 Good afternoon, everyone. My name is Carol Werner. I'm the executive director of the Environmental and Energy Study Institute. We are glad that you are with us this afternoon for this a little too timely briefing that is taking a look at the National Flood Insurance Program, critical issues and needed reforms. I want to tell you just a little bit about EESI and why we are doing the briefing today and the whole series of briefings that we've been doing on resilience issues. EESI was formed back in 1984 by bipartisan congressional caucus. We are not Congressional or federally funded at all, however, but we were charged then and we have continued to pursue this as our mission in terms of providing timely, credible information to policy makers and their staffs on environmental and energy issues that confront the country and to look at issues that are either before them or that are likely to be coming before them. What we have tried to do is to provide solid, credible information to bring forward a variety of perspectives across sectors as well as to also provide the opportunity to really look at the kinds of problem-solving solutions that can be when, when, and sometimes when that are being tried, being thought about again across sectors and across the country. So we want to bring forward kind of the best experience, the best knowledge that we can so that it is an opportunity for policy makers to be able to hear the latest kinds of information and thinking that is available. Today's briefing, as I mentioned, is a little, perhaps, feels a little too timely in certain respects in that on May 31st, the National Flood Insurance Program is, its authorization expires, it's already gone through a number of extensions. It's been very, very difficult to deal with, so we're hoping to hear from some, to learn a lot more about the program today, what it does, what it tries to do, and what some of the problems are and what are some of the reforms and how to best go about that. And I also have to tell you yesterday afternoon I was flying back from Omaha and I'll tell you I was sitting next to someone who worked at Off-It Air Force Base and also as we flew over the area around Omaha, Western Nebraska and Western, or Eastern Nebraska and Western Iowa, there is still so much water everywhere, still communities that are pretty shut off or having to find very circuitous routes in order to get to their destinations. And this was from flooding, massive unprecedented flooding in that area from several weeks ago. So it is pretty grim and obviously lots of issues, lots of problems, lots of heartache and lots of dollars. So today we are going to hear from a panel that knows so much about this issue. So we feel very honored to have been working with a coalition that is looking at what is known about dealing with floods, dealing with floodplains. How do we deal with this in terms of thinking about the private insurance sector? What is the role of the federal government? How do we best proceed with regard to this? So to kick off our panel today, I can think of no better person to help us set the context and to look at this than Diane Horn, who is an analyst in flood insurance and emergency management with CRS, the Congressional Research Service, Government and Finance Division. So Diane's current focus at CRS is to provide analytical support for the reauthorization of NFIP or the National Flood Insurance Program in other issues related directly to flood insurance. She also works on hazard mitigation. And before coming to CRS, Diane was Professor at Birkbeck College, the University of London, Diane. Okay, thank you very much. I know that most of you are already familiar with CRS, but I'm going to start with just a quick plug for us. We're going to be doing another couple of seminars, probably next month that focus a little bit more on reauthorization. And we're also going to be doing a joint CBO CRS seminar, Unexpected Costs and Storms, Implications for Disaster Assistance, the NFIP and Policy Options, which will also be sometime in June. So watch out for those. Today, I'm supposed to be talking about history and overview of the NFIP. Obviously, I can't do all of that in 15 minutes, so it's going to be sort of selected highlights. And this slide shows just some facts and figures for the NFIP, which is the main source of flood insurance coverage for domestic properties in the U.S. There are about 5.1 million NFIP policies that provide about 1.3 trillion in coverage. And the NFIP collects about $4.6 billion in annual premium revenues, fees and surcharges from the policyholders. There's a little bit over 22,000 communities in all 50 states, five territories, and District of Columbia participate in the NFIP. And according to FEMA, the NFIP saves the nation and estimated $1.87 billion annually in flood losses avoided because of the NFIP's building and floodplain management regulations, which Chad is going to talk a bit more about in the second talk. And as you can see from the figures, flood is a significant driver of natural catastrophe losses in the United States. Between 2010 and 2018, all 50 states experienced floods and many of the territories did as well. And the figures on this slide are for total flood losses, not NFIP claims, which in most cases were much less. 2016, the total flood losses were about $28 billion. The two major events were Hurricane Matthew and the Louisiana floods. In 2017, the total flood losses were $276.3 billion. Sorry, and that was the most costly year on record in terms of flood losses in the U.S. Of course, the big events were hurricanes Harvey, Irma and Maria. 2018, total flood losses about $49.4 billion. And the two big events were hurricanes Florence and Michael. We don't have any idea yet what the flood losses are going to be for this year, but we do know that the estimates just for the Midwest floods in March alone are over $4 billion. Of course, the floods are continuing and they're predicting more rain for this week. And the latest figures that I heard is that the rains, the floods are going to continue at least into June. Most of you probably know the NFIP started in 1968. It's not just an insurance program from the very beginning risk reduction was part of the NFIP remit. The ultimate goal is to reduce flood losses through a combination of insurance and mitigation. So it had two main purposes. The first was to provide access to primary flood insurance through to properties with significant flood risk who might not otherwise be able to obtain insurance or possibly not afford it. The second was to reduce flood risk through the adoption of floodplain management standards, which again Chad will talk about a bit more. The longer term objective was to try to reduce federal expenditure on disaster assistance after floods. And the NFIP is different from other disaster assistance programs. It's not funded from the Disaster Relief Fund. It's not funded by the taxpayers. The policyholders fees and premiums pay for almost all of the NFIP program, so it's a way to get people to contribute directly to the cost of disaster relief, which is not the case for most of the other disaster programs. Now one of the things that I'm sure that all of you know is that the NFIP has to be reauthorized by the end of May. It has had 10 short-term reauthorizations since the end of September 2017, which was in the last long-term reauthorization ended. If it's not reauthorized by the end of May, certain authorities will expire. The first is that the authority for the NFIP to borrow funds from the Treasury will be reduced from the existing $30.425 billion to $1 billion. The second is that the authority to provide new flood insurance contracts will expire. If your flood insurance contract is enforced, it will remain enforced, but they will not be able to issue any new flood insurance contracts. This is important because properties which are mapped into the high flood risk zones must have flood insurance to get the federally backed mortgage. If the NFIP lapses, they won't be able to get mortgages. The NFIP has lapsed before, and it has lapsed for significant periods of time. In 2010, it lapsed for a total of 53 days. The longest one is it lapsed for the entire month of June. Unfortunately, we don't have any authoritative figures. They never did a study by GAO or anybody afterwards, so we have to rely on the figures from the National Association of Realtors, but according to them, that there was something like 40,000 home sale closings that were either canceled or delayed during that one month when the NFIP lapsed. So the one message that probably all of your bosses are hearing from is don't let the NFIP laps. The NFIP, in terms of its structure, is a voluntary program. Communities are not required to participate in the NFIP. They volunteer to participate in order to obtain access to flood insurance. It's sort of a carrot and stick approach. The availability of the federally backed flood insurance is tied to the adoption and enforcement of floodplain management standards by the participating communities. FEMA sets out the minimum standards it requires for participation in the NFIP. Although these standards appear in federal regulations, the standards only have the force of law because they are adopted and enforced by a participating community. Communities can choose to adopt higher standards. One of the ways that it can do this is through the community rating system where they get points for certain activities. The more points they