The MCC would like to invite all members, and those interested in becoming a member, to the second annual membership meeting which will be held January 13th, 2021 at 6:00pm virtually via Zoom. This years annual meeting was delayed due to COVID-19.
The purpose of the annual meeting is to vote in the 2021 slate of MCC officers. This years meeting will feature a recap of MCC activity in 2020 and the announcement of an exciting new multi-tiered membership program. The MCC is particularly fortunate to be able to feature nationally recognized and renowned flood expert and researcher Carolyn Kousky, Executive Director of the Wharton School of Risk as this year’s keynote speaker.
Slate of officers for a vote of the membership for a 3 year term on the MCC Board of Directors:
· Vice Chair, Timothy Williams
· Director, Nathan Dill
· Director, Kevin Harris Voting happens during the annual meeting
Welcome from Chair and Executive Director Joe Rossi
Business meeting and member vote of Board of Director Members
2020 Recap
Announcement of new membership program
Keynote: Carolyn Kousky, Executive Director of the Wharton School of Risk
Thank you and Adjourn
Note: If you are not a member, but interested in becoming a member, we will be signing new members up until the day before the annual meeting. Become a member here: https://knowflood.org/become-a-member
Recent Podcasts: Know Flood Newscast
Have you listened to our Podcast recently? The MCC releases one podcast a month called the Know Flood Newscast. We take relevant topics in the news and from our newsletter and discuss them with national and local experts. Here are some recent and planned podcasts:
-Know Flood Newscast Episode 9 – Jim Albert:
Technology has become a major factor in the future of insurance, but nowhere is it more prevalent than in the quickly evolving flood insurance industry. Joe and Tim talk to Jim Albert, founder of Neptune private flood insurance, about how technology is not only improving the flood product, but the buying experience. And that experience is expanding to all parts of our lives. Jim discusses how new flood risk data is changing our perception of flood insurance. Jim also talks about a recent survey Neptune conducted showing that many households don’t purchase flood insurance, and revealing some key reasons why they don’t. Listen as Jim talks about the future of flood insurance, and where the industry is headed.
-Know Flood Newscast Episode 10 – Tom Little: The MCC has been focused in recent years on helping mitigate flood risk. Tom Little is an executive officer of several key companies in the flood mitigation space, including Smart Vent, Risk Reduction Plus, and Floodproofing.com. We hear the word “mitigation” all the time, but what does it really mean to those with flood risk? Tom talks about mitigation and its impact on flood insurance and loss reduction. Joe and Tim also discuss with Tom the future of flood mitigation, and how complicated issues like Risk Rating 2.0 will change floodplain management. Tom also gives his thoughts on how far we’ve come after just passing the 8-year anniversary of Superstorm Sandy.
As 2020 ends, we look towards busy legislative year in 2021
Around this time each year, the flood insurance industry reflects on the past year’s legislative action, and speculates on what legislative changes are on the horizon. Going into 2020, most believed that no major legislative reforms to the National Flood Insurance Program (NFIP) would be passed. However, no one could have predicted the challenges the world would face and the impact these would have on legislative priorities at all levels of government. Congress was faced with unprecedented challenges and had little choice but to once again extend the NFIP with no major legislative reform. When looking forward to 2021, there is potential for a busy legislative year around flood insurance while also anticipating one of the largest programmatic changes in the history of the NFIP.
Flood Tips: From The Massachusetts NFIP Coordinator Going forward, the MCC will include several flood tips in each newsletter from Massachusetts NFIP Coordinator, Joy Duperault. These tips are great reminders no matter where you live!
TIP 1: National Flood Insurance Program (NFIP) communities must follow at least minimum standards for floodplain development. But with the impacts of climate change becoming more and more powerful each year, it’s a good idea to get ahead of the curve and adopt some higher standards for floodplain management, especially if your community experiences routine flooding and damages. A great source for learning about higher flood development standards is the national Association of State Floodplain Managers’ website. Their handbooks for “No Adverse Impacts” are a good place to start. Visit https://www.floods.org/resource-center/association-of-state-floodplain-managers-nai-no-adverse-impact-floodplain-management/
TIP 2: Due to the federal Privacy Act, it can be a bit tricky to find out about past flood losses for a specific property. If you are the owner and the National Flood Insurance Program (NFIP) policyholder for the property, you can call the NFIP Loss History Dept. to get historical NFIP claims for your property: 866-395-7496. If you are not the property owner/policyholder, methods for discovering previous flood losses include getting a home inspection; inquiring at local government offices such as the building, planning or fire departments; speaking with neighbors who may have had similar flooding; and looking at the annual flood insurance policy for the letters “RL” in the policy number. Properties with repetitive losses often have a relatively higher premium. To examine the flood risk of a property, check the FEMA maps and other local flood risk maps developed by the community.
Sue’s Flood Real Estate Tips
Tips when buying in risky areas
When you are planning to purchase a property located in a high risk flood zone, it is always good news to hear the current owner has flood coverage and the policy can be transferred to the new owner. This tells you the coverage has been continuous on the property and you will benefit from the NFIP “grandfathering” rule. *Please refer to your insurance agent for clarification of those benefits.
When you see a property listed for sale that states:
“Flood insurance cost is $1,000 annually” or “Current flood $1,000” that is simply telling you what that “specific” owner is paying for their flood insurance. Please DO NOT assume that will be the cost of your flood insurance.
As the buyer, you should ask for a copy of the current owner’s flood insurance declaration page. This will provide you with the details of the current coverage.
The following items are some of the variables that will control the final cost of your individual flood insurance premium.
The current owner may have a deductible in the amount of $2,000, $5,000 or as high as $10,000. The higher the deductible, the lower the premium. A $10,000 deductible may require written consent from your lender.
