Flood Maps in the USA are used by Federal Emergency Management Agency (FEMA) to identify flood risk and provide the basis for setting the National Flood Insurance Program (NFIP) flood insurance rates. The flood maps also identify Special Flood Hazard Areas (SFHA’s). Flood insurance is mandatory for obtaining a mortgage to purchase a property located in a SFHA.
Flood maps in the USA are often controversial, in particular the recently-redrawn FEMA flood maps. Flood map changes have meant some properties previously unaffected by flooding are now considered to be located in a flood zone. The property owner is then forced to purchase flood insurance for a house that has most likely dropped in value. There are around 30,000 requests per year for amendments to flood maps, despite the process being difficult and often expensive.
National Flood Insurance Program (NFIP)
Prior to 1950, flood damage cover was part of a standard homeowner’s insurance policy in the United States. With the building boom of the 1950’s and 1960’s, flood damage claims escalated until it became unprofitable for private companies to offer flood cover in their insurance policies.
In 1968, the National Flood Insurance Program (NFIP) was established by an act of Congress, aimed at lessening the financial impact of flood disasters on individuals, business and government, by enabling property owners and buyers to obtain flood insurance at affordable rates.
The NFIP is currently administered by the Federal Emergency Management Agency (FEMA), an agency established in the USA in 1978 to consolidate the many government agencies involved in disaster relief at the time.
In April 2010 there were an estimated 5.5 million NFIP policies, with the majority issued for properties in the states of Texas and Florida.
Federal Emergency Management Agency (FEMA)
FEMA was absorbed with 22 other federal agencies, programmes and offices into the newly created the Department of Homeland Security (DHS) in 2003. In addition to on-the-ground support of disaster recovery efforts, the agency also provides state and local governments with experts in specialized fields and funding for rebuilding efforts and infrastructure replacement.
Under the current policy, the NFIP offers flood insurance to homeowners, renters, and business owners if their community participates in the NFIP by agreeing to adopt and enforce ordinances that meet or exceed FEMA requirements to reduce the risk of flooding.
Flood Insurance Rate Maps (FIRM) – Flood Maps
Flood Insurance Rate Maps (FIRM), commonly called Flood Maps, are the basis for setting flood insurance rates through the NFIP. In addition, flood maps are used to communicate flood risk levels to residents of communities, to inform local floodplain management regulations and to identify Special Flood Hazard Areas (SFHA’s) where flood insurance is mandatory for obtaining a mortgage to purchase property.
The process for developing and updating flood maps is a long one, incorporating opportunities for community participation and contribution at several points in the process. Projects generally last for three to five years to completion, but may take longer. The mapping standards used have been peer reviewed, and are published, vetted and updated continuously to ensure alignment with current best practices.
Formulating Flood Maps
The eight steps of formulating a flood map are summarised below, and illustrated in a “Flood Maps Infographic” by FEMA at the end of this page:
1. Identify the Area to Map or Re-Map, usually a watershed area (or catchment) of a single river system, where significant development may have taken place since the last mapping period.
2. Select the Project Area based on evaluation of the perceived risk, need, availability of data and regional issues, and on input from stakeholders.
3. Gather Information using sound science, as well as additional, validated flood hazard information from property owners and communities in a collaborative process, including community contribution, review, and appeal processes.
4. Hold the Flood Risk Review and Resilience Meetings, the former among authorities to validate mapping data and supporting research to identify areas more prone to flooding, and to in fact determine if a Flood Map project is still required, the latter being a collaborative discussion with local residents to provide a platform for risk communication and mitigation planning.
5. Issue Preliminary Flood Maps at an Open House Meeting facilitated with the help of a FEMA Consultation Coordination Officer (CCO) who engages stakeholders and the public, explain the potential implications of the map and providing information on the public comment and appeal process. If new or refined and verifiable data becomes available from any party during this process, it can be incorporated at this time.
6. Facilitate Public Comment and Appeal Period which is a ninety day period in which comments or appeals regarding the preliminary map can be submitted for review, possibly leading to amendment of the map. If necessary, a Scientific Resolution Panel may be convened to independently review appeals. This step also provides for property owners to dispute mapping of their property in a SFHA, which, if successful, may lead to eligibility of lower flood insurance premiums or the option to not purchase flood insurance.
7. Issue Letter of Final Determination follows a six month adoption and compliance period allowing time for a community to formally adopt appropriate floodplain management ordinances and, perhaps, additional voluntary mitigation actions. The latter can, through the NFIP’s Community Rating System (CRS) lead to discounted flood insurance premium rates for communities taking part.
8. Issue Flood Maps, with updates to be tracked by community authorities via Letters of Map Revision (LOMR) required within 6 months of project completion for local projects that change flood hazards in a specific area.
9. Improve Resiliency of Watershed after Final Flood Maps are posted to the online Map Service Center, with FEMA and state leaders required to track and log potential changes, while the relevant community is responsible to implement actions to further reduce the risk of flooding in order to continue participation in the NFIP.
Criticism of the NFIP
Whilst the practice of identifying high risk flood areas and implementing the necessary mitigating measures is commendable, the NFIP itself has come under criticism from several quarters, centring on the fact that the provision of cheap flood insurance often leads to unintended consequences.
The NFIP was intended to reduce the overall costs of floods to individuals and businesses by providing incentives for flood risk management, and by pooling flood risks nationally.
In order to provide less expensive insurance rates, the program either runs a deficit (US$24bn in 2014, with annual revenue of US$3.6bn) which must be addressed either by borrowing money, or obtaining subsidies from federal government. In either option, the property owner in a flood risk area is receiving a government subsidy to be there.
Furthermore, property owners in flood risk areas are reported to receive both insurance pay-outs and, in many cases, also disaster aid. This double subsidy causes escalated costs for all parties.
However, with flood insurance in flood risk areas only being mandatory to secure mortgage loans, the likelihood of flood-prone properties being owned by seniors who are cash-buyers is increased.
Flood insurance claims are subject to limitations, increasing the likelihood that such property will be occupied by renters rather than the property owner.
Flood prone properties are more likely to be offered for rent at a discount, attracting groups with less financial resources.
The above three points, coupled with the NFIP provision that limits cover to the owner’s property only, lead to flood-prone properties being more likely to be occupied by people least able to recover from flood disasters, further increasing the demand for aid, in an example of ‘adverse selection’.
The program has been criticised as encouraging building and rebuilding in vulnerable coastal areas and floodplains. The group ‘Taxpayers for Common Sense’ notes that, under the NFIP, flood insurance premiums have remained constant even when properties have flooded numerous times. This situation was due to change drastically with the adoption of the Biggert-Waters Flood Insurance Reform Act of 2012, which required the NFIP to introduce market-related insurance rates, but another bill designed to delay the implementation of Biggert-Waters for up to four years, or restrict premium increases is currently through the US legislative system.