get, the bigger a discount. The members of that community will get on their flood insurance premiums. A community can also choose not to participate in the NFIP possibly because they think they have little or no flood risk. They can withdraw from the NFIP, they can be placed on probation and ultimately suspended from the NFIP. If they don't adequately enforce the floodplain management regulations that they have adopted. If you're a resident in a community that isn't in the NFIP either because it's withdrawn or because it's been suspended, obviously you won't be able to purchase flood insurance from the NFIP which means you may have significant uninsured losses. More seriously, you may not be able to access certain types of federal assistance after a flood disaster. You may not be able to get certain types of individual assistance from FEMA or small business administration loans. Another important activity that the NFIP does is to do floodmaps which again Chad's going to talk about a bit more. FEMA develops in coordination with participating communities. Floodmaps which are called flood insurance rate maps or firms that do pick the community's floodplain and flood risk zones. But it's the community's flood map not FEMA even if FEMA does the mapping. The community has to adopt the map before it comes into force. And when people talk about being mapped into a flood zone, what they're really talking about is the special flood hazard area, special flood hazard area SFHA. And this is defined by FEMA as an area with a 1% annual chance of being flooded in any given year. This is the same thing statistically as the 1 in 100 flood but FEMA prefers not to use that terminology. If somebody hears that they're in the 1 in 100 floodplain and they flooded this year, they may think that they don't have to worry about flooding again for another 100 years. So FEMA says if you have a 1% chance of flooding in any given year, it may get across the idea that you could flood again next year. And certainly places like Houston, we saw that they had the 100 year flood or greater in 2015, 2016 and 2017. And obviously there's a risk of flooding outside the special flood hazard area as well. And you can buy flood insurance if you're outside the special flood hazard area. It's a lower cost policy called a preferred risk policy. And according to FEMA, over 20% of their claims in the NFIP or for policies, properties outside the special flood hazard area. And certainly the recent floods, starting with about the 2015 South Carolina floods and going through the Baton Rouge floods in 2016, hurricane Harvey right through to Hurricane Florence, have showed that the flood losses outside the mapped flood plain are increasing. And one of the problems that it also illustrates is that a lot of people don't realize that flood is not covered by normal homeowners or renters policy, that you have to buy a separate flood insurance policy. The only people though who are required by flood insurance under the mandatory purchase requirement is properties that are mapped into the special flood hazard area that have a federally backed mortgage. And by that we mean a mortgage from a direct government program like VA or FHA government sponsored enterprises like Fannie Mae or Freddie Mac or banks with deposits that are insured by FDIC. That's of course the large majority of mortgages. The mandatory purchase requirement has to be enforced by the lenders. FEMA has no idea who has mortgages, much less who has federally backed mortgages. And property owners that fall under this mandate can either purchase flood insurance from the NFIP or they can satisfy the mandate with private flood insurance under certain conditions. Now the other thing that most people know about the NFIP, that know about the NFIP is that it's in debt. So it's worth saying that the NFIP was not designed to retain funding to cover claims for extreme events. This isn't a failure of the NFIP, but part of the design. There was a recognition from the beginning that there might be truly exceptional events for which the program would have to borrow money from the Treasury and pay it back with interest. And this worked for the first 36 years of the program. Until 2005, the NFIP was self-supporting for the average historical loss year, which means that the operating expenses and the claims, the cost of mapping and floodplain management were all paid for by premiums collected from flood insurance policies, not by the taxpayer. And in 2004, the NFIP had no debt whatsoever. And then that all changed in 2005 because of the extreme nature of the hurricane season. The photograph that you can see there, I'm sure you all recognize, that's New Orleans after Hurricane Katrina. Katrina is the one that everybody's familiar with, but the 2005 hurricane season was truly extreme. We went through the entire alphabet. We went into the Greek alphabet as far as Zeta. The last hurricane of the 2005 hurricane season was in January 2006. Even then there was another storm brewing up and they decided to just call it at that point. So after the 2005 hurricane season, the NFIP was $16.8 billion in debt. That graph shows the debt of the NFIP from the beginning in 1968 through to 2018. And you can see that there were years when they had a debt they borrowed from the Treasury, they paid it off. And then you see that steep jump in 2005. And basically since then the program has been carrying the debt from the 2005 hurricane season. They increased the borrowing limit after Sandy to the current $30.425 billion, which is what it's at now. And then of course we came to the 2017 hurricane season, the NFIP is still paying claims. So the most recent figures I've had from FEMA is that they've paid about $10.1 billion for Harvey, Irma and Maria. It could have been a lot worse, but actually an awful lot of people didn't have flood insurance. So I just look a little bit closer at the borrowing associated with 2017 hurricane season. At the beginning of 2017, the NFIP borrowed about $1.6 billion. That was to cover the losses in 2016, the Louisiana floods and Hurricane Matthew. So when Harvey hit, the debt was at $24.6 billion. They had $5.825 billion left in its borrowing authority. They borrowed that on September 22, 2017. Now that date is critical because Harvey had hit, Irma had hit, Maria hit on the 20th of September. So the three storms had hit, but they had no idea what the losses were going to be, particularly from Irma and Maria. And of course, they didn't know what the rest of the hurricane season was going to be like. But it was clear that the NFIP was not going to have enough money to pay the claims from Harvey, Irma and Maria since they'd hit their borrowing limit. So at that point, Congress had to either raise the borrowing limit above $30.425 billion or they're going to have to take some other action. And at that point, they actually canceled $16 billion of the NFIP debt. That's the only time in the history of the program that any debt has ever been canceled. And that also was the first time that the taxpayers have ever been on the hook for NFIP debt. Up until that point, the NFIP debt was basically just hanging around the necks of the NFIP policyholders. And at that point, they canceled it. And of course, then it was attached to the general taxpayer. And then in November, they borrowed another $6.1 billion. And so the debt currently is at $20.525 billion. So this slide just shows a close-up of what's happened in the 2000s. The dark blue lines are all 2017. So you can see the initial borrowing for the 2016 hurricanes then for Harvey Irma and Maria. Then it drops down when you see the cancellation of the debt and then going back up. And it doesn't change for 2018. Basically Florence and Michael as bad as they were. The NFIP has not had to borrow to cover the costs of those. So the financial standing of the NFIP changes every week. They're paying claims every week. They're also bringing in premiums every week. The most recent figures I had from FEMA are not entirely up to date. But at that point, they had about five and a half billion available split between the National Fund Insurance Fund and the Reserve Fund. They still have $9.9 billion in the borrowing authority available if they need to borrow it. Since Katrina, the NFIP has paid $4.2 billion in interest, has made six repayments on principle of $2.82 billion. So they've paid a lot more in interest and they've repaid in the principle. And they're actually paying between $375 and $400 million a year in interest. And FEMA's view is that even if they had a number of good years without serious hurricanes, the NFIP probably would not come close to repaying the debt and it's going to be more difficult if the interest rates rise. And I wanted to finish with some potential issues for reauthorization. And that bottom slide is the Air Force Base in Nebraska. I'm not going to say a whole lot about reauthorization just because, as I said, we will be doing some seminars on them. JIO published a report in April 2017 where they examined the actions that Congress and FEMA could take to reduce federal fiscal exposure and improve national resilience to floods. They recommended that Congress should consider comprehensive reform in the six areas listed there. They said that all of them needed to be considered because if you change one, it could change the others. Obviously, these reflect challenges that the NFIP has had since the beginning. I would actually add two more issues, flooding outside the