 |
Receive alerts when new articles are uploaded by subscribing to our
e-notification service. |
|
Home |
Insurance |
Mitigation |
All Audiences |
Events |
Publications |
Websites |
Search |
About Us
|
|
A Model for RetentionLynd Morris, NFIP Bureau and Statistical AgentWhat 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. |
|
Last updated on December 1, 2006
|