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The
Flood Risk in Maui
According to
the Department of Land and Natural Resources, floods from
tsunamis, hurricanes, and rainstorms caused more than
350 deaths, and over $82 million in property damage, from
about 1860 until 1962. Damage from floods from 1963 through
1982 total about $395 million. From January 1983 to July
1992, twelve deaths have been attributed to flooding.
The 1987 New Year’s Flood caused an estimated $35 million
in damage. Floods in March 1991 resulted in damage estimated
at $10-$15 million. In December 1991, floods damaged an
estimated $7 million in property.
The National
Flood Insurance Program has paid a total of $51.7 million
in claims since 1974, $35.6 million of which were related
to Hurricane Iniki. Though small compared to the $1.6
billion in insurance claims paid by the private industry
following Iniki, the number and total value of flood insurance
policies has more than doubled since 1994.
National
Flood Insurance Program
The National
Flood Insurance Program (NFIP) provides federally-backed
flood insurance to property owners in communities that
regulate development in floodplains. The United States’
Congress established NFIP to "reduce the loss of life
and property and rising cost of disaster due to flooding."
The National Flood Insurance Program is a voluntary program
based on agreements between federal and local governments.
In order to participate, a community must adopt and enforce
certain minimum building and land use standards designed
to reduce property damage from flooding. These regulations,
among other things, require new or substantially remodeled
structures within special flood hazard areas to be engineered
and/or elevated in order to withstand anticipated flood
conditions. They also require communities to prohibit
development in floodways—areas that allow flood waters
to discharge from special flood hazard areas. NFIP also
shifts the cost of flood damage from taxpayers, who ultimately
pay for disaster relief, to property owners through flood
insurance premiums.
The risk of
flood damage to the structure’s lowest floor from a "100
year flood" provides the basis for National Flood Insurance
Program premiums. Flood Insurance Rate Maps—also based
on the "100-year" flood line—delineate special hazard
areas and applicable risk premium zones (Appendix One).
These Federal Emergency Management Agency generated maps
serve as primary reference documents for the National
Flood Insurance Program and other flood-related policies
and programs at all levels of government.
New National
Flood Insurance Program Regulations and Requirements for
Participation
The Community
Development and Regulatory Improvement Act was signed
into law in 1994. This Act amended the enabling National
Flood Insurance Program (NFIP) legislation in order to
reduce federal spending on flood losses and to improve
the financial status of NFIP. To this end, it directs
federal loan agencies and federally regulated or insured
lending institutions to "require flood insurance when
making, increasing, extending, or renewing loans and to
maintain the coverage for the life of the loan" for all
homes in special flood hazard areas. The Act also authorizes:
(1) mitigation assistance grants for states and communities
to protect homes and businesses; and (2) mitigation insurance
for rebuilding to meet improved design and construction
standards.
In 1994, new
National Flood Insurance Program (NFIP) regulations were
also promulgated to require all property owners (including
those in high-rise condominiums) in "special flood hazard
areas" – as determined by the community’s Flood Insurance
Rate Map—to insure their properties against flood damage
equal to 80% of replacement value.
Changes in
NFIP regulations since 1994 have required additional homeowners
in Hawaii to buy flood insurance. As a result, the number
of Hawaii’s NFIP policies more than doubled over an eighteen
month period. In December 1994, there were 22,140 flood
insurance policies statewide. By July 1996, the number
of policies had increased to 47,801 (Table 1), giving
Hawaii the largest per capita participation in the NFIP
in the United States, and third highest number of policies
overall. Over the same period, the value of NFIP policies
in Hawaii increased from over $2.5 billion to over $5.7
billion
Although the
number of policies increased dramatically, the face value
of the average National Flood Insurance Program policy
remained about the same and the average premium has declined.
The mean value of flood policies in Hawaii increased from
$120,897 in December 1994 to $121,332 in July 1996. Over
the same period, the average cost of premiums decreased
from $443 in 1994, $272 in 1995, and to $264 in 1996.
The reductions in the average premiums probably reflect
the large number of people outside the special flood hazard
area who have purchased policies, as well as the increase
in the number of condominium policies.
