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The Flood Risk in Kauai
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 to Hawaii’s policyholders, $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
|
|
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
|
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.
|
Appendix Two
Flood Insurance Rate Map Terminology
|
Base Flood
|
The flood has a one percent chance of being equaled
or exceeded in any given year. Also known as a "100-year"
flood.
|
|
Base Flood Elevation
|
The water surface elevation of the base flood.
|
|
Breakaway Wall
|
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.
|
|
Certificate of Occupancy
|
Required before any new construction or substantial
improvement in the special flood hazard areas may
be used or occupied.
|
|
Elevated Building
|
A non-basement building built.
|
|
Post-FIRM Building
|
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. |
|
Substantial Improvement
|
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.
|
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
|