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FEMA Mandatory Flood Insurance ‘Not Effective,’ Report Says

The Federal Emergency Management Agency should not extend its mandatory flood insurance program to areas without levees and needs a more modern approach to analyzing and managing flood risk behind levees, says a report from the National Research Council.

The report says purchasing flood insurance is an effective way for property owners behind levees to deal with financial risk from floods. But at this time there is no reason to extend the mandatory purchase requirement — which requires commercial and residential property owners with a federally backed mortgage located in the 100-year floodplain to purchase flood insurance — to areas behind accredited levees.

The mandatory purchase requirement has not been effective at achieving widespread flood insurance purchase in areas of the floodplain without levees, according to the report, which says FEMA should study whether the mandatory purchase requirement is necessary throughout flood hazard areas and behind levees.

The report responds to a request from FEMA, which asked the National Research Council to examine the manner in which levees are addressed in the national flood insurance program. In recent years extreme storms and hurricanes have caused increasingly disastrous flooding along US rivers and coastal areas, with much of the damage occurring when levees failed or were overtopped by water, as was the case in last year’s Superstorm Sandy and 2005’s Hurricane Katrina (pictured).

Properties that are located in 100-year floodplains but protected by an accredited levee system  — one built to withstand a flood that has a 1 percent chance of happening each year — are exempt from the requirement to buy flood insurance.

FEMA began modernizing its flood maps in 2003, and found that some accredited levees no longer met the standard of protecting against a 1 percent annual chance flood. In establishing flood insurance premium rates, FEMA considers a non-accredited levee to be the same as no levee at all; this means that property owners 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).

The National Research Council’s report says that although the LAMP approach is technically sound, it is a short-term response and is not based on modern risk-based analysis. It recommends that FEMA not implement the LAMP approach and instead move to a more modern risk-based analysis that uses computational and mapping techniques to produce state-of-the-art risk estimates for all areas that are vulnerable to flooding.

In assessing the aftermath of Hurricane Sandy last year, insurance industry analysts said that the national flood insurance program was already $20 billion in debt since Hurricane Katrina.

Photo Credit: FEMA

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