The current owner may not have a mortgage on the property. They may choose to carry minimal coverage instead of the maximum amount that is required if you are obtaining a mortgage.
The current owner may be using the property as their primary residence. If you are purchasing the property as a secondary residence, your premium cost can increase. Your flood and homeowners’ premiums will increase for a vacation/secondary residence.
A word to the wise, please ask questions beforehand so you know what “your” annual flood insurance premium will actually cost you. It is always best to ask an insurance agent that has flood insurance expertise.
Please also be aware, you are required to pay your flood insurance premium “in full” annually. At the time of your purchase, you will reimburse the seller for prepaid months-based policy expiration. Ex: If you purchase the property on June 1st and the policy expires Oct 1st, you will need to reimburse the seller for June/July/Aug/Sept.
It is always best to fully understand what your expenses will be well in advance of the closing date.
Happy house hunting, Happy Holidays!! Please stay healthy.
Annual Increases for 2021 Announced On October 1st each year, FEMA releases the following year’s NFIP premium increases (Effective April 1st). Overall, premiums will increase an average of 10.2 percent. The total amount billed to the policyholder will increase from $990 to $1,080.
SRL Premium: FEMA will increase the Severe Repetitive Loss (SRL) Premium for all SRL policies from 10% to 15%.
FEMA releases Landmark Nationwide Losses
Avoided Study that Finds That Building Codes Save
“Using big data, FEMA’s modeling of the 18.1M buildings constructed in the United States since 2000 has found that the nation has benefited to the tune of $1.6 billion in savings each year. These savings represent the cumulative losses avoided from property damage associated with using the International Codes or similar building codes during floods, hurricane, and earthquakes. FEMA projects that, by the year 2040, the nation will save around $3.2 billion in savings per year. This adds up to almost $133 billion in total losses avoided from 2000 to 2040.”
“Those dollar values represent considerable financial reasons for why communities should be proactive in adopting and enforcing hazard-resistant building codes.”
Read this critical study, and see other material from the study by going to the study’s homepage HERE
FEMA releases the national risk index
“FEMA announced the Phase 1 rollout of the National Risk Index, a new online resource that helps illustrate communities most at risk from natural hazards. To provide a holistic view of community risk, this online mapping application analyzes risk factors from 18 natural hazards in addition to expected annual losses, social vulnerability, and community resilience.
The Index determines risk by reviewing a community’s expected annual loss, based on hazard frequency, exposure, and historic loss rate; social vulnerability by measuring the susceptibility of impacted social groups; and community resilience, which measures the ability of a community to recover from, the impacts of natural hazards.”
The data shows most Massachusetts counties as “low risk” and “resilient” View the tool HERE
Tim’s Flood Savings Tips VE zones are tricky
One of my favorite catch phrases is describing the VE zone as “Very Expensive.” The AE zone follows as “Almost (as) Expensive.” And AO zone as being “Almost Ordinary…” The VE zone is very expensive for good reason. It includes wave action in its pricing formula. “VE” short for “VElocity: taking into consideration the additional damage that waves can bring to a dwelling. Waves can cause their own damage through simple force but can also carry beach stones and debris, hurling them as projectiles at buildings with a double whammy of damage.
The VE zone’s focus is on height: The plan is for storm water to pass under elevated structures – through pilings and at breakaway walls, allowing flow in all directions with minimal obstruction. By encouraging elevation, and not crediting for ‘at or below’ ground level improvements like other zones, (i.e. venting a crawlspace), the force of most waves is minimized.
But the VE zone could include waves engulfing or colliding with a dwelling while water simultaneously passes underneath. This is where the VE zone’s coverage adds another layer of possible consideration and expense.
Coverage for standard flood policies in the NFIP is capped at $250,000 for any dwelling: from the smallest dwelling to any single mansion. But VE zones rates are tied to the replacement cost of the dwelling. A larger dwelling can sustain more damage than a smaller one when the maximum coverage is identical for both structures. This is the ratio of cost of coverage to value. The NFIP has rating increases as dwellings increase in value in the V zone.
Rate tables are written with increases at three points: where coverage is at or above 75% of $250,000 value ($333,333+), then where $250,000 is 50% or greater than replacement value ($500,000+) and lastly where $250,000 = 25% of value or greater ($1,000,000+).
An example of this would be a $1,000,000+ home. This dwelling’s underlying coverage of $250,000 provides 25% of coverage relative to the dwelling’s replacement value. This puts this dwelling’s rate higher than a comparable $500,000+ dwelling whose valuation is at 50% of replacement cost valuation. The $1,000,000 home will rate at the highest level, while the $500,000 home will rate in the middle table – a significant difference in premium (all things being the same.)
This reality can make for ugly surprises following a renovation of a VE-zoned dwelling. A real example: a $902,000 home after the renovation, all things being the same, cost 40% more to insure than the same property valued at $500,000 pre-renovation.
So be sure to watch your wallet if you are renovating. Your flood policy might all-of-a-sudden get expensive. Purchasing a newly renovated dwelling in a VE zone might end up with a nasty surprise if the old policy is presented and renovation results are not considered in the premium.
Note from the Chair
With 2020 coming to a close, the MCC is reflecting back on a much different year than what we had planned for. With a pandemic bringing the world to a stop, the MCC worked on building our virtual and digital presence with great success. We worked on advocating for changes to the NFIP that help with how the program works for you, and we continued to work on implementing CRS across our state. In 2021, we are almost entirely focused on raising funds to bolster the activities and programs we have developed over the last several years. We will release a new membership and sponsorship program, and focus on helping communities become more resilient through our HELP program. We appreciate all of your support, and hope that you continue to support us as we help educate, advocate and inform you on flood issues.
Joe Rossi
Chair and Executive Director
Massachusetts Coastal Coalition