Table
1
Flood
Insurance Trends in Hawaii, 1993 to 1996
|
County
|
Total Premiums
|
Total Policies
|
Total Value
of Policies
|
|
Hawaii
1993
1994
1995
1996
|
$844,000
$983,000
$1,238,000
$1,251,000
|
1,772
1,690
3,225
3,232
|
$232,040,000
$228,274,000
$333,803,000
$352,027,000
|
|
Honolulu
1993
1994
1995
1996
|
$3,967,000
$5,153,000
$6,433,000
$7,007,000
|
9,444
11,337
26,793
30,262
|
$1,022,023,000
$1,353,059,000
$2,833,638,000
$3,824,456,000
|
|
Kauai
1993
1994
1995
1996
|
$1,003,000
$1,293,000
$1,293,000
$1,445,000
|
2,463
2,739
2,775
3,276
|
$276,617,000
$319,354,000
$347,545,000
$411,293,000
|
|
Maui
1993
1994
1995
1996
|
$1,512,000
$2,009,000
$3,051,000
$2,897,000
|
3,869
5,492
11,273
11,030
|
$461,057,000
$669,348,000
$1,168,259,000
$1,210,914,000
|
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Statewide
1993
1994
1995
1996
|
$7,326,000
$9,438,000
$12,015,000
$12,601,000
|
17,548
21,258
44,066
47,801
|
$1,991,737,000
$2,570,035,000
$4,683,245,000
$5,799,690,000
|
The
decrease in the average premium provides little solace
to homeowners paying more for their property insurance.
Most single family dwelling owners in the special
flood hazard area who had flood insurance in 1994
are probably paying about the same premium in 1996.
However, more property owners are now required to
buy flood insurance. The average condominium policy
may be less expensive than a flood insurance policy
for a single family dwelling. However, the requirement
that the value of "commercial" policies for condos
in the special flood hazard area be equivalent to
80% of the replacement value, has caused huge increases
in costs for condominium associations. For example,
flood insurance costs for one large condo in Honolulu
increased from about $9,000 in 1994 to over $39,000
in 1995. This increase was passed directly on to individual
homeowners through their maintenance fees.
The
Community Rating System
The
US Congress has recognized for several years that
although the minimum measures required for participation
in the National Flood Insurance Program (NFIP) provide
a reasonable level of protection, additional mitigation
measures can reduce the risk of flood losses. Consequently,
in 1990, the NFIP instituted a Community Rating System
(CRS) to provide incentives for additional mitigation
measures over and above the minimum NFIP requirements.
CRS gives individual policyholders a premium reduction,
or credit, on their flood premiums, if their communities
(i.e., counties in Hawaii) implement additional mitigation
measures approved by the National Flood Insurance
Program.
The
Community Rating System gives communities credit for
eighteen categories of mitigation activities in four
general areas (Appendix Three). The application process
involves identifying the various qualifying mitigation
activities that are in place at the time of the CRS
application. These include, but are not limited to,
the following actions:
-
public
information programs informing people about the flood
hazard, the National Flood Insurance Program, and
ways to reduce the flood hazard;
-
mapping
and regulatory programs including development of Flood
Insurance Rate Maps for areas not already mapped,
preservation of open space, and improved regulatory
standards and stormwater management;
- damage reduction
programs aimed at addressing repetitive loss problems,
retrofitting and public acquisition of flood prone structures,
and drainage system maintenance; and
- flood preparedness
programs that include flood warning, and levee and dam
safety activities.
Communities
can also receive credit for activities undertaken
by their state government and by private parties.
The latter could include deed restrictions, dedication
of privately controlled open space and other restrictions
on development in special flood hazard areas.
The
Community Rating System (CRS) has devised a point-based
scoring system to evaluate each mitigation measure,
with a total of over 8,145 points possible (Appendix
Three). All policy holders within a designated community
receive a reduction in their flood insurance premiums,
based on the overall points scored. Discounts or premium
credits range from 5% (500 points) to 45% (4500+ points),
with the vast majority of credits across the United
States between 5% (Class 9) and 15% (Class 7). If
each county in Hawaii participated in the program,
it would translate into an annual collective premium
savings of between $630,000 (5%) and $1,890,000 (15%)
(Table 2). Although National Flood Insurance Program
rates are currently rising, a number of program changes
will likely result in a significant expansion in the
number of flood insurance policyholders in the next
few years. Therefore, the potential savings available
for the community under CRS should also increase significantly.
