Flood insurance, available under the National Flood Insurance Program (NFIP), which was created by the National Flood Insurance Act of 1968, can be costly. For example, an average of $800 per residential property has been seen in communities in Northwest Arkansas that have relatively minor flooding.
The Federal Emergency Management Agency (FEMA), which oversees the flood insurance program, recognizes the high cost for insurance. For this reason FEMA developed the Community Rating System (CRS), a voluntary program through which a community can take a proactive approach toward reducing insurance rates.
FEMA’s Coordinator’s Manual for the CRS includes the following: “The goals of the CRS are to recognize, encourage, and reward, by the use of flood insurance premium adjustments, community and state activities beyond the minimum required by the NFIP that:
- Reduce flood damage to insurable property,
- Strengthen and support the insurance aspects of the NFIP, and
- Encourage a comprehensive approach to floodplain management.”
Insurance Rate Reduction Tied to Improvemed Floodplain Management
The intention of the CRS program is that communities that do a better job of managing floodplains within their city limits will be recognized and their citizens rewarded with reduced flood insurance premiums. FEMA has established a large number of criteria that define good flood plain management. A community must work on these things, and demonstrate progress to FEMA’s satisfaction. If this can be done, the community is awarded points, and enough points improve a community’s rating.
The flood plain management activities are divided into four broad categories.
- Public Information
- Mapping and Regulations
- Flood Damage Reduction
- Flood Preparedness
The CRS identifies classes 1 through 10 for community standing. Class 10 is any community that does not do much to manage flood plains. Class 1 is the best rating, and will be earned only by those communities that are really aggressive with flood plain management and flood risk mitigation.
For each improvement in rating beginning with class 9, everyone in the community gets 5 percent off their flood insurance premiums. So a class 8 community has a 10 percent reduction, a class 6 community has a 20 percent reduction, etc. A class 1 community would qualify for 45 percent reductions.
Activities Required Under the Community Rating System
A community that wishes to participate in the CRS must first have a visit conducted by a FEMA official. This is known as the Community Assistance Visit. The FEMA representative will go over the community’s current floodplain management practices and help the community determine what activities they are already doing that qualify for CRS activities and what activities they must do as a bare minimum.
The following activities are the minimum that must be undertaken to be a CRS community.
- The community must be in the Regular Phase of the NFIP, and in full compliance with the minimum requirements of that program. The FEMA Regional Office must confirm this.
- The community must maintain elevation certificates (a specific FEMA form) for all new and substantially improved construction in the floodplain after the date of application for CRS classification. Having these elevation certificates from before the application date is also a plus.
- “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 damage in repetitive loss areas. The FEMA Regional Office can tell whether this applies to any given community.” [FEMA]
Cost to the Community to Participate in the CRS
The cost to take part in the community rating system is only the internal cost spent by the community and any outside consultants they must hire. A CRS Coordinator must be appointed and paid (in a small community usually the person already serving as flood plain administrator).
The Community Assistance Visit will take some staff time. Keeping the documentation required by FEMA requires time and storage space. The annual re-certification has some staff time cost.
All of these are most likely minimal compared to insurance premiums savings the community will experience. For improved mapping, engineering costs will be involved and can be expensive. Fortunately a preliminary study can determine if the larger expense for improved mapping will be worth the cost.
In some cases the community will experience negative public relations “costs”. This would be true if the improved mapping or more stringent regulation results in more people being put in the floodplain. This non-monetary cost will have to be weighed against the benefits the entire community will experience.
FEMA has a great many documents and guides on their web site. The community floodplain administrator, or others in the community who are interested in seeing flood insurance premiums reduced, will find the CRS is worth pursuing.
