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Suggested Citation:"Front Matter." National Research Council. 2015. Tying Flood Insurance to Flood Risk for Low-Lying Structures in the Floodplain. Washington, DC: The National Academies Press. doi: 10.17226/21720.
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Tying Flood Insurance to
Flood Risk for Low-Lying
Structures in the Floodplain

Committee on Risk-Based Methods for Insurance Premiums of
Negatively Elevated Structures in the National Flood Insurance Program

Water Science and Technology Board
Division on Earth and Life Studies

Board on Mathematical Sciences and Their Applications
Division on Engineering and Physical Sciences

NATIONAL RESEARCH COUNCIL
                         OF THE NATIONAL ACADEMIES

THE NATIONAL ACADEMIES PRESS

Washington, D.C.

www.nap.edu

Suggested Citation:"Front Matter." National Research Council. 2015. Tying Flood Insurance to Flood Risk for Low-Lying Structures in the Floodplain. Washington, DC: The National Academies Press. doi: 10.17226/21720.
×

THE NATIONAL ACADEMIES PRESS • 500 Fifth Street, NW • Washington, DC 20001

NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance.

Support for this study was provided by Federal Emergency Management Agency under contract number HSHQDC-11-D-0009/HSFE60-13-J-0026. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the views of the organizations or agencies that provided support for the project.

International Standard Book Number-13: 978-0-309-37166-7
International Standard Book Number-10: 0-309-37166-X

Cover Illustration: Photo of an inundated downtown riverfront in Davenport, Iowa, when the Mississippi River overflowed its banks on May 4, 2001. The building is a negatively elevated structure in the Special Flood Hazard Area. SOURCE: Photo by David Teska, FEMA.

Additional copies of this report are available for sale from the National Academies Press, 500 Fifth Street, NW, Keck 360, Washington, DC 20001; (800) 624-6242 or (202) 334-3313; Internet, http://www.nap.edu.

Copyright 2015 by the National Academy of Sciences. All rights reserved.

Printed in the United States of America

Suggested Citation:"Front Matter." National Research Council. 2015. Tying Flood Insurance to Flood Risk for Low-Lying Structures in the Floodplain. Washington, DC: The National Academies Press. doi: 10.17226/21720.
×

THE NATIONAL ACADEMIES

Advisers to the Nation on Science, Engineering, and Medicine

The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences.

The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. C. D. Mote, Jr., is president of the National Academy of Engineering.

The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Victor J. Dzau is president of the Institute of Medicine.

The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. C. D. Mote, Jr., are chair and vice chair, respectively, of the National Research Council.

www.national-academies.org

Suggested Citation:"Front Matter." National Research Council. 2015. Tying Flood Insurance to Flood Risk for Low-Lying Structures in the Floodplain. Washington, DC: The National Academies Press. doi: 10.17226/21720.
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Suggested Citation:"Front Matter." National Research Council. 2015. Tying Flood Insurance to Flood Risk for Low-Lying Structures in the Floodplain. Washington, DC: The National Academies Press. doi: 10.17226/21720.
×

COMMITTEE ON RISK-BASED METHODS FOR
INSURANCE PREMIUMS OF NEGATIVELY ELEVATED STRUCTURES
IN THE NATIONAL FLOOD INSURANCE PROGRAM

DAVID T. FORD, Chair, David Ford Consulting Engineers, Sacramento, California

ROSS B. COROTIS, University of Colorado, Boulder

WEI DU, CoreLogic Spatial Solutions, Springfield, Virginia

CLIVE Q. GOODWIN, FM Global Insurance Company, Johnston, Rhode Island

LARRY LARSON, Association of State Floodplain Managers, Madison, Wisconsin

HOWARD LEIKIN, Independent consultant, Silver Spring, Maryland

MARTIN W. MCCANN, Jack R. Benjamin & Associates, Menlo Park, California

LAURA A. MCLAY, University of Wisconsin, Madison

ERWANN MICHEL-KERJAN, University of Pennsylvania, Philadelphia

LINDENE PATTON, CoreLogic Spatial Solutions, Springfield, Virginia*

PATRICIA TEMPLETON-JONES, Wright National Flood Insurance Company, St. Petersburg, Florida