map to floodplain and future catastrophic events, things which have been illustrated by the last two hurricane seasons. And I'll stop there. Thank you. Thanks, Diane. That was extremely sobering. We are not going to hear from Chad Bergenus, who is the Executive Director of the Association of State Floodplain Managers, ASFPM. He's been Executive Director and on the staff there since 2011. However, he's been involved in floodplain management issues, hazard mitigation, and land use planning across many sectors in terms of looking at the state, local, and private sectors. So that gives him a lot of experience in terms of having worked at the state level in Ohio's floodplain management program and where he was Ohio State Hazard Mitigation Officer. And then he also was a local official in Perry County, Ohio, where he was responsible for planning, economic development, and floodplain management programs. And then he also was in the private sector where he was the National Practice Leader in Hazard Mitigation for Michael Baker, Junior Inc. So while at the State Floodplain Manager Association, he's held a number of rules there, in addition to being Executive Director, where he has been the Chair of the Insurance Committee. He has also been the coordinator of the Mitigation Policy Committee and as well as Vice Chair and Chair. So he has sort of seen floodplain management across many, many different roles and perspectives. And that particularly equips him for the role he has both here today, but also in terms of his day job. Chad. Great. Thank you very much. Appreciate the opportunity to address everybody. And on a topic that is very important to the Association of State Floodplain Managers, the National Flood Insurance Program. Now I'm going to start off by saying I hate the name of the program. I got to get that off my chest because it implies that this is really just focused on insurance. And I've personally been a part of the last three authorizations going back to 2004. And unfortunately, more recently, the conversation kind of disassociates insurance from everything else in the program. I could think of alternative names, but the point is this is the nation's primary program for dealing with flood risk. We have programs across the federal government, across agencies, you know, whether it be the Corps of Engineers and structural flood control programs, you know, through the Department of Agriculture and conservation programs. But the NFIP is really the biggest of them all. And it's in its very widespread in its adoption and use. And I hope to through my talk talk about these other pieces of the NFIP that aren't necessarily insurance. And so a lot of us talk about the NFIP in terms of a four legged stool. It has the insurance component, it has the mapping component, the regulations, and then this this interesting mitigation piece. So I want to start off by talking a little bit about flood mapping and really appreciate a Diane's introduction to some of the terminology and things. And so mapping currently provides the basis for insurance rating. It's the basis for the in out determination for mandatory purchase requirement. And but the mapping also has some limitations and it's important to know realistically what mapping does and what it doesn't do. And in all of these remarks, I'm going to be talking about the program kind of looking under the hood. And I don't and so the comments aren't necessarily meant to be critical. But as your bosses are really thinking about NFIP reforms and ideas, want to show where some of maybe the shortcomings are in the program itself and some opportunities for improvement. One of the big messages on mapping is that the maps really only show two types of flooding. This 100 year 1% chance flood and the 500 year or the point 2% chance annual flood. That's it. Okay, we got a lot of flood risk in this country, though. We have flood risk due to urban stormwater flooding. You saw a lot of that in Harvey. We have flood risk due to potential failures of dams who remembers Oroville in California fairly recently. And we got phone calls into our office at ASAPM headquarters from downstream and actually another federal government agency wondering if we knew what the flood risk was downstream of that dam, because from a policy standpoint, one of the problems we have right now is that we have some federal policy directives that basically call that kind of information for official use only. It's not easily publicly available, which is I think problematic. One of the other things, though, about mapping is that we've only mapped about a third of our stream rivers and coastlines in this country. So we have about three and a half million miles of stream rivers and coastlines, and we've mapped about 1.2 million miles of it. So let that sink in a little bit. I mean, we talk about, you know, there's people get very riled up when they're put in the floodplain when the FEMA flood maps are updated or taken out, but we're only talking about some of the floodplain. So even those floodplains that are that 100 year or the 500 year, we've only mapped a third of those. Now, one of the big things Congress did in 2012 is they authorized, actually, Congress authorized the National Flood Mapping Program. It's a component within the NFIP, but it was the first time that mapping in and of itself was specifically authorized as an activity. And what that really means is that there's a mandate to do mapping, not just to support insurance, not just to support land use, but in and of itself it's a worthwhile thing to do. And so the requirements in the National Flood Mapping Program are the 100 year, the 500 year, future risk areas, current risk areas, areas of residual risk, including dam failure or levee failure, as well as protected areas of those. And then we have this new phenomena that's come out called urban flooding. And there's been some different legislation drafts that I've seen that even have urban flooding as maybe a new flood risk to map and identify. So all of these, I think, are worthy and important ideas. And this is also one of the reasons why flood map funding becomes very important. So I want to just give you an example. So today's flood map isn't like yesterday's flood map. This is actually a picture from FEMA's National Flood Hazard Layer. And what you'll see, and the pointer's not going to show it, but you see kind of a main blue shaded main river and you have two tributaries that actually have some mapping. All that green there is basically cornfields. This is in Western Licking County in Ohio. It's the county I lived in. And you have a subdivision that circled there, subdivision called Cameron Chase. So here you actually have all the other data taken off, but this just shows kind of the streams in the area. So again, what do we see? We see probably one, two, three, four, five, six tributaries off of that main stream. And go back. How many tributaries does FEMA map there? Two. Got six. We've mapped two. And the two that are mapped aren't mapped to its full extent. I point this, I use this illustration because Cameron Chase subdivision is 18 miles due west as a crow flies from the center of Columbus, Ohio, major metro area, about two million people. Rapidly urbanizing, these are all cornfields, but you can see the subdivisions that are being built there. This will all be developed. And we wonder why flood losses are increasing. They're increasing because we've not mapped ahead of the development. With only one third of the stream miles mapped in the country, we can't realistically get our ourselves ahead of this problem because we've not mapped the areas before developers and everybody else comes in. There aren't rules that apply to those. And we're building today. We're building tomorrow's flood problems. That's an issue. And that's why mapping is very important. By the way, there's one of those tributaries goes right through Cameron Chase. Lickin County has these higher standards that Diane referenced. They force you to map anything that conveys water. The floodplain of a creek that you can hop across is 300 feet wide in that subdivision. That's what we're talking about floodplain management. Yes, coasts are important. Yes, the big rivers are important. But these little tributaries, this is where a lot of the houses are also being developed. And this is why mapping is such a critical piece of the NFIP. In terms of regulations, floodplain management regulations through the NFIP are the most widely adopted set of land use or zoning type regulations in the country. Now, there's a bit of a mythology about building codes because every state, I believe, except one has a state building code. So it's assumed that we have building codes in communities everywhere across the country. And that's actually not true. And a partner of ours, the Federal Alliance for Safe Homes, actually has some new research that they have just a big project. And I forget the name, but you can look at it on their website that talks kind of about this reality of building codes adoption in the country. So NFIP minimum standards are adopted by over 22,000 communities in the United States. That gives us pretty good coverage, right? Now, the minimum standards of the NFIP, the building standards, haven't been updated really since the 1970s. They were updated a little bit in the 1980s. We've learned a lot about flood risk management. But from a congressional standpoint, probably one of the things we don't necessarily want Congress to do a