FLOOD COVERAGE AGENDA PART I

Transcription

1 THE PERIL OF FLOOD

2 FLOOD COVERAGE AGENDA PART I 1. Overview of session Introduction of Participants 2. FEMA Statistics 3. How is 2011 Shaping Up? 4. Types of Governmental Entity Property 5. Common Property coverage Pool inclusions 6. What is the NFIP? 7. NFIP Eligibility 8. Definition of flood

3 FLOOD COVERAGE AGENDA PART II 1. Covered/Non-Covered Property 2. Flood Coverage Considerations 3. Methods to structure coverage 4. Deductible Application 5. Pricing 6. Mitigation

4 FEMA STATISTICS Floods are the #1 most common natural disaster in the United States. Over the past 10 years ( ) the average flood insurance claim paid in the US was nearly $48,000 per year. Over the past 10 years ( ), flood insurance claims averaged just over $2.6 billion. People outside of high-risk areas file over 20% of NFIP claims and receive one-third of disaster assistance for flooding. The NFIP paid $709 million in flood insurance claims to homeowners, business owners, and renters in

5 HOW IS 2011 SHAPING UP? 2011 Declared Disasters 59 total declared disasters 48 of which involved flooding A Presidential Major Disaster Declaration puts into motion long-term federal recovery programs, some of which are matched by state programs, and designed to help disaster victims, businesses and public entities Declared Emergencies 26 total declared emergencies 23 of which involved flooding An Emergency Declaration is more limited in scope and without the long-term federal recovery programs of a Major Disaster Declaration. Generally, federal assistance and funding are provided to meet a specific emergency need or to help prevent a major disaster from occurring.

6 TYPES OF GOVERNMENTAL ENTITY PROPERTY Municipal Offices Schools Fire Stations Wastewater Treatment Plants Emergency Services Buildings Public Docks and Piers Maintenance and Vehicle Storage Garages Stadiums Pumping Stations Libraries Broadcasting Towers Transfer Stations Water Towers Town Halls Gazebos and other open type structures Salt Sheds Park and Recreation Buildings Covered Bridges Ice Rinks indoor 6

7 COMMON POOL PROPERTY COVERAGE INCLUSIONS Automobile Physical Damage Mobile Equipment and other types of property normally covered under an Inland Marine Coverage Part Business Income Extra Expense Valuable Papers and records 7

8 WHAT IS THE NFIP? The NFIP is a program in which communities formally agree, as evidenced by their adoption of codes and ordinances, to regulate the use of their flood prone lands. In return, FEMA makes flood insurance coverage available on buildings and their contents throughout the community. FEMA has traditionally identified these flood hazard areas on maps that are provided to communities for carrying out their responsibilities. The maps are also used by insurance agents/producers to determine rates and by lenders to determine purchase requirements. 8

9 NFIP ELIGIBILITY NFIP policies are written by the NFIP and servicing carriers. Flood insurance may be written only in those communities that have been designated as participating in the National Flood Insurance Program (NFIP) by the Federal Emergency Management Agency (FEMA). Flood insurance may not be sold or renewed in communities that are suspended from the NFIP. When a community is suspended, coverage remains in effect until expiration. These policies cannot be renewed. New Policy Standard 30-Day Waiting Period The effective date of a new policy will be 12:01a.m., local time, on the 30th calendar day after the application date and the presentment of premium. (Example: a policy applied for on May 3 will become effective 12:01 a.m., local time, on June 2.) 9

