New coastal flood modeling maps by the Federal Emergency Management Agency (FEMA) may affect owners of properties susceptible to flooding from the Gulf, Tampa Bay and inland areas near waterways connected to the Gulf or Bay.
FEMA has advised Pinellas County that its Flood Insurance Rate Maps (FIRMS) are being revised. Preliminary maps will be available soon. Flood map development is still in progress and FEMA has not yet made available preliminary maps intended for review. Pinellas County will make those maps available to the public online at Pinellasegis.maps.arcgis.com/apps/MapSeries. The new maps will include a new Coastal AE Flood Zone (see story below).
At the same time, the White House’s Fiscal Year 2019 budget calls for structural reforms to the National Flood Insurance Program (NFIP), which in recent years has had to borrow more than $40 billion from federal taxpayers to pay its claims.
The just-released budget reiterates the administration’s support for a set of reforms first proposed early in October 2017 by Office and Management and Budget Director Mick Mulvaney that “would ensure the continued financial stability of the NFIP while maintaining affordability for low-income policyholders, and expand the private market to get the Federal Government out of the flood insurance business.”
Under Mulvaney’s proposal, FEMA would have authority to discontinue NFIP coverage for extreme repetitive loss properties following future losses. Starting in 2021, the program also would phase out coverage for commercial properties altogether, while no policies could be written for new construction inside a special flood hazard area.
Flood Insurance Background Jake Holehouse, Vice President, Business Development, Heritage Property & Casualty Insurance, Clearwater, gave Paradise News some valuable background. He notes, “Prior to 1968, typically flood insurance was included in a standard homeowner’s insurance policy. However, with massive losses the insurance industry began excluding flood as a coverage. That allowed the formation of the NFIP to begin providing flood insurance coverage.
“The flood insurance program did very well in terms of staying solvent from 1968 until 2005 when Hurricane Katrina devastated Louisiana with a significant amount of flood damage, leading to billions of debt for the NFIP. Congress passed the Biggert-Waters Act in 2012 to provide solvency to the program with unforeseen consequences of massive rate increases. You then had Superstorm Sandy load on more debt to the program, creating a need for additional rate increases.
“With rates going up and better technology, private markets became more interested in writing private flood insurance. When flood insurance rates were in the $500 to $1,000 range for a standard slab on grade ranch style home in an A zone, there was too much risk for the amount of premium being collected. Now that flood insurance rates are in the $2,000 to $3,000 range, it becomes a very profitable venture to offer private flood insurance.
From a flood zone standpoint, in Pinellas County we see flood zones A, V or X. A and V have a mandatory purchase requirement from a mortgage company and an X zone is an option purchase but flood insurance is still highly recommended. One of the key elements of flood zones is understanding that the flood zone is different than the evacuation zone. FEMA just announced a remapping of Pinellas County that will include a new AE Flood Zone (see accompanying story).
Challenges Still Ahead Holehouse sums up, “Flood insurance continues to be a challenge at the federal level. Congress continues to just use short-term extensions. The challenge here is that uncertainty is still faced in the marketplace about what the future looks like for the flood insurance program. “However, based on the proposed Senate Bill called ‘The Sustainable, Affordable, Fair & Efficient National Flood Insurance Program (NFIP) Reauthorization Act’, I am optimistic about the future of the flood insurance program. Two highlight points are the continuation of grandfathering flood insurance premium rates for existing structures and providing rate caps at 10% per year.
“From a private market standpoint, these markets in flood insurance continue to grow. It is estimated that approximately 70% of Floridians with flood insurance would receive a rate savings by moving their insurance policy into the private market. “The challenge that we have on the barrier islands is that many of our homes are in the 30% without a savings as we are the most likely to be affected by a flood-type event. However, we are seeing thousands of homeowners in the coastal areas of Pinellas County receiving a private flood rate savings as there are approximately 12 private market flood companies actively writing business today. For more information, Holehouse can be reached at jholehouse@heritagepci.com or (727) 470-5177.
Article by Steve Traiman
[Editor’s Note: Special thanks to Jake Holehouse, Heritage Insurance; Dolores Glass, Wright Flood; and Sean Tobe, Brown and Brown Insurance, for their excellent comments and diagrams.] Steve Traiman is President of Creative Copy by Steve Traiman in St. Pete Beach, offering freelance business writing services. He can be reached via email at traimancreativecopy@gmail.com
New FEMA Flood Zone Should Not Affect Rates
“When FEMA completes a new Coastal Flood Zone Map Study for Pinellas this spring it will add a new wrinkle to your flood risk analysis with the inclusion of storm surge estimates,” according to Dolores Glass, Senior Communications Manager, Wright Flood. She told Paradise News, “This creates a new Coastal AE flood zone designation to help property owners better understand their risk of flooding.”
“At the coastal water line is FEMA Zone VE — at highest risk and subject to the extremely damaging velocity of wave heights greater than 3 feet. Stringent flood mitigation building codes require raised living spaces with unobstructed areas below. Further inland is the traditional AE Zone that is subject to minimal storm surge, but remains a high risk for water damage. Building codes require flood mitigation features like flood vent openings in crawl spaces. The most inland areas are Zone X to indicate where there is a moderate-to low risk for flooding. While the X zone may designate a property as a lower risk, FEMA statistics show that one in five properties may still suffer a flood.
“The new Coastal AE zone is the area between the VE and AE zones, as shown in the accompanying image. This new zone is still at high risk as it is subject to significant damaging wave heights of 1.5 to 3 feet. Communities that adopt stronger flood mitigation and building construction standards in Coastal AE zones may earn a flood insurance premium discount for all residents in that community that build more resilient structures.”
Adds Sean Tobe of Brown and Brown Insurance of Pinellas, “Whenever new FEMA flood zone maps are issued, property owners should turn to their insurance agents and re-evaluate protecting their property and financial security.
“A low cost Preferred Risk policy is recommended for Florida property owners to be protected. It doesn’t take a hurricane for it to flood on your street in Florida and it also doesn’t take the President to declare an emergency for the (NFIP) flood policy to help you recover.
“Most important, no additional premium is currently planned for the new Coastal AE flood zones. In fact, any barrier island community can earn a mitigation discount for every flood policy and make their communities safer— if they enact stronger flood mitigation building codes for the new Coastal AE zone.“
For more information follow this link: Coastal AE Zones Frequently Asked Questions or search the www.FEMA.gov website for Coastal AE Flood zones. Sean Tobe can be reached at 727-450-7123 or Stobe@bbpinellas.com. To find a flood insurance agent near you, contact Writher Flood at 866-373-5663.
Article by Steve Traiman