whole lot, they aren't necessarily building code managers. So prescribing specific building code measures may not be the most effective way. But one of the things that we can do is try to equip communities and equip states to better handle those regulations and those programs and administer those a lot better. And so there is a, in each state, there's a state coordinating agency for the National Flood Insurance Program. That's a program I worked for for 10 years in Ohio. And we helped all of our 750 communities in the state not only participate in the program, provide technical assistance. And again, that's an important feature of the NFIP. The NFIP helps enable and maintain capacity to do floodplain management, to adopt these regulations and to enforce those. Now, from the regulation side, I always kind of, I've always joked, the regulations really tell you how to build in a floodplain somewhat more safely. I mean, that's the reality of the regulations. They don't mandate that you can't build in a floodplain and those kinds of things. The elevation standard is to that 100-year flood, the base flood elevation. And they typically don't steer development away from flood hazard areas. There's been a lot of policy discussion on this, you know, land use authority rests at the state and local level. And, you know, whether or not the NFIP should have some of these higher standards baked in there, you know, one of the main purposes that people forget in the original act was to steer development away from hazardous areas. I would actually say that's one of the purposes that we've not even come close to realizing the potential of the NFIP. But it's something that was part and parcel of the program at least intent since the beginning. The area that is the most challenging, you know, from regulations by far is after a disaster. There's a requirement called the substantial damage requirement. And basically it means any building that's damaged more than 50% of its market value has to come into compliance with the current codes. Okay. And so when you had like the Louisiana flooding, I believe in 2016 in the Baton Rouge area, that was, there were, I think close to 200,000 homes maybe that were inundated in a lot of those in floodplain areas. So think about that local permit official. Maybe you have a staff of two or three people if you're in a big community, but then you have tens of thousands or in the case of Houston after Harvey, over 100,000 buildings that you have to do inspections, you have to do code enforcement, and you have to then approve the whole permitting process afterwards. It's a lot of work. And that's where the NFIP the standards require it. But then some of the programs like the Stafford Act programs come in and help provide some of the resources to help that way. But post disaster substantial damage, that's where that's where the most difficult decisions are. And it's also where I've spent more, I've been to many council meetings, trying to talk communities out of repealing their regulations because they feel like they're making people making it easier for folks to rebuild. But in reality, when you do something like that, you're actually setting yourself up for the next disaster. Okay. So it's a difficult situation. I've dealt with it as a local and a state official. But it's something that is critically important on in the NFIP. All right, so the third leg that I'm going to talk about and leave the balance to my good colleague, Sam, we'll talk more about the insurance is the mitigation piece. There are two mitigation functions within the NFIP one of them is actually through the insurance called increased cost of compliance. It's a mandatory coverage of every NFIP policy that you have an ICC element to that. And it provides up to $30,000 to come into compliance with the code. Now, typically for residential structures, that means elevate, but you can also relocate it to a non flood prone site. For non residential structures, you have the additional option of dry floodproofing. $30,000 doesn't go very far these days. The typical cost of elevation now where I'm at in the Midwest, if you're an older frame home with the basement, you can actually cover a lot of the costs there. But if you're down in Louisiana where you're elevating a slab on grade home, you're probably talking 70 to $125,000 to elevate one of those buildings. And so one of the ICC complaints I know that floodplain managers and property owners have is that that coverage is just too low. And it doesn't really cover the true cost of doing the mitigation that is requirement. Fred is basically an acronym for floodproof, relocate, elevate or demolish. So those are the eligible types of mitigation activities in ICC. With flood mitigation assistance program, this is actually a grant program. And if a property has an NFIP policy, it can be eligible for flood mitigation assistance. Between ICC and FMA, FEMA mitigates approximately 2,000 structures a year in terms of reducing risk. Now it doesn't sound like a lot, but again it's chipping away at the problem. And from ASFPM side, you know, we've always advocated for strong ICC component, strong FMA component. And right now FEMA has chosen to kind of prioritize FMA to the severe repetitive loss and repetitive loss structures. But it can be used, and we did this in Ohio, it can be used things for like stormwater type projects that reduce flood risk in an entire neighborhood. Or even some of those kinds of projects that maybe address some green infrastructure type things as well. So FEMA, one of the things that they've actually done really well with these projects is not only try to anticipate the broad variety of things that you can be eligible for, but they've increased, they've also included as part of cost-benefit analysis, natural functions. So you can actually, when you determine whether or not something's eligible, you can throw in some of the natural benefits of floodplains and flood plain management. So with that, that concludes my discussion on the three legs of the tool. And if I have a concluding comment, I think it's this, is that as you contemplate reforms to the NFIP, understand that all four legs of the program do not exist in a vacuum. If you change one of them, you have a potential of changing one, two or three of the other legs. And we've had far too many conversations, I think, on reform, just choosing one of the legs irrespective of the impacts on the others. And I will stand here today to say this is the most widely adopted and used flood risk management program in the country. As Diane had said, we save almost $2 billion a year and losses avoided due to floodplain regulations. We, FEMA mitigates about 2,000 structures a year when it comes to the mitigation programs. And we've mapped 1.3 million miles, have the world's most comprehensive set of flood maps. So there's a lot of good in this program. And as we think about reforms, let's make it better. Thank you. Thanks so much, Chad. And I think your advice is so well taken in terms of understanding how all of these components really are critical to each other, work together, need to work together. And so that we, as we think about reauthorization, how it really needs to be thought about in that kind of a holistic way so that we truly can get the best out of all of the components by addressing it as a whole. So I think that's a really important takeaway from today's briefing. So we are not going to hear about this other leg of the stool. And we're going to hear about that from Samantha Medlock, who is Executive Vice President, North America Head of Capital Science and Policy with Willis Towers Watson, where she is advancing insurance capabilities to address risk and resilience requirements for the corporate and also public sector clients. She brings more than 20 years of experience in land use and disaster law, has testified in Congress on flood risk, levy safety, and resilient recovery from disasters, how to do that. She was a senior advisor in the Obama White House coordinating across the administration to reduce risk and costs of disasters, and was a recipient of the Army Commander's Award for Public Service for her service after Hurricane Katrina. Sam serves on the advisory committee for the Natural Hazard Center at the University of Colorado Boulder. So it is a pleasure to welcome you, Sam. So we're going to dive right in. Part of my role now is to walk you through risk transfer and ways that reinsurance can be used to stabilize the National Flood Insurance Program and other programs across the federal enterprise. Reinsurance is fundamentally insurance for insurance companies, and it's a way for insurers to lay off parts of their portfolio risk into the private markets and into the capital markets. So I'm going to go through a very brief history of reinsurance as it's been applied to the National Flood Insurance Program, with first Congress authorizing FEMA to engage the private markets through action in 2012 and then again in 2014. In 2015, a flood insurance risk study was completed to look at the feasibility of reinsurance for the flood program and the benefits. And then in 2016, there was a test placement of reinsurance to exercise some of those administrative operations for FEMA through a small test placement of reinsurance that was structured to be triggered and indeed it was. And so it gave FEMA and the the reinsurance community the chance to kind of exercise those functions and make sure that things would work. In 2017, FEMA