SUSAN E. VOSS, American Enterprise Group, Inc., Des Moines, Iowa

National Research Council Staff

ANNE M. LINN, Study Director, Board on Earth Sciences and Resources

SCOTT T. WEIDMAN, Director, Board on Mathematical Sciences and Their Applications

ANITA A. HALL, Senior Program Associate, Water Science and Technology Board

____________________

* Since October 2014; previously at Zurich Insurance Group, Washington, DC

Suggested Citation:"Front Matter." National Research Council. 2015. Tying Flood Insurance to Flood Risk for Low-Lying Structures in the Floodplain. Washington, DC: The National Academies Press. doi: 10.17226/21720.
×

WATER SCIENCE AND TECHNOLOGY BOARD

GEORGE M. HORNBERGER, Chair, Vanderbilt University, Nashville, Tennessee

EDWARD J. BOUWER, Johns Hopkins University, Baltimore, Maryland

YU-PING CHIN, Ohio State University, Columbus

DAVID A. DZOMBAK, Carnegie Mellon University, Pittsburgh, Pennsylvania

M. SIOBHAN FENNESSY, Kenyon College, Gambier, Ohio

BEN GRUMBLES, Clean Water America Alliance, Washington, D.C.

GEORGE R. HALLBERG, The Cadmus Group, Watertown, Massachusetts

CATHERINE L. KLING, Iowa State University, Ames

DEBRA S. KNOPMAN, RAND Corporation, Arlington, Virginia

LARRY LARSON, Association of State Floodplain Managers, Madison, Wisconsin

RITA P. MAGUIRE, Maguire & Pearce PLLC, Phoenix, Arizona

DAVID I. MAURSTAD, OST, Inc., McLean, Virginia

ROBERT SIMONDS, The Robert Simonds Company, Culver City, California

FRANK H. STILLINGER, Princeton University, Princeton, New Jersey

GEORGE VALENTIS, Veolia Institute, Paris, France

MARYLYNN V. YATES, University of California, Riverside

JAMES W. ZIGLAR, SR., Van Ness Feldman, Washington, D.C.

National Research Council Staff

JEFFREY JACOBS, Director

LAURA J. EHLERS, Senior Program Officer

STEPHANIE E. JOHNSON, Senior Program Officer

EDMOND J. DUNNE, Program Officer

M. JEANNE AQUILINO, Financial and Administrative Associate

MICHAEL J. STOEVER, Research Associate

ANITA A. HALL, Senior Program Associate

BRENDAN R. MCGOVERN, Senior Program Assistant

Suggested Citation:"Front Matter." National Research Council. 2015. Tying Flood Insurance to Flood Risk for Low-Lying Structures in the Floodplain. Washington, DC: The National Academies Press. doi: 10.17226/21720.
×

