Flood Insurance: This is Not Going Well!

by Oct 3, 2016

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I recently read an interesting article in the local paper about the Community Rating System (CRS) for the National Flood Insurance Program (NFIP). It is a floodplain (zone) management initiative in which communities can earn up to a 45% reduction in flood insurance premiums, if they exceed the minimum flood protection standards of the National Flood Insurance Plan. That is really great news.

When I Googled CRS to find out more about the requirements to achieve better flood rates it led me to a series of articles about Louisiana, and specifically Saint Charles Parish, which is just west of New Orleans. The city had successfully appealed to Federal Emergency Management Association (FEMA) and many of its flood insurance buyers had the flood insurance premiums reduced from $2,500 a year all the way down to $450 per year.

That article was published on September 27, 2016.

Those rate reductions appear to be a serious misstep on the part of FEMA when in early August 2016 torrential rains prompted a flood emergency for Saint Charles Parish and generated an application for $15 billion in Federal Aid due to the devastating floods, in what was identified as a rare storm the likes of which happens once every 500 years!!

And this is not the first disaster to overwhelm the system. Superstorm Sandy left $9.2b in claims in its wake, increasing the Flood program debt to $29 billion. The average flood premium would need to go up 450% to keep pace with current claims. Who is going to pay those premiums?

Flood insurance rates going down, storm frequency and severity going up. Where do we go from here?

If you have questions email Kyle at or call 203.698.9342.

Written by: Steve Shepard

Founder/Principal, Shepard Insurance Group. At Shepard Insurance Group we begin every relationship with a face to face meeting with the client. In a comprehensive discussion of coverage needs, personal concerns, objectives and finally appetite for risk, we can arrive at the proper insurance solution. Understanding the client is the first step to accurate execution.

October 3, 2016

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