secured over a billion dollars of traditional reinsurance coverage from about 25 reinsurers. And with those 25 reinsurance markets, it really laid the cornerstone for a multi-year strategy to diversify the tools that FEMA uses to manage the financial consequences of major flood risk. We heard from Diane about the the debt that the flood program is in. What I emphasize is that reinsurance at these levels is not going to be designed to pay off the debt. What it's really designed to do is to stop the bleeding and prevent the program from sinking further into debt in some of these major catastrophic losses. We also saw through that 2017 placement that it paid off for the American taxpayer pretty early on. So as of May of 2018, FEMA had paid NFIP policy holders over eight billion dollars in claims resulting from Hurricane Harvey. And through that FEMA was able to recover the entire 1.042 billion in reinsurance as of the end of 2017. So by essentially putting some of that risk into the private market, it paid off almost immediately. Then in 2018 we see FEMA securing 1.46 billion dollars again in traditional reinsurance from 28 reinsurers. This agreement was structured to cover 18 percent of losses between four billion and six billion. So this is what's known as an excessive loss reinsurance program. So anything between four and six billion, you take 18.6 percent of that, that is covered by those 20. This time it was 28 reinsurers and then more than 50 percent of losses between six billion and eight billion. So the idea is in those major loss events we've got more stability for the program and fundamentally capacity to pay claims without having to sink the program further into debt. We also saw in 2018 FEMA engaged a catastrophe bond for the first time. This is yet another form of reinsurance by transferring this time 500 million dollars of the NFIP's financial risk to capital markets investors who are sponsoring that catastrophe bond. This is a three-year agreement that's designed to operate between August of 2018 and July of 2021. So this is a reinsurance or catastrophe bond agreement that's still operating to cover 3.5 percent of losses between five and ten billion and then 13 percent of the losses between seven point five and ten billion. So the way that this is structured again is you've got that that payout available in the event of some of these major losses where between seven point five and ten billion you're drawing not only from the three point three point five percent but also an additional 13 percent. So combined with that January 2018 reinsurance placement FEMA transferred nearly two billion dollars of the NFIP's loss for the 2018 season into the private sector. Cat risk is a catastrophe modeling firm that analyzed the NFIP risk as a portfolio and that analysis was provided to investors. Most recently in January 2019 we see the program again going back to the market. This reinsurance placement again is a traditional reinsurance placement on a one-year program to cover all flood losses in all geographic areas. So that is to say it's not just for named storms and it covers everywhere that the NFIP writes flood insurance. So it's structured to cover 14 percent of the losses between four and six billion and then 25 percent of the losses between six and eight billion and over 26 percent of the losses between eight and ten billion. But in this way FEMA is doing what insurance companies have done through reinsurance and the catastrophe bond the capital markets for more than 10 years and even before that. So for example we see the California earthquake authority that has been actively engaging reinsurance and capital markets as well as Florida citizens and others. So we we see opportunities for the for the federal enterprise to lay off more of its risk. If you're curious also Fannie and Freddie have engaged reinsurance as well as the XM Bank. So what are the opportunities that think about this for things like crop insurance or other GSEs across the federal enterprise that are engaging mortgage markets. I want to talk about the fundamentals though of where it really begins and that's with risk analytics. So historically flood is is a complex peril to model. It can be challenging. There were technological barriers that made it difficult to adequately generate a complete view of flood hazard throughout the United States and one of the for all of its strengths and the amazing resources that the national flood insurance program provides. It has had the effect historically of of perhaps not having quite as much interest to stimulate a private flood market here in the United States. So commercial vendors didn't invest a lot in developing catastrophe models around flooding. But that is starting to change. There have both been technological advances and we'll take a closer look at that. We've also seen a stronger flood insurance market here in the United States both for supporting the national flood insurance program but also for developing innovations that harmonize with that program and we'll talk about some of those examples. I won't be labored the great points that Chad and Diane have already made particularly on some of the limitations of FEMA's mapping but I want to illustrate a couple of examples for you. In the top we see the product of that is the U.S. flood layer through the national flood insurance program with those red boundaries showing the special flood hazard area but you're not getting the tributaries and Chad did a great job of walking us through specific examples for a community in Ohio of that. They're in the lower level what you're able to see are some of those tributaries and smaller streams and so catastrophe modelers here in the U.S. working on flood risk are able to depict that and present that information for state and local government so that it can be informing their mitigation decisions as well as developers and policy holders who are thinking about whether or not to purchase flood insurance if they are outside that special flood special flood hazard area and may not be under a federal mandatory purchase requirement but are still facing risk that is very real. We also see here on the left again we're seeing the FEMA's data depicting that very binary relationship you are either in or out on the right we see a depiction this is in Coral Gables Florida of cat risks data that shows that there is in fact a fair amount of risk outside that map special flood hazard area to be informing and prioritizing some of the decisions around mitigation and the purchase of flood insurance. What cat modeling also enables us to do is portfolio analysis for an insurer it might be a right your own that is writing flood insurance under the national flood insurance program it might be a reinsurer that is purchasing some of that risk and taking that on in exchange for a premium it might be a local government. So in this case we're looking at Pensacola Florida and locations that have been noted by FEMA as minimal risk but under cat risks flood models we're seeing that there is risk of flooding there and by being able to look across the portfolio of assets for a local government like where are all of their public buildings where are their schools where is their infrastructure you can be helping local leaders understand their risk and make better decisions about managing that risk and prioritizing the mitigation actions that they can be undertaking. I would also note that there are other flood modelers that are out there RMS and AIR also do excellent work we're just using cat risk as an example because their inland flood model is pretty good. I'm going to change direction here just a little bit and talk about some of the innovations that are harmonizing with the national flood insurance program this is not intended in any way to supplant the indemnity based flood insurance policies that folks should be buying but it can be a way of augmenting that and getting at community wide flood insurance to cover everyone and make sure we're not missing for example folks that are outside the special flood hazard area that haven't purchased. Parametric insurance is getting more and more traction it actually came about through emerging markets around the world where insurance was needed in a simplified way that could be triggered not by actual loss but by the presence of particular weather phenomenon. So parametric insurance is activated not by loss on the ground but by the presence of specific criteria that are identified in advance it might be rainfall it might be wind speed or the magnitude of an earthquake but we're going to focus on flood. So some of those types of triggers that can be designed could be around flow like cubic feet per second in the channel rainfall water surface elevation how high is the water getting in the channel we talked about wind speed but it could also be triggered by things like extreme heat and temperature. What's important to note though about parametric insurance is its fast payment typically those payouts reach the ground within days often within two or three days of the triggering event parametric insurance can be approved even in advance of the storm hitting once those projections from the national weather service or the USGS confirm that we're going to reach a certain magnitude rainfall or a certain magnitude storm like barometric pressure it's also simple and easy to understand it's triggered not because the insurer says that the policy should pay or because the insured says that the policy should pay but because NOAA has confirmed it with data USGS has confirmed it with data and so it's that rapid deployment of liquidity in the hours and days following a storm that make parametric insurance such an important complement to the national flood insurance program and other programs. Here's an example that we'll go through very quickly where we were able to design a flood insurance solution through a parametric program for a river district down in Texas where they were concerned not just about rainfall but also about the relationship between rainfall and water surface elevation in the channel. What I mean by that is as long as the channel is dry and they can be pumping water from behind their levees at a very rapid rate that district could handle as much as 20 inches of rainfall but if they already have water in the channel they can't pump the water out as fast they may not be able to take 7 inches of rain so we can't just look at rainfall we've got to look at rainfall in combination with what's happening upstream and the capacity that's available for the district to be pumping. So we devised a solution that operates across both of those parameters so it's not just a simple rainfall trigger or a simple water surface elevation trigger but one that operates in combination to take both of those conditions into account. The idea here is that these are accredited levees what this means is that there is no flood insurance requirement and actually very little flood insurance penetration in an area that is not far from Houston. So by being able to have a parametric program that district can get a bit of funding available to engage in things like augmenting where there's a lack of flood insurance. We're also hearing a lot of interest from communities in the ways that parametric programs can complement the ICC this is the increased cost of compliance that we heard from Chad Bergenus about where $30,000 may not be enough but if the community has a parametric program to augment that with an additional $5, $10 or $20,000 you can do more to mitigate in the wake of a disaster and help people rebuild stronger. Communities are also interested in parametric insurance for non-damage costs so they may use parametric insurance for paying for things like flood fighting like what's happening right now on the Mississippi. They can also pay overtime for their emergency first responders. There are other non-damage costs that parametric insurance can help them to defray some of which is actually not covered by federal disaster programs. I'm actually going to wrap up there because I really want to reserve more time for questions. We could talk about credit risk I guess the upshot of it is for communities that are relying too much on federal disaster aid that could actually be showing up in their credit ratings. So insurance can also help communities to make the cost of capital more manageable. But I really want to wrap up there and allow more time for discussion in this group. Thanks, y'all. Thanks, Sam. That was terrific. Well, let's open it up for any questions or comments that you may have. And actually, I just want to say to all of you, first of all, terrific presentations. And secondly, if there are points that you want to raise or after hearing your colleagues points that you want to just comment on, you know, please, please use the time to do that now. Any questions or comments? Okay. And then if you could just wait for the microphone so that we can make sure that our online viewers the mitigation and the maps are great. Are folks saying that the flood insurance money might be encouraging people to live in areas that might be better for them not to live in? Is there, like, what is the current thinking on the program in terms of trying to encourage land use patterns that might kind of work with the water rather than kind of fight against it? I would say that insurance is not, the availability of insurance is not necessarily a great indicator of whether or not, you know, folks are going to make a choice to live in that risky area. And I think with, especially with some of the availability of private flood that makes it even less so potentially in terms of doing that. What is, what we find is more determinative is when a community adopts those higher standards, those higher land use standards and zoning that might basically say, look, there are some of these areas that are so risky, we're just going to have those zoned as conservation or open space areas and not going to put like high density residential there. And again, I also point to, you know, one of the programs that exist right now that's existed for a long time is the Coastal Barrier Resources Act, the Cobra Zones. And if if the theory that unavailable, unavailability of flood insurance were true, then we would have no development in Cobra Zones and that's not necessarily the case. Thank you. There are so many other, other tools and resources. It's the other legs of the stool that Chad was talking about. There are land use requirements and development review requirements under the National Flood Insurance Program that are very real. I'm a former local government official myself and meeting the requirements to review development for being reasonably safe from flood is an important requirement. Additionally, the tools that come available, whether it's through the National Flood Insurance Program or through private resources in terms of like the cap modeling that we saw a moment ago is really designed to provide a much more transparent lens on risk than we've seen historically. That can be a little bit controversial. I just showed a slide that showed flood risk for folks who may not be aware of that, right? But that's the necessity that we're facing now. We need for folks to be able to make informed decisions as they're thinking about purchasing their single largest investment being their home or in the wake of a disaster whether to rebuild, whether to rebuild the same way or rebuild higher or stronger or whether potentially to rebuild elsewhere. And then in the private sector there are interesting opportunities to use the payouts from catastrophe bonds and reinsurance to actually help drive migration away from these areas of risk whether it's coastal zones or areas that are close to flood plains inland. And I'd be happy to talk more about that inside bar, but the more we're bringing forward mapping and data and information, the more local governments are able to act on that information. There is a problem that there's no national requirements for disclosure of flood risk. The disclosure requirements vary state by state. The, all of the bills that were proposed in the 115th Congress had some form of disclosure requirements in them. Sorry, a bill that were posed in the 115th Congress for reauthorization of the NFIP. Obviously we don't know what bills will come in the 116th Congress, but at the moment it is not necessarily required when you sell a property that you disclose the flood risk of that property. So realtors don't have any onus up on them to disclose that either, correct? That varies by state. Okay, all right. Go ahead. Mr. Burgidness, you mentioned substantial repair and substantial alteration which would require placement of only unoccupied space below the BFE. That means it would allow storage. It would allow parking. It would allow access to the elevated structure. In non-substantial repair, a non-substantial alteration, that requirement does not apply. My question is, do you have some sense in the current portfolio of the NFIP, the ratio of occupied space to unoccupied space below the BFE? In short, I do not. And I would say that it varies geographically, I think to some extent. You have some regions of the U.S. where construction on a perimeter wall foundation is kind of the predominant construction. And that sometimes can lead to a conversion of those spaces to something that's more habitable. And so that's why a lot of times in the coastal areas where you might have to elevate a building 12, 14 feet high, all of a sudden that opening closure after years becomes enclosed and becomes then an apartment and everything else. But in other areas, slab on grade is the kind of construction that you have and so you don't really have the opportunity to do that. Now, communities have, I think, some tools to, again through their regulations, that they can make a stricter requirement. We know a number of communities, for instance in Indiana, that have adopted a substantial damage threshold, less than 50 percent. So maybe it's, you have 25 percent damage and then you hit that trigger or threshold. So there are ways to address it, but I don't have a good sense in terms of what proportion of either structures have areas below. We don't quite frankly, even though the number of structures that are in the flood plain, how many of those are what are called pre-firm or probably built before the regulations versus post-firm. Because your approaches on mitigating those are going to be very different. Interesting. I wanted to just ask a question also about the mapping and coming back to kind of what Diane was talking about too, because, which is another reason why transparency is so important here, but because flood plains, because streams, rivers, do not know boundaries, then what happens as far as mapping that goes across all sorts of jurisdictions? Not just counties, but states. Could be a whole number of states. If different communities have not all taken a