Cost of Program to the Federal Government and a Hypothetical Homeowner (IMAGE)
Caption
This figure shows the costs of the insurance-only voucher and the combined insurance and loan voucher in V-Zone properties subject to wave action and A-Zone properties that have a lower flood risk. It also shows the payments after the loan has been fully repaid. The savings from coupling mitigation with the insurance voucher are quite substantial, as shown in the figure. During the life of the loan, the total annual savings (the difference between the premium with no mitigation and the combined loan and premium after mitigation) are $1,800 for the A zone property and $8,190 for the V zone property. Everyone benefits from this program. The homeowner has affordable annual payments and a safer home. The NFIP has lowered its exposure through mitigation and has improved its financial soundness through pricing that is closer to risk based. The financial institution providing the mortgage to the homeowner has a more secure investment because expected losses from a flood event are reduced. And the general taxpayer benefits from a potentially reduced need for disaster aid or bailouts of the NFIP.
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