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DHS FEMA NFIP Services - eWaterwark Article
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A Model for Retention
Lynd Morris, NFIP Bureau and Statistical Agent
What happens to insurance retention when local flood maps are rezoned and thousands of NFIP
policyholders are removed from the Special Flood Hazard Area (SFHA)? Many policyholders who are
rezoned out of the floodplain might use this as an opportunity to drop their coverage at renewal.
However, a collaborative education and marketing effort by local insurance agents and public
officials can turn a rezoning scenario into a recipe for policy retention and growth.
Here is how one community did it.
You Mean I Don't Have to Buy Flood Insurance?
More than 2 years ago, the NFIP's Watermark newsletter ran an article about the efforts
undertaken by the Northern California's Sacramento Area Flood Control Agency (SAFCA) and FEMA Region
IX to educate consumers about keeping NFIP insurance in place when flood maps were revised in their
community (see "Map Prep" on page 12 of the
2004, Number 1 Watermark). As a result of levee improvements and resulting
changes in Flood Insurance Rate Maps (FIRMs), more than 45,000 NFIP policyholders were removed from the
floodplain in the Sacramento area in January 2004.
Many property owners who were removed from the SFHA that January may have been tempted not to renew
their flood insurance policies. However, months prior to remapping, SAFCA's outreach program cautioned
policyholders that no zone is risk free and reminded them about NFIP coverage options for those whose
property is located in lower-risk zones--in particular, the economical Preferred Risk Policy (PRP).
Proactive Outreach
When communities found that FIRM changes also added a substantial number of properties to the SFHA,
the SAFCA plan provided local officials with an orderly framework for ensuring timely property
owner compliance with the mandatory purchase requirements set forth in the Flood Disaster Protection
Act of 1973 and the National Flood Insurance Reform Act of 1994.
SAFCA's outreach strategy consisted of four phases, each involving a different group of
stakeholders: community leaders, insurance agents, WYO companies, lenders, and property owners. When
the first phase--project development--was completed, the SAFCA program began working with local elected
officials to build momentum for outreach. Next, SAFCA enlisted the support of, and trained,
insurers--the agents and companies who are on the frontline of major flood insurance changes.
Finally, the program directed outreach to property owners--those people who will feel the monetary
impact of the inception or end of the flood insurance mandatory purchase requirements. This final
phase of SAFCA's outreach strategy included direct mailings to property owners in the affected
areas, coordinating and implementing Town Hall meetings, developing a commercial property
component, and conducting a media campaign.
An Unprecedented Response
Prior to remapping, property owners in Sacramento's American River and South Sacramento Streams
Assessment Districts spent more than $30 million each year on flood insurance and purchased
roughly 25 percent of California's NFIP policies.
Although SAFCA estimated that the outreach campaign would result in at least a 15 percent rate of
flood insurance policy retention, in fact, the percentage of NFIP policies retained was much
higher. By March 30, 2006, 74 percent of the 45,000 policyholders removed from the Federal
requirement to purchase flood insurance coverage for buildings in the SFHA that have loans from
Federally regulated lenders, maintained their flood insurance protection. Of this group, 43
percent opted to purchase PRPs.
"This choice to purchase Preferred Risk Policies represents a savings of nearly $3 million in
premium annually for Sacramento area NFIP policyholders," says George Deukmejian, a SAFCA
consultant. "I think that people who aren't required to buy flood insurance are more likely to
stay in the NFIP if they can pay less for insurance by purchasing a PRP."
SAFCA estimated the total cost of the campaign was approximately $215,000, with SAFCA paying
25 percent ($54,000) of the project's costs, and FEMA providing the remaining 75 percent
($161,000).
Adapting this Model to Your Community
Outreach programs like the one implemented in Sacramento provide valuable public education about
flood hazards while enabling FEMA and WYO companies to meet ambitious policy growth goals.
Although SAFCA's plan was a comprehensive one, it can be scaled down to meet the needs of smaller
communities. WYO companies and their agents can get a jump on marketing PRPs in communities that
are being remapped by knowing what changes in the FIRMs may affect their policyholders. For more
information about the SAFCA/FEMA outreach program, contact the FEMA Region IX Mitigation Division
at 510-627-7100.
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| Last Modified:
Friday, 21 January 2011 |
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