10 DEFINITION OF FLOOD NFIP DEFINITION ISO DEFINITION POOL DEFINITIONS A flood is a general and temporary condition where two or more acres of normally dry land or two or more properties are inundated by water or mudflow. Overflow of inland or tidal waters; Unusual and rapid accumulation or runoff of surface waters from any source; Flood, meaning a general and temporary condition of partial or complete inundation of normally dry land areas due to: 1.The overflow of inland or tidal waters; 2.The unusual or rapid accumulation or runoff of surface waters from any source; or FLOOD Vermont Pool The term Flood shall mean the rising, overflowing, or breaking of boundaries of rivers, lakes, streams, ponds or similar natural or man-made bodies of water, or from waves, tidal waves, tidal waters, surface waters, rain accumulation or run off, or by spray from any of the foregoing all whether driven by wind or not: water which backs up through sewers and drains; water below the surface of the ground including that which exerts pressure on or flows, seeps, or leaks through sidewalks, driveways, foundation, walls, basement or other floors, or through doors, windows, or any other openings in such sidewalks, driveways, foundations, walls or floors. All losses occurring during a continuous period of seventy-two (72) hours shall be considered one occurrence, and shall be deemed to have occurred at the time of the first loss. 10

11 DEFINITIONS OF FLOOD cont d NFIP DEFINITION ISO DEFINITION POOL DEFINITIONS 1. Mudslides or mudflows which are caused by flooding as defined in C.2. above. For the purpose of this Covered Cause Of Loss, a mudslide or mudflow involves a river of liquid and flowing mud on the surface of normally dry land areas as when earth is carried by a current of water and deposited along the path of the current. All flooding in a continuous or protracted event will constitute a single flood. FLOOD RHODE ISLAND TRUST Flood waters, waves, tide or tidal water, the release of water, the rising, overflowing or breaking of boundaries of natural or man-made bodies of water, or the sprays of any of the foregoing. 11

12 NFIP COVERAGE PROPERTY EXPOSURES 12

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14 WATERBURY, VERMONT 14

15 COVERED/NONCOVERED PROPERTY Refer to Building and Personal Property Handout 15

16 FLOOD COVERAGE CONSIDERATIONS Do you have a time deductible for Business Income and Extra Expense or are you providing coverage from the time of the loss forward? How is Debris Removal handled in your Pool Coverage documents? How do you handle expediting expenses? When Auto Physical Damage Coverage and Mobile Equipment is factored in, is the flood sublimit sufficient? Does your coverage document contain an Other Insurance Clause that addresses how coverage works when it is being provided by both the pool and the NFIP? Are you aware of where the Pool/Trust coverage starts in conjunction with an NFIP policy? 16

17 FLOOD COVERAGE CONSIDERATIONS con t Do all of the governmental entities that you insure in your pool participate as members of the NFIP? Understand your reinsurance coverage as respects cat perils what is and is not covered Is all property covered for all perils Review key terms in reinsurance contracts ie occurrence against Pool coverage document to ensure they are in sync 17

18 METHODS TO STRUCTURE COVERAGE SAMPLE LIMITS VERMONT POOL 18

19 METHODS TO STRUCTURE COVERAGE RHODE ISLAND TRUST ()%!"##* ()%!+##* Property Coverage Structure Including Flood!'##$###$### 2341 ()%!&##* ()%!"#* ()%!&* ()%!"##,!&##$###$### "#5 1;)9<=);6 0 &"5.8?6;(@ 0 &"5 A;B= 0 &#5 C<<67 0 "5 A<D69 0 "5!"#$###$###% "#5 1;)9<=);6 0 +#5 1>>89)8< 0 +#5.6789:()9 0 &#5!"#$###$###% "#5.6789:()9 0 "#5!"##$###% -./0* 1/!"##$###% E=6%E;F<( 19

20 RHODE ISLAND TRUST CATASTROPHE COVERAGE REQUIREMENTS con t A Special Property Deductible for Wastewater Treatment Plant and Facilities is applied in addition to other property deductibles applicable to the same occurrence for damages at other Member insured properties as specified in the Insurance Certificate for Property and Liability Coverage, Section 2, Property Coverage, Buildings and Contents. Purchase of NFIP coverage or its equivalent for buildings located in Flood Zones A or V to qualify for $10M aggregate coverage by Member. Coverage is otherwise limited to $1M over the initial layer by the Catastrophe reinsurers. 20

21 USING DEDUCTIBLES AS A RISK MANAGEMENT TOOL NFIP Deductibles Minimum deductible for non residential properties is $1,000 or $2,000 Applies separately to building and personal property ISO No minimum $ amount Deductible applies per flood loss VERMONT POOL $ per occurrence Occurrence Coverages: The Fund pays only the amount of loss or damage in any one occurrence that exceeds the deductible amount indicated on the Declarations Page. 21

