of information from reputable websites or published literature. Heck, the program will even mail you any publication requested. In other words, education is a not only a given right, but is also fundamental to development, growth and safe choices. Flood reform continues to move forward, so keep the buzz down in your home or community by understanding the many options to addressing flood risk through education.

Jim and Rod shake over the celebration of a new and exciting opportunity.

Announcements

Nadeau Land Surveys is pleased to announce our expansion to the Mid-Coast region of Maine!

To start the year off with new energy and opportunity, we have acquired Maine Coast Surveying, formerly of Damariscotta, Maine. Soon we will extend our offerings to this region with the same great product and service out of our new office in Wiscasset, under the name of Maine Coast Surveying & Flood Consultants.

Becoming part of our team, to aid in our transition, will be the former owner of Maine Coast Surveying, Rod Craib, a State of Maine Professional Land Surveyor since 1978. Rod became licensed in Massachusetts in 1993, and has held many professional association memberships including President of the Maine Society of Land Surveyors, National Society of Professional Surveyors Board of Governors, and is a founding member of the Maine Land Title Association. Rod holds a Bachelor of Science from the University of Maine, and in his free time, enjoys community theater activities, traveling with his wife Luci, and spending time with their new grandchild. We are all very excited to work with Rod!

Resources

Communication of Flood Risk

One phase in the implementation of the Homeowners Flood Insurance Affordability Act of 2014 is Clear Communication of Risk. The National Flood Insurance Program is analyzing the flood risk of each of its policyholders and sending them a letter based on their current level of risk as they enter into renewal. Different letters have been drafted depending on the level of risk. Samples of these letters and tips on how to communicate risk and lower premiums to clients can be found at "FEMA Letters: Flood Risk and Policy Options".

FloodList

FloodList is an online resource dedicated to spreading awareness about flood risk.

"We report on all the major flood events from around the world. By doing so, we aim to raise awareness of the risks of flooding and the devastation caused by the increasing number and severity of flood events. Our news reports and articles help people understand more about floods, what can be done to prepare, protect, stay safe and recover. FloodList include articles on flood-related issues such as warning systems, mitigation and control, flood recovery, flood damage repair and restoration, as well as flood insurance. Our reports and articles also include information about the extraordinary humanitarian, aid and relief efforts that need to be made in the aftermath of so many flood disasters."

Check it out!

In the News

National Flood Insurance Program Secures $1 Billion in Reinsurance for 2017; 25 Reinsurers Participate

Insurance Journal, January 3, 2017.

"Historically, the flood program had been limited to using flood insurance premiums, available surplus, borrowing capacity from the U.S. Treasury, and direct appropriations from Congress to pay claims...Several times of the past decade, flood insurance claims have exceeded the amount of funds available to pay for the insured losses, leaving the NFIP $23 billion in debt to the U.S. Treasury...while reinsurance helps pay claims from major events, it does not reduce the size of NFIP's current Treasury debt; rather it is intended to reduce the accumulation of future debt. "

Burned Areas At Higher Flood Risk

By Heidi Fron, Mountain News, January 19, 2017

Areas impacted by wildfire, such as in San Bernardino County, California, are at greater risk of flooding due to the lack of vegetation around a burn scar. Without vegetation to absorb rain and snow melt, these communities are more susceptible to landslides, rock slides and mud flows. The risk is high even several years after a fire.