Affordability of National Flood Insurance Program Premiums: Report 1 (2015)
Chapter: Front Matter
AFFORDABILITY OF
NATIONAL FLOOD INSURANCE
PROGRAM PREMIUMS
REPORT 1
Committee on the Affordability of
National Flood Insurance Program Premiums
Water Science and Technology Board
Division on Earth and Life Studies
Board on Mathematical Sciences and Their Applications
Division on Engineering and Physical Sciences
Committee on National Statistics
Division on Behavioral and Social Sciences and Education
NATIONAL RESEARCH COUNCIL
OF THE NATIONAL ACADEMIES
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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 the Federal Emergency Management Agency under contract HSHQDC-11-D-0009/HSFE60-13-J-0025. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the authors and do not necessarily reflect the views of the organizations or agencies that provided support for the project.
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COMMITTEE ON THE AFFORDABILITY OF NATIONAL
FLOOD INSURANCE PROGRAM PREMIUMS
LEONARD A. SHABMAN (Chair), Resources for the Future, Washington, DC
SUDIPTO BANERJEE, University of California, Los Angeles
JOHN J. BOLAND, Johns Hopkins University, Baltimore, MD
PATRICK L. BROCKETT, University of Texas, Austin
RAYMOND J. BURBY, University of North Carolina, Chapel Hill
SCOTT EDELMAN, AECOM, Greensboro, NC
W. MICHAEL HANEMANN, NAS, Arizona State University, Tempe
CAROLYN KOUSKY, Resources for the Future, Washington, DC
HOWARD C. KUNREUTHER, University of Pennsylvania, Philadelphia
SHIRLEY LASKA, University of New Orleans, New Orleans, LA
DAVID R. MAIDMENT, University of Texas, Austin
DAVID MAURSTAD, OST, Inc., Washington, DC
ALLEN L. SCHIRM, Mathematica Policy Research, Washington, DC
Staff
JEFFREY JACOBS, Study Director, and Director, Water Science and Technology Board
CONSTANCE F. CITRO, Senior Board Director, Committee on National Statistics
SCOTT T. WEIDMAN, Director, Board on Mathematical Sciences and Their Applications
MICHAEL J. STOEVER, Research Associate, Water Science and Technology Board
ANITA A. HALL, Senior Program Associate, Water Science and Technology Board
NORMAN GROSSBLATT, Senior Editor
WATER SCIENCE AND TECHNOLOGY BOARD
GEORGE M. HORNBERGER (Chair), NAE, Vanderbilt University, Nashville, TN
EDWARD J. BOUWER, Johns Hopkins University, Baltimore, MD
YU-PING CHIN, Ohio State University, Columbus
DAVID A. DZOMBAK, NAE, Carnegie Mellon University, Pittsburgh, PA
M. SIOBHAN FENNESSY, Kenyon College, Gambier, OH
BEN GRUMBLES, Maryland Department of the Environment, Baltimore
GEORGE R. HALLBERG, The Cadmus Group, Watertown, MA
ARTURO A. KELLER, University of California, Santa Barbara
CATHERINE L. KLING, NAS, Iowa State University, Ames
DEBRA S. KNOPMAN, RAND Corporation, Arlington, VA
LARRY LARSON, Association of State Floodplain Managers, Madison, WI
DINAH LOUDA, Veolia Institute, Paris, France
RITA P. MAGUIRE, Maguire & Pearce PLLC, Phoenix, AZ
DAVID I. MAURSTAD, OST, Inc., Washington, DC
STEPHEN POLASKY, NAS, University of Miunnesota, St. Paul
ROBERT SIMONDS, The Robert Simonds Company, Culver City, CA
FRANK H. STILLINGER, NAS, Princeton University, Princeton, NJ
MARYLYNN V. YATES, University of California, Riverside
JAMES W. ZIGLAR, SR., Van Ness Feldman, Washington, DC
Staff
JEFFREY JACOBS, Director
LAURA J. EHLERS, Senior Program Officer
STEPHANIE E. JOHNSON, Senior Program Officer
ED 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
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
VICKI M. BIER, University of Wisconsin, Madison
JOHN R. BIRGE, The University of Chicago, Chicago, IL
L. ANTHONY COX, JR, Cox Associates, Denver, CO
MARK L. GREEN, University of California, Los Angeles
BRYNA KRA, Northwestern University, Evanston, IL
JOSEPH A. LANGSAM, University of Maryland, College Park
ANDREW W. LO, Massachusetts Institute of Technology, Cambridge, MA
DAVID MAIER, Portland State University, Portland, OR
WILLIAM A. MASSEY, Princeton University, Princeton, NJ
JUAN C. MEZA, University of California, Merced
CLAUDIA NEUHAUSER, University of Minnesota, Minneapolis
FRED S. ROBERTS, Rutgers University, Piscataway, NJ
GUILLERMO SAPIRO, Duke University, Durham, NC
CARL P. SIMON, University of Michigan, Ann Arbor
KATEPALLI SREENIVASAN, New York University, New York, NY
ELIZABETH A. THOMPSON, University of Washington, Seattle
Staff
SCOTT T. WEIDMAN, Director
NEAL D. GLASSMAN, Senior Program Officer
MICHELLE K. SCHWALBE, Program Officer
RODNEY HOWARD, Administrative Assistant
COMMITTEE ON NATIONAL STATISTICS
LAWRENCE D. BROWN (Chair), University of Pennsylvania, Philadelphia
JOHN M. ABOWD, Cornell University, Ithaca, NY
MARY ELLEN BOCK, Purdue University, West Lafayette, IN
DAVID CARD, University of California, Berkeley
MICHAEL E. CHERNEW, Harvard University, Boston, MA
DON A. DILLMAN, Washington State University, Pullman
CONSTANTINE GATSONIS, Brown University, Providence, RI
JAMES S. HOUSE, University of Michigan, Ann Arbor
MICHAEL HOUT, University of California, Berkeley
SALLIE KELLER, Virginia Polytechnic Institute and State University, Blacksburg
LISA LYNCH, Brandeis University, Waltham, MA
THOMAS L. MESENBOURG, Retired, Formerly US Census Bureau
SARAH M. NUSSER, Iowa State University, Ames
COLM A. O’MUIRCHEARTAIGH, The University of Chicago, Chicago, IL
RUTH D. PETERSON, The Ohio State University, Columbus
EDWARD H. SHORTLIFFE, Columbia University, New York, NY, and Arizona State University, Tempe
Staff
CONSTANCE F. CITRO, Director
MICHAEL L. COHEN, Senior Program Officer
DANIEL L. CORK, Senior Program Officer
KAYE H. FEALING, Senior Program Officer
MARY KASPER, Senior Program Assistant
HERMANN HABERMANN, Senior Program Officer
CAROL C. HOUSE, Senior Program Officer
NANCY J. KIRKENDALL, Senior Program Officer
CHRISTOPHER D. MACKIE, Senior Program Officer
KRISZTINA MARTON, Senior Program Officer
RICHARD PAIN, Senior Program Officer
EDWARD J. SPAR, Senior Program Officer
DANIEL WEINBERG, Senior Program Officer
GOOLOO WUNDERLICH, Senior Program Officer
ESHA SINHA, Associate Program Officer
ANTHONY S. MANN, Program Associate
MICHAEL J. SIRI, Program Associate
JACQUI SOVDE, Program Associate
JULIA KISA-SHAKEER, Financial Associate
AGNES E. GASKIN, Administrative Assistant
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Acknowledgments
This report was reviewed in draft form by individuals chosen for their breadth of perspectives and technical expertise in accordance with procedures approved by the National Academies Report Review Committee. The purpose of the independent review was to provide candid and critical comments to assist the institution in ensuring that its published report is scientifically credible and meets institutional standards of 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 thank the following for their review of the report: Chad Berginnis, The Association of State Floodplain Managers, Madison, WI; Marianne Bitler, University of California, Irvine; Lloyd Dixon, RAND Corporation, Santa Monica, CA; Leslie Durham, Alabama Office of Water Resources, Montgomery; Gerald Galloway, NAE, University of Maryland, College Park; Katherine Greig, New York City Mayor’s Office of Recovery and Resiliency, New York, NY; Roger Kasperson, NAS, Clark University, Worcester, MA; Robert Litan, Kauffman Foundation, Wichita KS, and the Brookings Institution, Washington, DC; Erwann Michel-Kerjan, University of Pennsylvania, Philadelphia; Earthea Nance, Texas Southern University, Houston; Franklin Nutter, Reinsurance Association of America, Washington, DC; and Doug Plasencia, Michael Baker Jr. Inc., Phoenix, AZ.
Although the reviewers listed above 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 the report was overseen by David Moreau, Univer-
sity of North Carolina, Chapel Hill; and Michael Goodchild, University of California, Santa Barbara. Appointed by the National Research Council, they were responsible for ensuring that an independent examination of the report was carried out in accordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of the report rests with the author committee and the National Research Council.
Contents
National Flood Insurance Program Reform Legislation: Biggert-Waters (2012) and H.R. 3370 (2014)
National Research Council Reports
2 NATIONAL FLOOD INSURANCE PROGRAM HISTORY AND OBJECTIVES
Initial Proposals for a National Program of Flood Insurance
The National Flood Insurance Program: A Brief History
Legislative Changes: Biggert-Waters 2012 and Homeowner Flood Insurance Affordability Act of 2014
Takeup Rates: A Continuing Concern
3 NATIONAL FLOOD INSURANCE PRICING, POLICIES, AND PREMIUMS
National Flood Insurance Program Pricing and Policy Types
Biggert-Waters 2012 and the Homeowners Flood Insurance Affordability Act of 2014
4 THE INSURANCE PURCHASE DECISION
Rational Actor Model of Choice
Implications for Encouraging Purchase
5 LOCATIONS OF POTENTIAL NATIONAL FLOOD INSURANCE PROGRAM AFFORDABILITY CHALLENGES
National Flood Insurance program Policies in Force: An Overview
6 AFFORDABILITY CONCEPTS AND A FRAMEWORK FOR ASSISTANCE PROGRAM DESIGN DECISIONS
Measuring the Cost Burden of Flood Insurance Premiums and Defining Affordability
A Decision Framework for Designing Targeted Assistance to Make Flood Insurance More Affordable
7 POLICY ALTERNATIVES FOR AN AFFORDABILITY STRATEGY
Direct Financial Assistance to Policyholders
A Section 100236 – Biggert-Waters Flood Insurance Reform Act of 2012
B Homeowner Flood Insurance Affordability Act of 2014 – Section 16
D Invited Guest Speakers at Committee Meetings