22 USING DEDUCTIBLES AS A RISK MANAGEMENT TOOL con t Rhode Island Pool Municipal Members - $2,500 per occurrence School and Other Special Purpose District Members - $1,000 per occurrence Wastewater Treatment Facilities - Special deductible Refer to next slide 22

23 RHODE ISLAND TRUST SPECIAL DEDUCTIBLE Special deductible - Wastewater Treatment Facilities Special Deductible For the Wastewater Treatment Plant Complex at the Location specified above, the Insured Member Deductible specified in Section 2 of Insurance Certificate for Property and Liability Coverage Property Coverage, Buildings and Contents is not applicable. Instead, for buildings or structures that are deemed ineligible for NFIP coverage as defined by FEMA s latest guidelines, and which are part of a Waste Water Treatment Plant Complex which is located all or in part in Flood Zone A or V, such buildings or structures shall be subject to a per occurrence deductible equivalent to three percent (3%) of the value of the individual buildings or structures damaged as a result of Flood, or a $500,000 deductible per Location, whichever is greater. The value of buildings or structures not damaged by Flood at the Location specified above shall not be included in the base for determining the 3% deductible amount. The three percent (3%) deductible amount shall be calculated on the basis of the total value of the damaged building or structure that is listed with The Trust in the Insured Member s Statement of Values. 23

24 PRICING THE PERIL OF FLOOD Review NFIP base rates as a guide Pull Insurance Carrier filings for flood Reinsurer Assistance Own Experience 24

25 AFTER THE LOSS Activate the Disaster Recovery Plan Act Quickly reach out to your members Do you need help with outside adjusting firms Need to pay attention to cat loss adjustment expenses Do you need to advance funds to members 25

26 Federal Insurance and Mitigation Administration (FIMA) Resource Information What We Do FIMA manages the National Flood Insurance Program (NFIP) and a range of programs designed to reduce future losses to homes, businesses, schools, public buildings, and critical facilities from floods, earthquakes, tornadoes, and other natural disasters. Mitigation focuses on breaking the cycle of disaster damage, reconstruction, and repeated damage. Mitigation efforts provide value to the American people by creating safer communities and reducing loss of life and property. Mitigation includes such activities as: Enforcing stringent building codes, flood-proofing requirements, seismic design standards, and wind-bracing requirements for new construction or repairing existing buildings.

27 FEMA ORGANIZATIONAL CHART 27

28 Federal Insurance and Mitigation Administration (FIMA) - continued Complying with or exceeding NFIP floodplain management regulations. Adopting zoning ordinances that steer development away from areas subject to flooding, storm surge or coastal erosion. Retrofitting public buildings to withstand hurricane-strength winds or ground shaking. Acquiring damaged homes or businesses in flood-prone areas, relocating the structures, and returning the property to open space, wetlands or recreational uses. Building community shelters and tornado safe rooms to help protect people in their homes, public buildings and schools in hurricane- and tornado-prone areas.

29 Federal Insurance and Mitigation Administration (FIMA) - continued Mitigation s Value to Society Mitigation creates safer communities by reducing losses of life and property. Mitigation enables individuals and communities to recover more rapidly from disasters. Mitigation lessens the financial impact of disasters on individuals, the Treasury, state, local and tribal communities. The NFIP does more than make flood insurance available; it also supports local communities in their efforts to reduce the risk and consequences of serious flooding. In order to participate in the NFIP, a community must agree to adopt and enforce sound floodplain management regulations and ordinances. In exchange for these practices, FEMA makes flood insurance available to homeowners, business owners and renters in these communities. 29

30 ACRONYMS FEMA Federal Emergency Management Agency ISO Insurance Services Office NFIP National Flood Insurance Program SFHA Special Flood Hazard Area 30

31 RESOURCES Consumer/Agent Site Map Service Center ( ) FEMA NFIP Homepage s/nfip/ ISO www5.iso.com 31