Actuarial Rate Risk X Expected Loss Bill has a 50% Chance of losing $100 dollars any given year. Actuarial Rate =.5 X 100 = $50 Dollars
What Do You Prefer? 100% Risk of Losing $50 OR 50% Chance of Losing $100
What Do You Prefer? 100% Risk of Losing $20 OR 20% Chance of Losing $100
Pooling Risk – Bill and Bob No Insurance Bob or BillProbabilityLoss/Person No Loss50%0 Loss50% $ 100.00 Bill & BobTwo Person Pool No Loss, No Loss25%0 Loss, No Loss25% $ 50.00 No Loss, Loss25% $ 50.00 Loss, Loss25% $ 100.00
Study Background From the Start - 1968 Debt BW-12 Politics How bad is bad The Perfect Storm
IKE - 2008 BW-12 - 2012 New Coastal Maps – 20??
The Study We will discuss: Background What was the intent Where the data was taken Who was in the study How it was done Results Where to get a copy: Email me at firstname.lastname@example.org@hcpid.org Who did the study: Commissioned by HCPID, managed by Norex Engineering and executed by Quanticon LLC
What was the intent? Wealth Effect (Value) Income Effect (Available Financial Resources)
Wealth Effect $ 200,000 Mortgage 4.75% interest 30 Year Term = Monthly Payment - $1043 “Additional” Insurance Impact of $2400 yearly or $200 monthly implies an equal home value of $161,700 Or… elsewhere without insurance I could have purchased a home value of $238,000
Wealth Effect Said another way… Based on a $200K home at 4.75%, for every additional $261 of cost there is a perceived economic reduction of $50K in value compared to someone with the same loan not incurring the additional cost.
Income Effect Simply….. “If you give more money to the NFIP, you have less to spend elsewhere.”
Results Summary Immediate: $12,249,147 reduction in annual business volume Fully Realized BW-12 $43,127,257 reduction of annual business volume $270,269,940 reduction of property value (lets talk about this)
Results – Interesting Findings Properties in High-Risk Zones Counts TypeTotal Previous Map Current MapChange All properties159,39126,74831,4144,666 Single-family homes113,35615,94819,6113,863 Commercial8,8091,6441,772128
Results – Interesting Findings Value of Properties Below BFE CityTotal Market Value% of Total Baytown$52,170,5421% La Porte$76,445,1661.90% Morgan's Point$15,533,44620.20% Nassau Bay$193,310,68436% Pasadena$91,663,3231% Seabrook$335,717,24929.40% Shoreacres$80,608,00188.20% Taylor Lake Village$97,157,74728.20%
Results – Interesting Findings Difference from BFE, By Selected City FFE Relative to BFE City Database Properties% Under -2ft Baytown24,9791.20% La Porte14,4363.70% Morgan's Point3544.50% Nassau Bay1,59128.20% Pasadena40,5090.30% Seabrook5,19518.20% Shoreacres90260.30% Taylor Lake Village1,5289.20%