BOARD ON MATHEMATICAL SCIENCES AND THEIR APPLICATIONS

DONALD G. SAARI, Chair, University of California, Irvine

DOUGLAS N. ARNOLD, University of Minnesota, Minneapolis

JOHN B. BELL, E.O. Lawrence Berkeley National Laboratory, Berkeley, California

VICKI M. BIER, University of Wisconsin, Madison

JOHN R. BIRGE, The University of Chicago, Illinois

L. ANTHONY COX, JR, Cox Associates, Denver, Colorado

MARK L. GREEN, University of California, Los Angeles

JOSEPH A. LANGSAM, University of Maryland, College Park

BRYNA KRA, Northwestern University, Evanston, Illinois

ANDREW W. LO, Massachusetts Institute of Technology, Cambridge, Massachusetts

DAVID MAIER, Portland State University, Portland, Oregon

WILLIAM A. MASSEY, Princeton University, Princeton, New Jersey

JUAN C. MEZA, University of California, Merced

CLAUDIA NEUHAUSER, University of Minnesota, Minneapolis

FRED S. ROBERTS, Rutgers University, Piscataway, New Jersey

GUILLERMO SAPIRO, Duke University, Durham, North Carolina

CARL P. SIMON, University of Michigan, Ann Arbor

KATEPALLI SREENIVASAN, New York University, New York

ELIZABETH A. THOMPSON, University of Washington, Seattle

National Research Council Staff

SCOTT T. WEIDMAN, Director

NEAL D. GLASSMAN, Senior Program Officer

MICHELLE K. SCHWALBE, Program Officer

RODNEY HOWARD, Administrative Assistant

Page viii Cite
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Suggested Citation:"Front Matter." National Research Council. 2015. Tying Flood Insurance to Flood Risk for Low-Lying Structures in the Floodplain. Washington, DC: The National Academies Press. doi: 10.17226/21720.
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Acknowledgments

The report was reviewed in draft form by individuals chosen for their breadth of perspectives and technical expertise in accordance with the procedures approved by the National Academies’ Report Review Committee. The purpose of this independent review was to provide candid and critical comments to assist the institution in ensuring that its published report is scientifically credible and that it meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process. We wish to thank the following individuals for their review of this report:

Jeroen C.J.H. Aerts, VU University Amsterdam, The Netherlands

Gregory B. Baecher, University of Maryland, College Park

Wouter Botzen, VU University Amsterdam, The Netherlands

Patrick L. Brockett, University of Texas, Austin

W. Hans de Moel, VU University Amsterdam, The Netherlands

Robert E. Hoyt, University of Georgia, Athens

Christopher Jones, Professional Engineer, Durham, NC

David R. Maidment, University of Texas, Austin

Edward T. Pasterick, FEMA, retired, Bowie, MD

Jery R. Stedinger, Cornell University, Ithaca, NY

Although the reviewers listed above have provided many constructive comments and suggestions, they were not asked to endorse the conclusions or recommendations nor did they see the final draft of the report before its release. The review of this report was overseen by Gerald Galloway, University of Maryland, College Park, and Robin McGuire, Lettis Consultants International, Inc., Boulder, Colorado. Appointed by the National Research Council, they were responsible for making certain that an independent examination of this report was carried out in accordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of this report rests entirely with the authoring committee and the NRC.

Suggested Citation:"Front Matter." National Research Council. 2015. Tying Flood Insurance to Flood Risk for Low-Lying Structures in the Floodplain. Washington, DC: The National Academies Press. doi: 10.17226/21720.
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Floods take a heavy toll on society, costing lives, damaging buildings and property, disrupting livelihoods, and sometimes necessitating federal disaster relief, which has risen to record levels in recent years. The National Flood Insurance Program (NFIP) was created in 1968 to reduce the flood risk to individuals and their reliance on federal disaster relief by making federal flood insurance available to residents and businesses if their community adopted floodplain management ordinances and minimum standards for new construction in flood prone areas. Insurance rates for structures built after a flood plain map was adopted by the community were intended to reflect the actual risk of flooding, taking into account the likelihood of inundation, the elevation of the structure, and the relationship of inundation to damage to the structure. Today, rates are subsidized for one-fifth of the NFIP's 5.5 million policies. Most of these structures are negatively elevated, that is, the elevation of the lowest floor is lower than the NFIP construction standard. Compared to structures built above the base flood elevation, negatively elevated structures are more likely to incur a loss because they are inundated more frequently, and the depths and durations of inundation are greater.

Tying Flood Insurance to Flood Risk for Low-Lying Structures in the Floodplain studies the pricing of negatively elevated structures in the NFIP. This report review current NFIP methods for calculating risk-based premiums for these structures, including risk analysis, flood maps, and engineering data. The report then evaluates alternative approaches for calculating risk-based premiums and discusses engineering hydrologic and property assessment data needs to implement full risk-based premiums. The findings and conclusions of this report will help to improve the accuracy and precision of loss estimates for negatively elevated structures, which in turn will increase the credibility, fairness, and transparency of premiums for policyholders.

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