FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.

posted on 11 May 2016

Communicating About Flood Risk - Beyond The Special Flood Hazard Area

from CoreLogic

-- this post authored by Scott Giberson

In the conversation about flood risk and the benefits of flood insurance, one of the most commonly used statistics is that about 25 percent of the claims paid by the National Flood Insurance Program (NFIP) are on policies covering properties outside of the Special Flood Hazard Area [1].

This statistic confirms that risk exists outside of the Special Flood Hazard Area because properties are experiencing flood damage covered under a flood insurance policy. It also points to the reality that a certain percentage of the public recognizes this risk since property owners and renters are purchasing the flood policies. The challenge is to assess the risk beyond the Special Flood Hazard Area in order to communicate this risk effectively and drive prudent decision-making by property owners, business owners, communities, insurers, lenders and policymakers.

Gilbert F. White, regarded as the "father of floodplain management," famously wrote in his 1942 doctoral dissertation at the University of Chicago that "Floods are acts of God, but flood losses are largely acts of man." [2] Likewise, floodplains are naturally occurring areas subject to inundation, while the Special Flood Hazard Area is a manmade delineation of an area within the floodplain used for insurance and floodplain management purposes with a 1 percent statistical likelihood of flooding to a certain level each year.

Approximately 5 percent of the nation is in the Special Flood Hazard Area. [3] Determining the level of flood risk of the 95 percent of properties outside of the Special Flood Hazard Area requires risk assessment tools, such as the CoreLogic Flood Model, Flood Risk Score and Flash Flood Risk Score. Following Superstorm Sandy, CoreLogic scientists and data analysts studied the flooded areas in relation to the Special Flood Hazard Area and compared this data with the CoreLogic Flood Risk Score. Interestingly, as illustrated in Figure 1, about 18 percent of the properties that experienced flooding from Superstorm Sandy were identified through the Flood Risk Score as being at "High" flood risk even though outside of the Special Flood Hazard Area [4].

While it may be obvious that flood risk exists beyond the delineations of the Special Flood Hazard Area, it may be less obvious and more complicated to determine the reasons that certain property owners or renters purchase flood insurance protection outside of this area. A combination of factors, including risk tolerance, knowledge, life experience, financial means and support network, certainly play a role in the decision to voluntarily purchase flood insurance. The hope of policymakers, risk analysts, insurers and other interested parties is that greater understanding of flood risk beyond the Special Flood Hazard Area will influence decisions about protecting property with flood insurance.

Last month a small town in east Texas along the Sabine River experienced historic flooding due to more than 20 inches of rain falling along the Texas-Louisiana border, swelling tributaries that feed into the Sabine River. This led to gage heights of 15' above flood stage and river discharge over 20 times the median volume at certain points along the river. [5] Figure 2 shows the precipitation analysis for the south Texas-Louisiana river basin from the National Oceanic and Atmospheric Administration (NOAA). CoreLogic analyzed the FEMA flood map, published in the 1990s, in conjunction with the Flood Risk Score and found that about 90 percent of the town's downtown area ranks from High to Extreme on the Flood Risk Score, while only 25 percent of the area is in the Special Flood Hazard Area. At the time of the flood, likely only around 1 percent of the properties were covered by flood insurance.[6]

Precipitation Analysis

These are complex issues. More funding for FEMA's flood mapping may have resulted in more current flood maps which may have reflected a higher base flood elevation and expanded Special Flood Hazard Area. More communication and information about flood risk beyond the Special Flood Hazard Area may have resulted in higher numbers of insured properties. More local information about risk from the Sabine River could have led to different decisions. If the trend continues, at the end of the year the NFIP may report that about 25 percent of its claims paid were on policies written on properties outside of the Special Flood Hazard Area. But if we can assess and communicate the flood risk within these areas, the hope is that there will be a smaller and smaller percentage of properties both inside and outside of the Special Flood Hazard Area that are not covered by flood insurance.



1 "Special Flood Hazard Area" is an area identified by the Federal Emergency Management Agency (FEMA) as being subject to a high risk of flooding, at least 1 percent annual chance, and which is shown on FEMA's flood maps as a zone beginning with the letters "A" or "V." Per federal law, federally regulated lending institutions must require the purchase of flood insurance on loans secured by buildings in the Special Flood Hazard Area.

2 Gilbert F. White, "Human Adjustment to Floods," University of Chicago, 1942.

3 Several studies have estimated the percentage of properties in the Special Flood Hazard Area from 4 percent to 7 percent.

4 CoreLogic Flood Risk Score rates the risk associated with flood at a property according to a number scale (0-100) and a severity category (Very Low, Low, Moderate, High, Very High and Extreme).

5 National Oceanic and Atmospheric Administration, National Weather Service.

6 While NFIP statistics for this town are not available, the town is in a county for which there were less than 150 NFIP flood insurance policies in force at the time. The county has a population near 15,000 and over 8,000 addressed properties according to the CoreLogic property record database. Thus, only slightly more than 1 percent of the properties in this county are insured against flood even though the Sabine River forms its eastern border.

© 2016 CoreLogic, Inc. All rights reserved

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical News Post Listing

Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, using Livefyre just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.

You can also comment using Facebook directly using he comment block below.

Econintersect Contributors


Print this page or create a PDF file of this page
Print Friendly and PDF

The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.

Take a look at what is going on inside of
Main Home
Analysis Blog
A Short Note on a Connection Between Marginalist Economics and Folk Medicine
Run A High Pressure Economy? Janet Yellen Does Not Understand the Problem
News Blog
Rail Week Ending 22 October 2016 Better Than The Previous Week
What Happens After The Islamic State Loses Mosul
Infographic Of The Day: The History Of Women's Ice Hockey In Canada
Early Headlines: Asia Stocks Mixed, Huge Antarctic Marine Park, Can Trump Get To 270?, US Workers Gaining, UK Inflation, France GDP, India Savings Lag And More
Why Amazon Gives So Many Perks To Prime Members
Where Workplace Trust Is Strongest
How A Lack Of Sleep Affects Your Brain - And Personality
How Accurate Are Final US Election Polls
What We Read Today 27 October 2016
A Pony And His Beloved Teddy Bear Reunite After Being Apart For 3 Years
October 2016 Kansas City Fed Manufacturing Remains In Expansion
September 2016 Median Household Income Not Statistically Different Than The Previous Month
September 2016 Pending Home Sales Index Improves
Investing Blog
Technical Thoughts: Looking For The Rebounds
Gold That Pays Dividends
Opinion Blog
Global Debt Investors: The Silence Of The Lambs
A Hard Brexit And Reduced Migration Won't Benefit UK Workers
Precious Metals Blog
Inflation Surging As Platinum Signals Stock Market Decline
Live Markets
27Oct2016 Market Close: Wall Street Closes Fractionally Lower, Interest-Rate Stocks Outweighed Gains In Healthcare, Market Indicators Bearish
Amazon Books & More

.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Middle East / Africa
USA Government

Crowdfunding ....



Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day


Asia / Pacific
Middle East / Africa
USA Government

RSS Feeds / Social Media

Combined Econintersect Feed

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution



  Top Economics Site Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved