FLOOD INSURANCEOne- to Four-Family Properties with Multiple Losses Insured by the National Flood Insurance Program
What are the characteristics of properties that have experienced multiple flood losses (e.g., percentage of overall claims payments, number of losses, and structure characteristics)? What are the socioeconomic characteristics of multiple loss property (MLP) households and the communities in which they are located? What percentage of MLPs have been mitigated, what are the socioeconomics characteristics of neighborhoods where MLPs have been mitigated, and how effective has mitigation been in reducing risk?
The increased frequency and severity of flooding in the United States are likely to increase the number of properties that experience multiple flood losses. However, only limited information is readily available on the characteristics of such properties despite being a significant driver of the claim costs of the Federal Emergency Management Agency (FEMA)’s National Flood Insurance Program (NFIP).
Data are available on the location of properties that have repeatedly flooded, for example, but information is not readily available on the cause of loss (coastal flooding or riverine flooding), structure type, the distribution of losses (multiple small losses or fewer large losses), losses relative to structure and property value, and attractive mitigation strategies for different types of properties. This report examines properties with multiple losses insured by the NFIP and the communities in which they are located to help inform decisions related to floodplain management, flood insurance, and mitigation efforts.
A new report from RAND says that this information should help (1) the NFIP better understand the specific challenges faced by these properties and the communities in which they are located, including consideration of equity issues, and (2) develop more-targeted mitigation programs and risk transfer strategies.
Key Findings
The number of one- to four-family MLPs newly identified per year has been increasing over time
· In contrast, the proportion of NFIP claim payments attributable to MLPs has been declining. The decline could be due to several factors, including mitigation and decisions to forego flood insurance.
There is little evidence MLPs are more common in socially vulnerable or disadvantaged areas
Mitigation has reduced claim payments on MLPs
· Building elevation, replacement, and demolition and flood control/stormwater management have all been very effective in reducing claim payments per year insured.
· A higher percentage of MLPs appear to have been mitigated in more socially vulnerable communities.
· It is more common for structures to be demolished without acquisition and less common for structures to be replaced in vulnerable communities.
· Data on claim payments before and after a property has been substantially damaged suggest that rebuilding requirements for substantially damaged properties have not been fully enforced.
Owners of MLPs may feel trapped in these properties for several reasons
· The process to participate in one of the mitigation options can take several years. While homeowners wait, the property might flood again and the property value might be declining, sometimes putting the owner’s mortgage underwater.
FEMA has no automatic mechanism to update communities on the number of properties identified as MLPs
· FEMA data on which properties data have been mitigated are likely incomplete, but the extent of underreporting is unknown.
An MLP scoring system can help FEMA prioritize efforts to reduce repetitive losses