position with regard to becoming a member, in terms of opting for the standards and in terms of thinking about flood plains that you are going to be affected by that could be way, upstream of you. Who deals with that? How do you deal with it? I would say in the 2004 reform, this was a big topic of conversation where you had, you're crossing a jurisdictional boundary, whether it be between two communities, community and a state, and those kinds of things. And FEMA changed its approach to mapping where it then started mapping on a watershed basis. So you actually get from the uplands all the way downstream. And so you don't really see that issue so much anymore. I think where we still see it is where we have legacy mismatches right now. So you have a new watershed map that's being done, but it's dumping into an area that was maybe mapped 20 years ago and you have a disconnect there. So, but it's not as much of an issue as it used to be. And also, if only about one third of the mapping has been done, if one were to say, go ahead and let's just get this mapped, how long would it take to do that? Do you have a report on that? So ASFPM has put out a report that we're actually in the process of updating and we should have an update later this summer called flood mapping for the nation where we tried to develop a cost model based on the required mapping elements of the national flood mapping program. And the one question that you asked though that we didn't address is the time because times of function, I think of capacity, but in terms of cost, our cost estimate, and again, we did this, I believe in 2015, our cost estimate at that time was four and a half to seven and a half billion dollars. I would say trends since that time, the cost of getting the topography has gone down. We've also created new automated methods for rural areas where with good topography you can automate that. So I think there's cost efficiency. So my guess would be when we update it later this summer, those costs are actually going to be reduced a bit. Which hopefully will be an encouragement to move the mapping forward. Yes. Okay. Just to give you a bit of context, flood plain mapping is the only thing that is actually directly appropriated for the NFIP. The everything else is paid for by the NFIP policy holders fees and surcharges. And some of the cost of flood plain mapping is also paid for out of what they call the federal policy fee, which is paid for by the policy holders again. The amount that was appropriated last year for in the fiscal year 2018 for flood plain mapping was 262.5 million dollars. So that's how much they're getting appropriated for that. And the federal policy fee brought in 188.16 million dollars. So that's the amount of money right now that's going towards mapping and not all the federal policy fee goes towards mapping. Some of it pays for flood plain management too. Sorry. Go ahead, Jeff. Yeah. And if I could just mention, it was Chairwoman Waters a couple years ago, I know had put out a call for let's get the job and let's get the job of mapping the nation done in five years and appropriates some, you know, on the order of about a billion dollars a year to get it done. And so those ideas have floated out there too. Thanks. Great. Okay. I actually have two questions. What's currently mapped or and or if we map the entire nation, how frequently does that need to be updated? I don't know how outdated some maps may be. And one of you mentioned the binary nature of the maps here either in or out of the zone. If we move to a more graduated system, what do you think that would do to premiums and also the solvency of the program? I'm sure I could kick that off. I also wanted to mention on the mapping subject the that there are mapping partners across the United States. Many states are engaged in mapping. Many private sector partners are engaged in mapping. But there's even interesting opportunities looking at, for example, NASA and NOAA data and integrating that more. The 3DEP program under that's really coordinated through USGS is a great platform for bringing in more non-federal data into mapping. But to your question about getting to a greater level of granularity of understanding of risk actually serves to inform the structure and design of flood insurance and risk insurance through private sector insurance in a way that's a bit more robust and differentiates in some meaningful ways between the types of mitigation actions that may not right now get recognized by the National Flood Insurance Program. For example, whether or not you have a basement that has been finished out also whether or not the infrastructure for the building itself, the electrical panel and things like that have been elevated. But that's starting to change as well. So I would say stay tuned toward the roll out of what's called risk rating 2.0 where FEMA will be rolling out new rating methodologies in April of 2020 that will take effect at least based on their projections nationwide in August of 2020 that will hopefully get it a more granular understanding of risk and be able to differentiate more between different depths velocities but also different mitigation actions that insurers might undertake. You'd ask specifically about the effect on premiums and solvency. Are we referring to for private insurers or for the overall NFIP? Right. I will rely on my colleagues to speak I think with more directness to that. I would say the more data and information though that's available, the more FEMA is looking at that information in terms of its risk rating and in terms of its mapping. So it again is working with a number of catastrophe modeling firms as well as insurers throughout the markets that are helping to inform the methodologies and the metrics and how FEMA designs its updates. And so I think that's going to be helpful going forward. Just to answer the question on frequency of map update there's no hard fast rule in terms of doing it. Now FEMA has a requirement to evaluate every five years their mapping inventory and look at that. But I would say in a rapidly developing watershed or area it's going to be more frequent you know and even every five or 10 years is not out of the question and in very slow growth rural areas you know data that may be 20 some years old still may be decent data in terms of you know in terms of that. Now one caveat there and this is something that more and more as I go to our chapter meetings and talk to flood plain managers the science you know there's a lot of scientific study in terms of you know the impacts of climate change and how that manifests itself when it comes to flood risk. Inland what people are saying is we're just seeing more frequent events you know the big you know four or five inch rainfall events in the in the Midwest or larger. You know the there was a new Atlas published in Texas that showed basically that the you know the hundred year flood elevation went up by about or hundred year frequency storm went up about by about 30% in terms of that information and so so I think there's an emerging area that you know how do you deal with the future condition right and if your hydrology is changing then that should be a factor in how you're updating flood maps so that's kind of a wrinkle to it but the first thing we got to do is just get the extent done in the country. Also keep in mind that the flood maps only deal with coastal flooding and river flooding right now so they don't deal with Pula flooding with these heavy rainfall events so something like Harvey that comes and just sits over an area for six days and dumps rain that isn't in the in the flood models at all right now and that is frightening. Any other okay back here the treasury just passed the its final rule on allowing borrowers to federally regulated banks to allow borrowers to have option to get private flood insurance and some studies show that argue that private insurance might offer cheaper insurance or premium than the NFIP. Can you comment on this and also a related question is if there's an increase in private flood insurance I mean if there's an increase in the market of private flood insurance what are the implications to flood plain management since we know that NFIP does that only provide insurance but also flood plain management so what will happen to flood plain management if private market takes over or maybe get like 30-40% of the market thank you I could answer a couple of those pieces to start off on the private flood rule the the private flood rule for part of it seems to track pretty closely with statute statute was very prescriptive in this area in terms of what private flood policies should include and should have to meet the requirement for mandatory purchase but then it came up with this very curious thing called discretionary acceptance and for the life of us we are still uncertain how that conclusion was reached because discretionary acceptance seems to basically say follow the law but if you don't want to follow the law go ahead and go this path and we actually have very serious concerns even about the legality of that kind of exception in rule that that seeming seems to directly contradict statute in in that case and and our concern is twofold and one flood plain management one consumer kind of protection is that Congress in previous reforms Congress was very keen on making sure they exercised oversight in the areas of deductibles and kind of coverages and so in the deductible realm what we're concerned about is you