To
qualify for participation in the Community Rating
System (CRS), a community must be in full compliance
with the mandatory National Flood Insurance Program
(NFIP) requirements discussed in the previous section.
A community’s chief executive (mayor) must appoint
a CRS Coordinator. He or she can obtain a copy of
the CRS Coordinator’s Manual, which includes
application worksheets. A computer software package
can also be obtain at no charge from NFIP. The worksheets
and software program can then be used to identify
eligible mitigation activities.
Communities
with ten or more National Flood Insurance Program-insured
properties that have experienced repetitive flood
losses, which would include the City and County of
Honolulu, Kauai County, and Hawaii County, must also
prepare and submit a review of the Federal Emergency
Management Agency’s list of repetitive loss properties;
a map locating areas in which they are located; a
description of the causes of flooding; certification
that the respective loss property owners will receive
information on flood protection measures annually;
and a timetable for the adoption of a Repetitive
Loss Plan. The plan could include:
- amendments
to floodplain regulation ordinances requiring structures
in areas for which there are no base-flood data to be
built two feet above the highest known historical flood
elevation;
- monitoring
of debris in creeks and rivers near bridges and culverts;
- providing
residents with manuals on flood- proofing; and
- providing
technical advice on flood prevention and preparedness.
The
Federal Emergency Management Agency (FEMA) has streamlined
its Community Rating System (CRS) application in the
past two years, making the process simpler and more
straight forward. FEMA officials and the National
Flood Insurance Program State Coordinator in the Department
of Land and Natural Resources have also recently completed
a model application that can be used by Hawaii’s
counties to apply for participation in the program.
This model application documents state laws and regulations,
as well as other flood plain management activities
creditable on the CRS application. The model includes
scores for statewide CRS mitigation activities, for
a total of 537 points. It also provides the necessary
documentation for inclusion in a CRS application from
any one of the four Counties.
Maui
County is currently the only community in Hawaii participating
in the Community Rating System (CRS). On its first
try, the county obtained a 5% reduction for all of
its policyholders and came close to obtaining a 10%
reduction. The Maui County CRS Coordinator estimates
he worked quarter time for about six months to complete
the initial application. This entailed consulting
county, state, and federal agencies responsible for
flood mitigation activities, and securing copies of
the ordinances, regulations, and other records that
document activities claimed on the Community Rating
System application. To achieve a 10-15% premium discount,
the coordinator believes a follow up application should
be much simpler than the initial application. This
is due, in part, to his knowledge of the process,
the Federal Emergency Management Agency’s new
application, and 537 points for state-wide mitigation
activities documented in the model CRS application,
mentioned above. If Maui County would like to increase
the premium credits beyond ten or fifteen percent,
however, they will have to initiate additional mitigation
activities.
Benefits
of Participating in the Community Rating System
Reduction
of individual National Flood Insurance Program policy
premiums. Most consumer value highly and appreciate
even a small cost saving – especially those who
feel inundated with insurance premium payments (health,
automobile, home).
- The
statewide savings from a 10% discount would
total over $1.2 million per year (Table 2).
- With
a 10% discount, Maui County could save its 11,030
policy holders on Maui, Molokai, and Lanai $289,700
each year.
- The
City and County of Honolulu would save its 30,262
policy holders $700,700 annually with a 10%
discount.
Reduction
of flood hazards. Implementation of Community Rating
System activities in a flood hazard area:
- provides
a reminder to "at risk" homeowners
in a flood hazard area. For many homeowners,
the cost of flood insurance is relatively low
in absolute terms. Thus, they may not realize
that their flood insurance premiums reflect
their risk of flood damage. New real estate
disclosure rules require a home seller to inform
the buyer that they are in a special flood hazard
area and are, therefore, required to carrying
federal flood insurance;
- encourages
the production and dissemination of information
about flood hazards. For repetitive loss
communities, County governments must inform
owners of repetitive loss structures how to
reduce the risk of future loss; and,
- establishes
measures which can result in a reduction in
the flood risk. With the number and value
of flood insurance policies in Hawaii increasing,
the National Flood Insurance Program will become
a more important source of disaster insurance
coverage in the future. Moreover, if the counties
aggressively pursue premium credits through
the Community Rating System, the cost of that
coverage can be reduced.
