NATIONAL FLOOD INSURANCE
Committee on 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
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This activity was supported by the Federal Emergency Management Agency Contract Number HSHQDC-11-D-0009/HSFE60-13-J-0025. Any opinions, findings, conclusions, or recommendations expressed in this publication do not necessarily reflect the views of any organization or agency that provided support for the project.
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Suggested citation: National Academies of Sciences, Engineering, and Medicine. 2016. Affordability of National Flood Insurance Program Premiums—Report 2. Washington, DC: The National Academies Press.
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COMMITTEE ON AFFORDABILITY OF
NATIONAL FLOOD INSURANCE PREMIUMS
LEONARD A. SHABMAN, Chair, Resources for the Future, Washington, D.C.
SUDIPTO BANERJEE, University of California, Los Angeles
JOHN J. BOLAND, Johns Hopkins University, Baltimore, Maryland
PATRICK L. BROCKETT, University of Texas, Austin
RAYMOND J. BURBY, University of North Carolina, Chapel Hill
SCOTT EDELMAN, AECOM, Greensboro, North Carolina
W. MICHAEL HANEMANN, Arizona State University, Tempe
CAROLYN KOUSKY, Resources for the Future, Washington, D.C.
HOWARD C. KUNREUTHER, University of Pennsylvania, Philadelphia
SHIRLEY LASKA, University of New Orleans, New Orleans, Louisiana
DAVID R. MAIDMENT, University of Texas, Austin
DAVID MAURSTAD, OST, Inc., Washington, D.C.
ALLEN L. SCHIRM, Mathematica Policy Research, Washington, D.C.
ED J. DUNNE, Study 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
ANITA A. HALL, Senior Program Associate, Water Science and Technology Board
WATER SCIENCE AND TECHNOLOGY BOARD
GEORGE M. HORNBERGER, Chair, Vanderbilt University, Nashville, Tennessee
EDWARD J. BOUWER, Johns Hopkins University, Baltimore, Maryland
DAVID A. DZOMBAK, Carnegie Mellon University, Pittsburgh, Pennsylvania
M. SIOBHAN FENNESSY, Kenyon College, Gambier, Ohio
BEN GRUMBLES, Maryland Department of the Environment, Baltimore
GEORGE R. HALLBERG, The Cadmus Group, Watertown, Massachusetts
ARTURO A. KELLER, University of California, Santa Barbara
CATHERINE L. KLING, Iowa State University, Ames
LARRY LARSON, Association of State Floodplain Managers, Madison, Wisconsin
DINAH LOUDA, Veolia Institute, Paris, France
DAVID I. MAURSTAD, OST, Inc., Washington, D.C.
STEPHEN POLASKY, University of Minnesota, St. Paul
MARYLYNN V. YATES, University of California, Riverside
JAMES W. ZIGLAR, SR., Van Ness Feldman, Washington, D.C.
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, California
VICKI M. BIER, University of Wisconsin, Madison
JOHN R. BIRGE, The University of Chicago, Chicago, Illinois
RONALD R. COIFMAN, Yale University, New Haven, Connecticut
L. ANTHONY COX, JR., Cox Associates, Denver, Colorado
MARK L. GREEN, University of California, Los Angeles
PATRICIA A. JACOBS, Naval Postgraduate School, Monterey, California
BRYNA KRA, Northwestern University, Evanston, Illinois
JOSEPH A. LANGSAM, University of Maryland, College Park
SIMON A. LEVIN, Princeton University, Princeton, New Jersey
ANDREW W. LO, Massachusetts Institute of Technology, Cambridge
DAVID MAIER, Portland State University, Portland, Oregon
WILLIAM A. MASSEY, Princeton University, Princeton, New Jersey
JUAN C. MEZA, University of California, Merced
FRED S. ROBERTS, Rutgers University, Piscataway, New Jersey
GUILLERMO SAPIRO, Duke University, Durham, North Carolina
CARL P. SIMON, University of Michigan, Ann Arbor
KATEPALLI SREENIVASAN, New York University, New York, New York
ELIZABETH A. THOMPSON, University of Washington, Seattle
SCOTT T. WEIDMAN, Director
NEAL D. GLASSMAN, Senior Program Officer
MICHELLE K. SCHWALBE, Program Officer
BETH DOLAN, Financial Associate
RODNEY HOWARD, Administrative Assistant
COMMITTEE ON NATIONAL STATISTICS
LAWRENCE D. BROWN, Chair, University of Pennsylvania, Philadelphia
JOHN M. ABOWD, Cornell University, Ithaca, New York
MICHAEL HOUT, New York University, New York
KAREN KAFADAR, Indiana University, Bloomingdale
SALLIE KELLER, Science and Technology Policy Institute, Washington, DC
LISA LYNCH, Brandeis University, Waltham, Massachusetts
SALLY C. MORTON, University of Pittsburgh, Pittsburgh, Pennsylvania
JOSEPH NEWHOUSE, Harvard University, Cambridge, Massachusetts
SAMUEL H. PRESTON, University of Pennsylvania, Philadelphia
HAL S. STERN, University of California, Irvine
ROGER TOURANGEAU, University of Maryland, College Park, and University of Michigan, Emeritus
ALAN ZASLAVSKY, Harvard Medical School, Boston, Massachusetts
CONSTANCE F. CITRO, Director
MICHAEL L. COHEN, Senior Program Officer
DANIEL L. CORK, Senior Program Officer
AGNES E. GASKIN, Administrative Assistant
HERMANN HABERMANN, Senior Program Officer
BRIAN HARRIS-KOJETIN, Deputy Director
CAROL C. HOUSE, Senior Program Officer
MARY KASPER, Senior Program Assistant
NANCY J. KIRKENDALL, Senior Program Officer
JULIA KISA-SHAKEER, Financial Associate
EILEEN LEFURGY, Program Coordinator
CHRISTOPHER D. MACKIE, Senior Program Officer
ANTHONY S. MANN, Program Associate
KRISZTINA MARTON, Senior Program Officer
GEORGE SCHOEFFEL, Research Assistant
ESHA SINHA, Associate Program Officer
MICHAEL J. SIRI, Program Associate
CYNTHIA THOMAS, Senior Program Officer
GLENN WHITE, Senior Program Officer
JORDYN WHITE, Program Officer
GOOLOO WUNDERLICH, Senior Program Officer
The report was reviewed in draft form by individuals chosen for their breadth of perspectives and technical expertise in accordance with the procedures approved by the National Academies’ Report Review Committee. The purpose of this independent review was to provide candid and critical comments to assist the institution in ensuring that its published report is scientifically credible and that it meets institutional standards for 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 wish to thank the following individuals for their review of this report: Kenneth J. Arrow, National Academy of Sciences/National Academy of Medicine, Stanford University; Bruce Bender, Bender Consulting Services, Inc., Phoenix, AZ; Chad Berginnis, The Association of State Floodplain Managers, Madison, WI; Lawrence D. Brown, University of Pennsylvania, Philadelphia; Lloyd Dixon, RAND Corporation, Santa Monica, CA; Gerald Galloway, National Academy of Engineering, University of Maryland, College Park; Earthea Nance, Texas Southern University, Houston, TX; and Doug Plasencia, Michael Baker Jr. Inc., Phoenix, AZ.
