Officials Look to Reduce Flood Insurance Costs

For homeowners in flood-prone areas like Oakland, insurance rates are expected to spike significantly in coming years, leading officials to explore ways to reduce the costs to residents.

The National Flood Insurance Program, which subsidizes flood insurance for over five million homeowners nationwide, has weathered its own fiscal storm since payments to victims of Sandy and other major flood catastrophes exhausted its coffers in recent years, with payouts exceeding premiums.

A bill passed by Congress last year will increase the premiums of some of those in the program, and houses that have seen severe or repeated flooding in the past could see rate hikes of 25 percent annually until their rate reflects the “true risk” of flooding on their property. This comes while revised New Jersey flood maps, not yet released publicly in Bergen, could expand the areas considered to be at a high risk.

In the face of the looming costs to residents in flood zones along the Ramapo River, the Flood Commission recommended that the borough council explore joining FEMA’s Community Rating System (CRS), a program that offers discounted insurance premiums for towns that take steps to reduce the impact of flooding in their communities.

The system works on a point system, in which municipalities can earn points for public information, mapping and regulation, damage reduction, and preparation. Participating municipalities begin at a rating of ten, and earn points to bring their ratings down a sliding scale to one, with 5 percent discounts in insurance premiums at each step.

The idea had been kicked around years ago, the commission’s chair, Lew Levy said, but “the program wasn’t what it is now.”

He said that now, with the looming hikes in insurance premiums, the potential benefits for the borough and its residents will add up.

“When these increases are done, it turns into real money,” he said.

He estimated that even at the lowest discount, with a 9 rating, the average Oakland NFIP customer would save around $176, with that discount multiplying as premiums rise.

But, he believes, Oakland would come into the program at a lower rating and a higher discount, because the borough has already taken steps to mitigate flood risk, such as a reverse 911 system that can target potential flood victims when the water’s on the rise.

At its last meeting, the borough council discussed contracting a professional engineering firm to help Oakland prepare a bid for the program, and an example that officials will look to is nearby Pompton Lakes, which at a five rating has the largest insurance discount in the state: 25 percent.

Levy says that the key to the program’s success was using professionals to prepare the application. “Part of the debate at the beginning was: do we go out and have a professional do this or do we do it ourselves?”

The answer, he said, from looking at the most successful programs around the state, was that a professional firm would deliver the most effective results, and the council will consider making that investment. When Pompton Lakes contracted its engineer in 2010, the contract came in at $6,440, according to borough records.

Levy said that the storms of the past couple of years, from Irene to Sandy, made it clear that flooding would remain an issue to contend with, and that the commission made it a priority to mitigate the financial impact on residents.

“Some of the events we’ve had over the last couple years have given us a better understanding,” he said. “You experience and you learn.”