Costs
of Participating in the Community Rating System
Staff
time for the completion of an application. Although
initially one-quarter time for six months to complete
Maui’s first application, the total time should
decrease due to the streamlining of the process
and the availability of the model application completed
by the Federal Emergency Management Agency and the
State National Flood Insurance Program Coordinator.
Costs
incurred for implementation of new mitigation for
credits beyond 15%. While 1600 points can be
obtained for acquiring flood-prone property and 1400
for retrofitting flood-prone structures, the national
average is 83 points for the former and 26 points
for the latter. Property acquisition and retrofitting
existing buildings can be expensive undertakings,
but these costs can be weighed against premium savings.
Repetitive
loss communities have additional activities required.
For the City and County of Honolulu, Kauai County,
and Hawaii County additional effort will be required
to commit to the development and implementation of
a repetitive loss plan and provide additional information
along with their applications. However, the amount
of effort required to complete an application to participate
in the Community Rating System could be less than
Maui County invested for its initial application.
Conclusions
The
National Flood Insurance Program’s Community
Rating System (CRS) provides a unique opportunity
for state and county governments to initiate flood
disaster mitigation measures and to reduce the cost
of property insurance for their residents. Although
merely filing a CRS application and documenting existing
mitigation measures does little to reduce the actual
risk of flood losses, even this effort will increase
the awareness of property owners (and elected officials)
of both the risk and what can be done to reduce it.
In
order to determine whether to participate in the Community
Rating System (CRS), each county has to evaluate the
costs and benefits of the program. In purely financial
terms, it appears that the benefits of participation
in the CRS to residents heavily outweigh the cost
to the county governments. The premium savings from
minimal participation using existing mitigation activities
are probably four or five times the cost of staff
time to complete an application and provide the required
reports to the National Flood Insurance Program and
the Federal Emergency Management Agency.
The
range of mitigation measures creditable under the
Community Rating System (CRS) regulations is broad
enough for the counties to design mitigation plans
tailored to reduce their unique flood hazard risks
with human and financial resources already available.
With the flexibility provided under the program, the
state and county governments can undoubtedly go beyond
CRS mitigation requirements for a ten or fifteen percent
reduction in premiums and significantly reduce the
risk of future flood losses in Hawaii.
Appendix
One
Hawaii’s
Flood Insurance Rate Map Special Flood Hazard Areas
and
Risk Premium Zones, 1996
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Coastal High Hazard
Zones VE, V
(also, V1 to V30)
|
Flood Fringe
Zones AE, AO, AH
(also, A1 to A30)
|
General Flood Plain
Zones A, D, X
|
| Zone V:
100-year coastal floodplain. No base flood elevation.
Zone VE: 100-year coastal floodplain.
Base flood elevation determined.
|
Area of shallow flooding. No clearly defined
channel exists, thus floodpath is unpredictable
and indeterminate.
Zone AE: 100-year floodplain,
computed base flood elevation
Zone AH: 100-year shallow flooding
(ponding), computed base flood elevation.
Zone AO: 100-year shallow flooding
(sheeting), computed base flood elevation.
Zone A99: significant progress made
on protective systems. No base flood elevation.
|
Zone A: 100-year floodplain, no base
flood elevation nor depth.
Zone X: moderate to minimal flood
hazard area. No base flood elevation nor depth.
Zone D: Unstudied area where
flood hazards are undetermined, but possible.
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Appendix
Two
Flood
Insurance Rate Map Terminology
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Base Flood
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The flood has a one percent chance of being
equaled or exceeded in any given year. Also
known as a "100-year" flood.
|
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Base Flood Elevation
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The water surface elevation of the base flood.
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Breakaway Wall
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A wall that is not part of the structural support
of the building and is intended to collapse
without causing damage to the elevated portion
of the building or supporting foundation system.
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Certificate of Occupancy
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Required before any new construction or substantial
improvement in the special flood hazard areas
may be used or occupied.
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Elevated Building
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A non-basement building built.