Although the reviewers listed above have 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 this report was overseen by Michael Goodchild, University of California, Santa Barbara, and David Moreau, University of North Carolina, Chapel Hill. Appointed by the National Research Council (NRC), they were responsible for making certain that an independent
examination of this report was carried out in accordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of this report rests entirely with the authoring committee and the NRC.
The National Flood Insurance Program (NFIP) was created by Congress in 1968 and over the years an uncounted number of studies and reports have reviewed the program’s structure and operations, often making recommendations for reform. Many, but not all, of these reports were made at the request of Congress. The reports of this committee were prepared in response to a congressional request in the Biggert-Waters Flood Insurance Reform Act of 2012 (BW 2012).
BW 2012, Section 100236, mandated that the Federal Emergency Management Agency (FEMA) conduct a study in cooperation with the National Academy of Sciences (NAS) that would “compare the costs of a program of risk-based rates and means-tested assistance to the current system of subsidized flood insurance rates and federally funded disaster relief for people without coverage.” This came to be known as the “affordability study” as a shorthand reference.
In response, the Water Science and Technology Board in the Division on Earth and Life Studies at NAS, in collaboration with the Board on Mathematical Sciences and their Applications, and the Committee on National Statistics, convened the committee on Affordability of National Flood Insurance Program Premiums. The committee members for both reports included persons who collectively brought expertise in insurance, economics, floodplain management, national flood and disaster science and policy, mapping and spatial statistics, and risk perception and communication to the work of the committee.
To fulfill the mandate of BW 2012, FEMA and NAS agreed to a plan of work to produce two reports. The first report, titled “Affordability of
National Flood Insurance Program Premiums—Report 1,” described policy options and decisions to be made for FEMA’s consideration as it formulates affordability policy alternatives for consideration by Congress. The first report was publicly released for prepublication on March 26, 2015. A second report focused on how FEMA might develop analytical capacity and databases needed to evaluate affordability policy alternatives. The committee was not tasked to complete such a study.
The committee process for preparing the two reports began in late 2013. The committee met five times during 2014 and 2015—January 2014, March 2014, July 2014, November 2014, and May 2015. The first four meetings were held in Washington, D.C., and the last meeting was held in Irvine, California. The first three meetings included guest presentations and we thank the many individuals who presented to the committee and provided reference materials. We list these in Appendix D of Report 1; the latter two meetings were mostly closed committee meetings.
In addition to those who presented, the committee recognizes three specific contributions. We thank Susan Phelps, as well as her employer AECOM, for her helpful contributions in working with the NFIP policy database and in preparing numerous maps and tables for consideration by the committee, many of which were not included in this final report.
The content of the second report drew heavily from the results of the proof-of-concept report that will be published as the North Carolina Floodplain Mapping Program. John Dorman, Program Director, and his staff provided a draft of the report to the committee and were responsive to requests for further explanations and clarifications of the report content.
We especially thank Andy Neal from FEMA for helping the committee understand the details of the NFIP program and for his timely, comprehensive, and enlightening replies to questions from the committee.
Through meetings, phone calls, and email exchanges each committee member has enthusiastically shared their expertise and knowledge and as a result has made valuable contributions to the report. I owe them all my gratitude. I would especially like to thank Dr. Allen Schirm from Mathematica Policy Research. Allen is an expert in assistance program design and microsimulation analysis. These topics became central to our committee’s work and we relied upon Allen’s advice and knowledge to a much greater extent than we, and maybe he, had expected. Allen’s commitment to the project and spirit of collegiality were crucial to the successful completion of our reports.
Finally, I want to thank particular NAS staff. Dr. Connie Citro prepared essential text that appears in the second report. Dr. Jeffrey Jacobs served as study director for the first report and Dr. Ed Dunne served as study director
for the second. Their attention to keeping the committee focused on its task and moving our reports to completion is truly appreciated.
Leonard Shabman, Chair
Committee on the Affordability of National
Flood Insurance Program Premiums
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