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Horn Flashcards

1
Q

The National Flood Insurance Plan (NFIP) was instituted by

A

National Flood Insurance Act of 1968.

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2
Q

NFIP was created to serve what 2 interrelated purposes

A
  • Provide access to primary flood insurance
  • Reduce the nationwide comprehensive flood risk (financial risk and risk of human life) via development & implementation of floodplain management standards.
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3
Q

2 actions that NFIP requires of communities

A
  1. collaborate with FEMA to develop & adopt “Flood Insurance Rate Maps”
  2. establish minimum floodplain standards based on these flood maps
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4
Q

What will happen if NFIP is not reauthorized or amended by Congress by 7/31/18

A
  • The plan will not be able to issue new contracts
  • Contracts already inforce will continue until the end of their one year policy term
  • The authority for NFIP to borrow funds will be reduced from
    $30.425B to $1B
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5
Q

3 purposes of Flood Insurance Studies (FISs)

A
  1. Identify areas that have special flood, mudslide, and flood-related erosion hazards
  2. Assess the flood risk
  3. Designate insurance zones
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6
Q

Which zones in the FIRM are considered to be SFHA.

A

A, AE, AH, AO, V, VE, VO and VI-30

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7
Q

When does the “Coordinated Needs Management Strategy” recommend that flood maps be updated

A
  • Significant new building developments in/near the flood zone
  • Changes to the flood protection systems (e.g. levees & sand dunes)
  • Environmental changes in the community
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8
Q

List 2 circumstances that may require changes to the FIRM

A
  1. The natural elevation of the property was incorrect in the FIRM, and where it should not be considered to be part of the SFHA based on the correct elevation. (LOMA)
  2. The community believes that a physical development has reduced the flood risk for areas that were previously mapped in the floodplain. (LOMR)
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9
Q

Purposes of minimum floodplain management standards

A
  • Restrict development of land that is exposed to flood damage, where appropriate
  • Guide development of proposed construction away from locations that are threatened by flood hazards
  • Assist in reducing damage caused by floods
  • Improve the long-range land management and use of flood-prone areas
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10
Q

List examples of the requirements of the minimum standards for communities

A
  • Require permits for development in the SFHA
  • Require elevation of the lowest floor of all new residential buildings in the SFHA to be above the Base Flood Elevation (BFE)
  • Restrict development in the regulatory floodway
  • Require the use of certain construction materials & methods
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11
Q

Purpose of the “community assistance visits” (CAVs)

A

Ensure that the community is adequately enforcing the rules.

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12
Q

List some uses of grants from the Flood Mitigation Assistance (FMA) Grant Program

A
  • State & local mitigation planning
  • Elevation, relocation, demolition, or flood proofing of structures
  • Acquisition of properties
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13
Q

List the 3 types of Standard Flood Insurance Policies (SFIPs)

A
  • Dwelling
  • General Property
  • Residential Condominium
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14
Q

List examples of lenders that require the flood insurance include

A
  • Federal agency lenders (e.g. Department of Veterans Affairs)
  • Government sponsored enterprises (GSEs), Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac)
  • Federally regulated lenders (e.g. banks covered by the FDIC, Federal Deposit Insurance Corporation)
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15
Q

Why does FEMA encourage the purchase of PRPs?

A

This will:
* Reduce the financial impact of floods for a broader group of property owners
* Expand the policy base of the NFIP, which should improve its fiscal soundness

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16
Q

Purpose of increased Cost of Compliance (ICC) Coverage

A

It is possible that the community of a flood damaged building may require that the building be rebuilt to the current floodplain management requirements. This policy will offset the expense of complying with more rigorous building code standards that may be required.

17
Q

2 possible structures of using to private market to help administer NFIP

A
  1. Direct Servicing Agent (DSA): a private contractor issues policies directly from the NFIP
  2. Write-Your-Own (WYO): private insurers are paid to directly write and service the policies.
18
Q

List some forms of compensation provided to the WYO issuers

A
  • Operating & administrative expenses: marketing, operating & administrative expenses
  • Commission allowance: commissions/ salaries of agents
  • Growth bonus: increase in commission based on the extent to which the Company meets the NFIP marketing goals
  • ALAE: standard amount for each claim
  • ULAE
  • Special ALAE (SALAE): direct expenses above what is covered by ALAE
19
Q

Characteristics used by FEMA to classify policies for the purpose of determining rates

A
  • Specific risk zone on a FIRM
  • Occupancy type (single family, other residential, nonresidential, mobile/ manufactured home)
  • Other determinants of risk
20
Q

Describe the Pre-FIRM Subsidy

A

Congress has instructed FEMA not to charge actuarial rates to properties that were constructed or substantially improved before the later of the following 2 dates:
* 12/31/74
* the date upon which FEMA published the first FIRM for the community

21
Q

To what type of policies does the Newly Mapped Subsidy apply

A

Policies that were previously in zones B, C, X, D, AR or A99 that were mapped into a SFHA on or after 4/1/15, if the applicant obtained coverage effective within 12 months of the map revision date.

22
Q

Describe the Newly Mapped Subsidy

A

For the first 12 months after a map revision, these policies will receive a rate equal to the PRP rate (but with a higher Federal Policy Fee of $50 versus $25 that applies to the PRP). After the first year, the rate will gradually increase to the full-risk rate

23
Q

What types of properties do not qualify for the newly mapped subsidy

A
  • properties that are mapped into a SFHA by the initial FIRM for a community entering the NFIP
  • properties that were excluded due to loss history
24
Q

Describe “grandfathering” the Cross-Subsidy

A
  • FEMA allows property owners to maintain their old flood insurance rate class if their property is remapped into a new flood rate class.
  • Policies may also be grandfathered if the elevation of a base flood zone changes in the map, but the property does not change flood zones.
25
Q

Goal of the Community Rating System (CRS) program

A

Encourage communities to improve the minimum floodplain management standards that are required to participate in the NFIP.

26
Q

How are points in the CRS determined:

A

Based on how the community:
* informs its public about the flood risk
* maps & regulates it floodplain
* reduces possible flood damage
* provides immediate warnings
* responds to flooding incidents

27
Q

2 ways in which FEMA will remove a community from the NFIP

A
  1. probation
  2. suspension
28
Q

Why could a community can also be suspended from NFIP

A

Either:
* failing to adopt an approved floodplain map & an approved set of floodplain management standards within the time period set by regulations
* repealing/ revising its floodplain management standards below the minimum level set by regulations

29
Q

Consequences for communities that have been suspended, and for those that do not participate in the NFIP

A
  • the members of the community will not be able to purchase flood insurance through
  • if the community has been previously mapped by FEMA for flood hazards, it will be difficult for the community/ policyholders to access other forms of federal assistance for areas in the floodplain
30
Q

3 sources that NFIP funds

A
  • Receipts from flood insurance premiums, including fees & surcharges
  • Direct annual appropriations for specific costs
  • Borrowing from the U.S. Treasury when the balance of the NFIF is insufficient to pay the NFIPs obligations
31
Q

Purpose of the Terrorism Risk Insurance Act of 2002

A

Give the insurance industry time to gather the data and create the structure & capacity to be able to offer terrorism coverage.

32
Q

Briefly describe the changes implemented when TRIA was extended in 2005 and 2007

A
  • 2005: focused on reducing the governments up front financial exposure
  • 2007: accelerated the post event recoupment provisions It also expanded the coverage to include domestic acts of terrorism

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