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Post-FIRM Building
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A building for which
the start of construction or substantial improvement
occurred after 12/31/1974, or on or after the
effective date of the initial Flood Insurance
Rate Maps for the community in which the building
is located, whichever is later. |
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Substantial Improvement
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Any repair, reconstruction or improvement of
a structure, the cost of which equals or exceeds
50% of the market value of the structure either
before the improvement or repair is started,
or if the structure has been damaged and is
being restored, before the damages occurred.
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FEMA.
1988. National Flood Insurance Program and Related
Regulations
Appendix
Three
Credit
Points for
the Community Rating System
of
the National Flood Insurance Program
Minimum
Requirements:
211
Prerequisites: Your community must be in
the Regular Phase of the National Flood Insurance
Program (NFIP) and be in full compliance with
the minimum requirements of the NFIP.
310
Elevation Certificate: All Community Rating
System (CRS) communities must maintain Federal
Emergency Management Agency elevation certificates
for all construction in the flood plain after
the date of application for CRS classification.
510
Repetitive Loss Projects: A community with
properties that have received repeated flood insurance
claim payments must map the areas affected. Communities
with 10 or more such properties must prepare,
adopt, and implement a Plan to reduce damages
in repetitive loss areas.
300
Information Activities
310
Elevation Certificates points: possible
US average Maui
Mandatory.
Maintain Federal Emergency Management Agency
elevation certificates for new construction in the
floodplain.
320
Map Information points: possible US
average Maui
Provide
Flood Insurance Rate Map information to people who
inquire and publicize this service.
330
Outreach Projects points: possible US average
Maui
Send
information about the flood hazard, flood insurance,
and flood protection measures to flood-prone residents
or all residents of the community.
340
Hazard Disclosure points: possible US average
Maui
Real
estate agents advise potential purchasers of flood-prone
property about the flood hazard; regulations require
a notice of the flood hazard.
350
Flood Protection Library points: possible
US average Maui
The
public library maintains references on flood insurance
and flood protection.
360
Flood Protection Assistance points: possible
US average Maui
Give
inquiring property owners technical advice on how
to protect their buildings from flooding and publicize
this service.
400
Mapping and Regulatory Activities
410
Additional Flood Data points: possible
US average Maui
Develop
new flood elevations, floodway delineation, wave
heights, or other regulatory flood hazard data for
an area that was not mapped in detail by the flood
insurance study; have a more restrictive mapping
standard.
420
Open Space Preservation points: possible
US average Maui
Guarantee
that currently vacant floodplain parcels will be
kept free from development.
430
Higher Regulatory Standards points:
possible US average Maui
Require
a freeboard; require soil tests or engineered foundations;
require compensatory storage; zone the floodplain
for minimum lot sizes of one acre or larger; regulate
to protect sand dunes; have regulations tailored
to protect critical facilities or areas subject
to special flood hazards.
440
Flood Data Maintenance points: possible US
average Maui
Keep
flood and property data on computer records; use
better base maps; maintain elevation reference marks.
450
Stormwater Management points: possible
US average Maui
Regulate
new developments throughout the watershed to ensure
that post-development runoff is no greater than
pre-development runoff; regulate new construction
to minimize soil erosion and protect or improve
water quality.
500
Flood Damage Reduction Activities
510
Repetitive Loss Projects points: possible
US average Maui
Mandatory
only for communities which have repeat losses, as
determined by the Federal Emergency Management Agency.
See "Minimum Requirements."
520
Acquisition and Relocation points: possible
US average Maui
Acquire
and/or relocate flood-prone buildings so that they
are out of the floodplain.
530
Retrofitting points: possible US average
Maui
Document
flood-proofed or elevated pre-Flood Insurance Rate
Map buildings.
540
Drainage System Maintenance points: possible
US average Maui
Conduct
periodic inspections of all channels and retention
basins and remove debris as needed.
600
Flood Preparedness Activities
610
Flood Warning Program points: possible US
average Maui
Provide
early flood warnings to the public and have a detailed
flood response plan keyed to flood crest predictions.
620
Levee Safety points: possible US average
Maui
Maintain
levees not otherwise credited that provide some
base flood protection.
630
Dam Safety points: possible US average Maui
All
communities in a state with an approved dam safety
program receive this Credit.
Totals
points: possible US average Maui
12.5.96
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