Supporting Statement 1660-0006 5-13-10

May 13, 2010

Supporting Statement for

Paperwork Reduction Act Submissions

OMB Control Number: 1660 - 0006

Title: National Flood Insurance Program Policy Forms

Form Number(s): FEMA Forms 086-0-1, 086-0-2, 086-0-3, 086-0-4, and 086-0-5

A. Justification

1. Explain the circumstances that make the collection of information necessary.

Identify any legal or administrative requirements that necessitate the collection. Attach a copy of the appropriate section of each statute and regulation mandating or authorizing the collection of information. Provide a detailed description of the nature and source of the information to be collected.

The National Flood Insurance Program (NFIP) is authorized by Public Law 90-448 (1968) and expanded by Public Law 93-234 (1973). The National Flood Insurance Act of 1968 requires that the Federal Emergency Management Agency (FEMA) provide flood insurance at full actuarial rates reflecting the complete flood risk to structures built or substantially improved on or after the effective date for the initial Flood Insurance Rate Map (FIRM) for the community, or after December 31, 1974, whichever is later, so that the risks associated with buildings in flood-prone areas are borne by those located in such areas and not by the taxpayers at large. These actuarial rates are based on the degree of the flood risk reflected on the FIRM and take into account a number of different factors including flood risk zone, elevation of the lowest floor above or below the Base Flood Elevation (the elevation of the 100-year frequency flood), type of building, number of floors, basements, enclosures, and so forth. However, an alternative rating method is available for buildings built before the effective date of the FIRM for the community, or before December 31, 1974, whichever is later. Such buildings qualify for Pre-FIRM rates, which are subsidized rates that vary by the category of building.

In return, communities enact and administer construction safeguards to ensure that new construction in the flood plain will be built to eliminate or minimize future flood damage. In accordance with Public Law 93-234, the purchase of flood insurance is mandatory when Federal or federally related financial assistance is being provided for acquisition or construction of buildings located, or to be located, within FEMA-identified special flood hazard areas of communities, which are participating in the NFIP.

2. Indicate how, by whom, and for what purpose the information is to be used. Except for a new collection, indicate the actual use the agency has made of the information received from the current collection. Provide a detailed description of: how the information will be shared, if applicable, and for what programmatic purpose.

In order to provide for the continued widespread availability of policies for flood insurance, policies will continue to be marketed through the facilities of licensed insurance agents or brokers in the various States. Applications from agents or brokers are forwarded to a servicing company designated as fiscal agent by FEMA. Upon receipt and examination of the application and required premium, the servicing company will issue the appropriate Federal flood insurance policy.

The following FEMA forms are used to collect the information needed for NFIP policies to be issued and to accommodate the changing insurance needs of policyholders:

FEMA Form 086-0-1, Flood Insurance Application - This form, which has two parts, is used to obtain building and/or contents coverage for dwellings and general property. The form is also used to apply for a Residential Condominium Building Association Policy (RCBAP), which provides flood insurance coverage on a single policy for all residential condo units in a condominium building.

Part 1 of the application provides basic information concerning building type and occupancy, location and type of contents, date of construction or substantial improvement, amounts of coverage desired, flood zone, community number, and so forth, necessary for any NFIP policy to be issued.

Part 2 of the application provides detailed underwriting information for risks located in Special Flood Hazard Areas (SFHA) which are to be rated based on information pertaining to building elevations, enclosure construction and size (if any), use of any enclosed area, types of machinery and/or equipment located in any enclosed area, and so forth. The information provided in Part 2 expands on the information provided on the Elevation Certificate and Part 1 of the Application Form. (Part 2 of the Application cannot be used in lieu of an elevation certificate.)

FEMA From 086-0-2, Flood Insurance Cancellation/Nullification Request Form - The form is signed by the insured (except for reason of non-payment of premium or ineligibility for coverage) and submitted to effect either a cancellation or nullification of a NFIP policy.

FEMA Form 086-0-3, Flood Insurance General Change Endorsement - This form is used to amend existing policy data shown on the policy Declarations Page. Following receipt and processing of the endorsement form, a Revised Declarations Page showing the requested changes is generated.

FEMA Form 086-0-4, V-Zone Risk Factor Rating Form and Instructions - This form provides certified information concerning the building site, the building support system and other construction details, related to the building's resistance to wind and wave action, which is used to determine the risk's eligibility for lower flood insurance rates because of superior ability to withstand the force of coastal flooding wave action.

FEMA Form 086-0-5, Flood Insurance Preferred Risk Application - This form is a simplified application used to obtain flood insurance coverage for risk's located in B, C and X Zones (zones designated as being moderately to minimally at risk from flooding) at lower premiums.

Renewal Premium Notice - This advises that the policy is about to expire and informs the payor that the premium required must be submitted to renew the policy for the coverage option selected.

3. Describe whether, and to what extent, the collection of information involves the use of automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses, and the basis for the decision for adopting this means of collection. Also describe any consideration of using information technology to reduce burden.

Electronic versions of Flood Insurance Policy Forms have been developed and can used in lieu of the paper forms. Respondents have the capability to electronically complete these forms and then can submit them as PDF files via e-mail. These forms can be found as follows: FEMA Form 086-0-1 http://online.fema.net/management/records/doc/forms/81-16.pdf; FEMA Form 086-0-5 http://online.fema.net/management/records/doc/forms/81-67.pdf; FEMA Form 086-0-2 http://online.fema.net/management/records/doc/forms/81-17.pdf; FEMA Form 086-0-3 http://online.fema.net/management/records/doc/forms/81-18.pdf; FEMA Form 086-0-4 http://online.fema.net/management/records/doc/forms/81-25.pdf.