go discretionary acceptance and you could get a really cheap policy but you might have a deductible you can't afford and the lenders the lenders goal in insurance is not the same as the property owner's goal the lenders is to protect their balance of that loan and and so we have that concern because we see private models like earthquake where deductibles are 10 to 15 percent of the value of the home Congress never has gone that far in terms of allowable deductibles and NFIP in terms of coverages our number one concern there is increased cost of compliance that's a mandatory coverage under NFIP under private homeowners policies that all of you may have at your homes that's almost always optional there are some policies that have it as mandatory part but you know you can get that and the private versions called ordinance and law and so again current statute requires that private policies be at least as broad as in terms of deductibles and coverages the discretionary acceptance basically seems to say the best we can interpret don't worry about it that's a really big concern to answer your other question quickly about the impacts on NFIP and the private market ASFPM is fine with having a growing private sector market what we're concerned about is the operationally how does that happen and not impact the good work that's happened already with the NFIP in two areas we're concerned about this in one of those is what happens in a low policy count community it maybe has one or two policies that join the program to get flood insurance because that's a dynamic most people worked at states that have enrolled and I've enrolled communities in the NFIP they've done it because one or two people need flood insurance and for many many years the NFIP is the only game in town so what if you have widespread availability of private flood and you don't have a requirement or the quid pro quo of the program that says you have to adopt local regulations to be in the program so one of the ideas that we're trying to talk about right now is simply put a requirement in if it's to meet mandatory purchase whether it's public or private you have the requirement still that the community that the community has to participate in the NFIP because most communities already do so let's not backtrack from there and then the other has to do with the loss of revenue for doing mitigation and flood mapping and floodplain actually floodplain management so the federal policy fee the federal policy fee covers floodplain management and and mapping those are the components that it funds and so so what happens again if we have now if we have private sector policies that are just expanding the pool that's great but if they're actually poaching policies from the NFIP then we have less available for doing floodplain management and mapping and so again an idea that's out there would be something like an equivalency fee that's on the federal on private policies for mandatory purchase at at least at a minimum that would be set equal to the federal policy fee that can help then those that have private policies pay for things and then your final question was I think in terms of you know costs and you know how what's the projection about private flood we just bought a building ASFPM did our headquarters building in Madison, Wisconsin we're going through the process of buying a NFIP policy the fees on that policy fees alone not premium are almost $500 and I've talked to private insurers that can make money all day long by simply using NFIP rates but because they there are no fees that are attached to that private policy that's their profit and that's what they're making difference so the fees are a big issue and especially the HIFIA surcharge but when you when you combine that with the reserve fund assessment the ICC piece is actually a pretty small fee and the federal policy fee cumulative that's a lot sorry for the long explanation it's a good fulsome explanation I appreciate that very much and you know from the from the private industries perspective what we would recognize is the opportunity to to provide consumers some choice there are instances where a private flood policy may be less costly than going through the NFIP there may be instances where it's more costly but I think it's also important to to acknowledge the fact that right now the national flood insurance program is indeed more than insurance and so there's a need to make sure that those those elements that Chad highlighted of of of equivalency and a and a comparably structured policy that goes beyond just the premium but also looks at those operating factors around fees and keeping revenue flowing into mapping and into mitigation as well as addressing the question of deductible so that that's not hidden from the consumer is going to be really important considerations and and and so I think going forward you know headed toward reauthorization but even beyond where there is the opportunity to build a private market to augment and harmonize with the NFIP addressing those points is going to be important so that consumers see in front of them options that are where they can really compare and there's no no sort of you know hidden issues around things like deductibles but even where there there is that equivalency and there are those comparable structures and we're giving consumers real choices we think that's a positive thing and it's a great way to address the the protection gap in this country where just if we look at the Harvey example three quarters of those losses were uninsured not all of that gap is going to be addressed by the national flood insurance program some of it in a broader market will be addressed by private flood so certainly there's a lot of scope for new policies to be written and FEMA has this moonshot where they're trying to double the number of flood insurance policies by 2023 and they recognize that that needs to be NFIP and private the the other potential conservative NFIP is that a lot there are a number of policies which are currently cross subsidizing other policies if the policies which are doing the cross subsidies end up being policies people who then go to the private sector then the number of policies available to provide that cross subsidy goes down also then the number of policies overall if they lose policies the number of people that are available to help pay off the debt goes down as well too which is not good for the NFIP financially there's a lot of other potential issues I'll just say that we have a report on private flood insurance and the NFIP which we have just updated and given it in today so it should be up on our site either later on today or tomorrow so are there any last pieces of advice that you would give to policymakers as they think about how to deal with this reauthorization I'll just say one thing that hasn't actually come up Wharton did a study on all of the flood insurance schemes in the world at least all the ones that they could study and they found that the NFIP was the only one that actually linked mitigation and flood insurance premiums so it may not be perfect but in that respect it's better than anybody else that they studied that's really really interesting Chad also another topic I think Diane talked about this a bit but not in the Q&A and that's the debt to the program that is a real risk and if we get interest rates anywhere close to traditional interest rates in the country again the NFIP pays that with interest there's a I think a great recommendation and it's by the it's the American Academy of actuaries and it's something called a sufficiency standard Congress has given the NFIP a lot of tools to diversify its flood risk and Sam Sam was talking a lot about some of those tools that that FEMA's taken advantage of but we're going to have big events in the country and we're on a past actuarial rates but it's going to take a little while to get there I mean it's taken you know 40 some years to get to the point of 2012 where we started moving towards actuarial rates and the concept of a sufficiency standard is basically you know with the program can we find a way to basically put in a standard where you know there's an acceptable there's a certain threshold of loss based on using all these tools and then after that that debt is either automatically forgiven or absorbed by the taxpayers and still I would argue that that model is cheaper than pure disaster assistance thanks interesting well and Diane you mentioned that CRS had just come out with a report today that you're posting it's an update we have not a report of private flood insurance but we updated to reflect the recent rule on private let private flood insurance and also we updated to reflect the data that we have on the number of private flood insurance policies being sold and I think I heard you earlier talking about because CRS often does special sessions for congressional staff that you have some upcoming that may also be useful we don't have dates yet but we will probably do two sessions on reauthorization we usually will try to do one on the house side and one on the senate side and then we're also going to be doing a joint one with CBO so everybody congressional offices should be sure and stay tuned for that or or shoot an email to Diane to make sure that you get notified about that when that happens so please join me in terms of thanking our terrific panel lots and lots of good information here and lots and lots of questions still to come right so thank you very very much