Act Locally, Save Federally: The National Flood Insurance CRS Program

About the Author

Jeff Hughes

Jeff Hughes was the Director of the Environmental Finance Center (EFC) at the UNC School of Government between 2003 and 2019. Hughes currently serves as a Commissioner in the North Carolina Utilities Commission.

The UNC Environmental Finance Center (EFC) typically focuses on the role of local governments in directly providing and funding basic community environmental services such as water, wastewater, stormwater, and solid waste management. For example, the EFC recently released a set of resources related to local government stormwater fees that local programs use to fund their stormwater services. These types of resources help local governments raise funds for critical environmental protection activities but there are other ways that local governments can play a role in supporting environmental finance. Recent news out of Brunswick County, North Carolina highlights the fact that local governments can have a significant impact on environmental expenses paid to other branches of government as well. In the case of Brunswick County, efforts by the County Government to improve flood planning, preparation, and education led to the County earning a rating with FEMA’s Community Rating System (CRS). The rating will result in lower National Flood Insurance Program (NFIP) insurance premiums for property owners in the county that participate in the NFIP. The CRS is an example of an interesting local government, federal government, and individual property environmental finance system partnership. The principle assumption behind the CRS is that local government efforts can improve a community’s resiliency and reduce private property damages associated with flooding.  A recent post on the EFC blog provides history and more background on the CRS program. Click here for a FEMA fact sheet about the program.

Participation in the CRS program is not automatic. Local governments must go through a process to enter the program that involves a series of planning efforts and commitments including participating in a comprehensive Community Assessment Visit (CAV) with state emergency management professionals. As of April 2018, 472 of the 660 Cities and County unincorporated areas in the state had properties participating in the NFIP with 88 of those (15.7%) currently enrolled in the CRS program. Dare County has the most NFIP policy holders paying approximately $15,815,263 per year or an average of $749 per policy. CRS ratings are based on the implementation of practices, policies and initiatives that fall into 19 general categories. CRS discounts depend on the class of rating and whether or not the property is in a high risk area and range from 5% to 45%.  The discounts increase as the rating decreases from 10 to 1. Charlotte currently has the distinction of having the lowest rating of any NC local government with a rating of 4.

Local governments through the CRS have had a major impact on what it costs their residents to protect their property from flooding. Based on a conservative estimate of savings based on existing CRS discounts, NC policy holders in the 88 communities that participate in CRS currently save approximately $11 million dollars each year in premium payments and 15 local governments save policy holders in their jurisdiction $250,000 or more each year. The map below shows the relative financial value of entering the CRS system and earning a basic rating of 9. As expected, the impact of the CRS is greatest along the coast, but there are many inland local governments where the CRS has or could result in significant savings as well.

The benefits of the CRS go well beyond saving individuals money on insurance premiums and instead likely rests with the program’s ability to drive local measures that reduce the economic, environmental, and public health costs associated with flooding – something that all levels of government and property owners likely can support.



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