Flood insurance program needs better approach to analyzing flood risk

all; this meant that communities protected by levees that do not meet the standard would be considered “without levee” and required to buy flood insurance at the same rates as those with no levees.

At the urging of Congress, the FEMA administrator instructed the agency’s staff to replace its current “without levee” approach with one that would better reflect the flood risk in areas impacted by non-accredited levees. In response, FEMA is developing a new approach, the Levee Analysis and Mapping Procedure (LAMP).

Although the LAMP approach is technically sound, gives some credit to non-accredited levees, and responds to Congress, it is a short-term response and is not based on modern risk-based analysis, the report says. It recommends that FEMA not implement the LAMP approach and instead focus its efforts on moving to a more modern risk-based analysis. The report also proposes interim steps to deal with non-accredited levees.

The flood risk analysis recommended by the report would use twenty-first century computational and mapping techniques to produce state-of-the-art risk estimates for all areas that are vulnerable to flooding. It would assess how well levee systems are likely to perform, taking into account the probabilities that the many components of a system will function as designed. Such an approach would give individual property owners a more accurate view of the risks they face and inform communities of their levee systems’ limits and potential vulnerabilities. It would also be able to account for any partial protection offered by non-accredited levees.

The report also concludes that the National Flood Insurance Program is using a sound actuarial approach for calculating rates for the flood insurance policies it issues. However, the program is financially unsound overall because it is legislatively mandated to offer discounts on about one-fifth of the policies it issues. Rate setting for properties behind levees would be improved by using the modern risk analysis.

FEMA should encourage communities to develop and implement multi-method strategies to manage flood risk. In addition to structural methods such as levees and floodways, communities should consider non-structural techniques, which include flood-proofing, elevating or relocating structures, evacuation planning, and the purchase of flood insurance.   

FEMA also should work with local communities to communicate flood risk to the public, following principles for effective risk communication, such as delivering the information at a local level and using consistent, repeated messages.  Communicating flood risk is challenging, the report notes; for example, many people misunderstand “100-year floodplain” to mean that the area will only be flooded once every 100 years, when in fact it means that each year the area has a 1-in-100 chance of being flooded.  A property located in the 100-year floodplain has a 26 percent chance of being flooded at least once during the lifetime of a 30-year mortgage payoff period.

A first step in properly managing levee-related flood risk is to know the location, ownership, and condition of the nation’s levees, along with what assets and lives they are protecting – information that is currently unclear, the report says. Some levees are under the authority of FEMA, while others are overseen by the U.S. Army Corps of Engineers, and each agency has a complementary but separate database for keeping this information. A preliminary analysis indicates that approximately 3,400 miles of levees (66 percent) in the NFIP are in both databases and may be operating under the oversight of both agencies.  A comprehensive inventory of the nation’s levees needs to be completed, the report says.

Effective management of national flood risk requires sharing of responsibilities among all levels of government and the public and closer collaboration among federal agencies, especially with respect to risk communication, the report concludes.

The study was sponsored by the U.S. Federal Emergency Management Agency. 

— Read more in Levees and the National Flood Insurance Program: Improving Policies and Practices (National Academies Press, 2013)