A Levee Policy for the National Flood Insurance Program (1982) / Chapter Skim
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'TREATMENT OF LEVEES IN THE INSURANCE ASPECTS OF THE NFIP'
'TREATMENT OF LEVEES IN THE INSURANCE ASPECTS OF THE NFIP'
Pages 39-46
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From page 39... ...
Precedent for a rating scheme based on approximate average group risk is found in the fire insurance industry in which assignment of property to 1 of 10 fire risk rating zones is according to a determined degree of exposure. Windstorm insurance rates are regionalized, sometimes by state or by proximity to the South Atlantic or Gulf Coast.
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From page 40... ...
The committee recommends: • Consistent with the design levels of protection recommended in Chapter 3, NFIP policyholders in areas behind existing levees that offer more than 25-year protection or new levees affording 100-year protection or greater should pay lower rates that reflect the reduced risk of property damage. In order to estimate appropriate insurance rates, levees would be classified by a set of factors carefully prepared by FEMA intended to reflect the probability of failure; that is, the likelihood of failure would be estimated based on correlation with such factors as levee geometry, levee maintenance, and adequacy of internal drainage.
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From page 41... ...
Congressional consideration of eliminating this subsidy over time would be appropriate. HAZARD RATING PROCEDURE Background The use of actuarial risk for setting insurance rates requires that a procedure be developed which can differentiate the failure hazard associated with individual levees and assign numerical assessments of hazard.
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From page 42... ...
When data are disaggregated to estimate the effects of levee design, physical characteristics, soil and hydrological conditions, maintenance history, and other relevant factors, the number of failures in any one category is quite small for reliable statistical analysis. On the other hand, the problem of assigning risk ratings to levees is not unlike many other insurance rating problems, e.g., fire safety ratings.
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From page 43... ...
The conceptual approach to estimating geotechnical risk at this time is theoretically incomplete and therefore not generally applied in practice. Nevertheless, it seems clear that the primary piece of hydrologic information determining risk for a given levee is the probable distribution of duration that water levels can be expected to continue at elevations lower than levee crest.
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From page 44... ...
FEMA should contract for the development of a list of key categories concerning the physical condition of a levee that would be used to evaluate the levee's ability to function effectively and concerning use of those factors to estimate geotechnical risk. An unsatisfactory rating would result in increased insurance premiums.
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From page 45... ...
, property owners will either receive, or be denied, a reduction in insurance rates. This reduction would be deducted from the premium paid by a property owner behind a levee that has an adequate rating.
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From page 46... ...
II. Maintenance Program 11.1 Absence of erosion 11.2 Absence of animal burrows 11.3 Etc.
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