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Alluvial · 06-06-2009, 11:54 AM

Yes, they have, especially for businesses. The NFIP used to subsidize everyone's premiums; in other words, although the property might've been rated as highly suceptible to flooding based on the zone it's in, the premium wasn't based on the actual risk. Going back to cold logic, the premium properly ought to be based upon the flood risk. But, if they had all been properly rated, people wouldn't have been able to afford the premiums and the program would have been a failure.

After the floods of the 1990's, the NFIP changed their ways and stopped subsidizing premiums for businesses, and also put some 'teeth' into their regs. Business owners got quite a shock, because many of them were paying small premiums based compared to their actual risk. Example: business owner previously paying $500/yr in premiums now paying $2000/yr. The premiums for businesses were changed to reflect the true risk, while residential properties continue to be subsidized, although not as much as before.

Now for the 'teeth' I mentioned. Often a home or business is what they call "frequently flooded". The NFIP took a look back over their historic data and saw that many of these structures had claims stretching back ten years or more; in fact, often the insurance payouts, after adding them all together, exceeded the value of the structure. In an effort to stem this hemorraging, they put a mitigation plan into effect. This says that if your building sustains more than 50% of its value in damages over a certain period of time, then you *must* mitigate for flood or you won't be able to buy flood insurance any more. That's for damages including all hazards, including things like fire or tornado. Let's say you have submitted claims for property damage from flooding ten times in the last twelve years, and today it burns to the ground. When you rebuild it tomorrow, you must elevate the lowest finished floor above the base flood elevation, or you won't be able to get flood insurance from the NFIP.

I hope I'm explaining this in an understandable way - since I'm around it all the time, sometimes I accidentally leave pertinent parts out.

06-06-2009, 11:54 AM	#18
Alluvial Phenomenologist Join Date: Apr 2009 Location: Central Mississippi Posts: 270	Yes, they have, especially for businesses. The NFIP used to subsidize everyone's premiums; in other words, although the property might've been rated as highly suceptible to flooding based on the zone it's in, the premium wasn't based on the actual risk. Going back to cold logic, the premium properly ought to be based upon the flood risk. But, if they had all been properly rated, people wouldn't have been able to afford the premiums and the program would have been a failure. After the floods of the 1990's, the NFIP changed their ways and stopped subsidizing premiums for businesses, and also put some 'teeth' into their regs. Business owners got quite a shock, because many of them were paying small premiums based compared to their actual risk. Example: business owner previously paying $500/yr in premiums now paying $2000/yr. The premiums for businesses were changed to reflect the true risk, while residential properties continue to be subsidized, although not as much as before. Now for the 'teeth' I mentioned. Often a home or business is what they call "frequently flooded". The NFIP took a look back over their historic data and saw that many of these structures had claims stretching back ten years or more; in fact, often the insurance payouts, after adding them all together, exceeded the value of the structure. In an effort to stem this hemorraging, they put a mitigation plan into effect. This says that if your building sustains more than 50% of its value in damages over a certain period of time, then you must mitigate for flood or you won't be able to buy flood insurance any more. That's for damages including all hazards, including things like fire or tornado. Let's say you have submitted claims for property damage from flooding ten times in the last twelve years, and today it burns to the ground. When you rebuild it tomorrow, you must elevate the lowest finished floor above the base flood elevation, or you won't be able to get flood insurance from the NFIP. I hope I'm explaining this in an understandable way - since I'm around it all the time, sometimes I accidentally leave pertinent parts out.