When a registered agent/agency wishes to submit an NFIP policy form electronically, he/she goes to the https://www.nfipservices.com/ web site. He/she selects the transaction desired and will then be prompted to fill in the information required which is transmitted electronically. Necessary supporting documentation may also be submitted along with the form in an electronic format, such as a PDF file.

4. Describe efforts to identify duplication. Show specifically why any similar information already available cannot be used or modified for use for the purposes described in Item 2 above.



This information is unique for this program and is not collected anywhere else. There is only one application required per structure to obtain flood insurance.

5. If the collection of information impacts small businesses or other small entities (Item 5 of OMB Form 83-I), describe any methods used to minimize.

This information collection does not have an impact on small businesses or other small entities.

6. Describe the consequence to Federal/FEMA program or policy activities if the collection of information is not conducted, or is conducted less frequently as well as any technical or legal obstacles to reducing burden.

Without this collection, the NFIP could not operate and could not provide necessary flood insurance coverage to property owners in communities participating in the NFIP. This would result in FEMA’s inability to meet mandates required by law.

7. Explain any special circumstances that would cause an information collection to be conducted in a manner:

1. Requiring respondents to report information to the agency more often than quarterly.

There are no requirements for respondents to report information to the agency more often than quarterly.



2. Requiring respondents to prepare a written response to a collection of information in fewer than 30 days after receipt of it.

There are no requirements for respondents to prepare a written response to a collection of information in fewer than 30 days after receipt of it.

3. Requiring respondents to submit more than an original and two copies of any document.



There are no requirements for respondents to submit more than an original and two copies of any documents.

3. Requiring respondents to retain records, other than health, medical, government contract, grant-in-aid, or tax records for more than three years.

There are no requirements to respondents to retain records for more than three years.

3. In connection with a statistical survey, that is not designed to produce valid and reliable results that can be generalized to the universe of study.



There is not statistical survey, involved with this collection of information.

 (f) Requiring the use of a statistical data classification that has not

been reviewed and approved by OMB.

There are no requirements to use statistical data classification that has not been reviewed an approved by OMB.

(g) That includes a pledge of confidentiality that is not supported by

authority established in statute or regulation, that is not supported by disclosure and data security policies that are consistent with the pledge, or which unnecessarily impedes sharing of data with other agencies for compatible confidential use.



There is no pledge of confidentiality that is not supported by authority established in statue or regulation for this information collection.

 (h) Requiring respondents to submit proprietary trade secret, or other confidential information unless the agency can demonstrate that it has instituted procedures to protect the information’s confidentiality to the extent permitted by law.

There are no requirements for respondents to submit proprietary trade secret, or other confidential information for this collection.



8. Federal Register Notice:



 a. Provide a copy and identify the date and page number of publication in the Federal Register of the agency’s notice soliciting comments on the information collection prior to submission to OMB. Summarize public comments received in response to that notice and describe actions taken by the agency in response to these comments. Specifically address comments received on cost and hour burden.



A 60-day Federal Register Notice inviting public comments was published on March 4, 2010, Volume 75 pp 9918. No comments were received. See attached copy of the published notice included in this package.

A 30-day Federal Register Notice inviting public comments was published on June 7, 2010, Volume 75 pp 32199. See attached copy of the published notice included in this package.

 b. Describe efforts to consult with persons outside the agency to obtain their views on the availability of data, frequency of collection, the clarity of instructions and recordkeeping, disclosure, or reporting format (if any), and on the data elements to be recorded, disclosed, or reported.

The Flood Insurance Producer National Committee (FIPNC), which is made up of non-government professionals involved with the NFIP and FEMA’s Mitigation Directorate meets annually at the Association of State Floodplain Managers National Conference as well as at regional conferences held throughout the year.

c. Describe consultations with representatives of those from whom information is to be obtained or those who must compile records. Consultation should occur at least once every three years, even if the collection of information activities is the same as in prior periods. There may be circumstances that may preclude consultation in a specific situation. These circumstances should be explained.

Surveyors and engineers attend both the annual Association of State Floodplain Managers National Conference and the regional meetings and FEMA consults with these groups to improve the ease of use and value of data collected. Respondents to this collection of information also regularly provide feedback to FEMA via the toll free 800 phone numbers, fax number or e-mail address listed on the NFIP Website at FloodSmart.gov.

9. Explain any decision to provide any payment or gift to respondents, other than remuneration of contractors or grantees.

FEMA does not provide payments or gifts to respondents in exchange for a benefit sought.

10. Describe any assurance of confidentiality provided to respondents. Present the basis for the assurance in statute, regulation, or agency policy.



FEMA does not disclose the information collected except to the servicing office acting as the government’s fiscal agent, to routine users, to the insured’s agent of record, and mortgagee listed on the flood insurance policy. The NFIP computer system security plan complies with the Computer Security Act, OMB Circulars A-123, A-127, and A-130. The NFIP Servicing Agent computer system has a protection and control of the data maintained in the system. A System of Records Notice (SORN) dated December 19, 2008, Volume 73, Number 245, pages 77747-77750 has been completed. A Privacy Threshold Analysis is being completed and will be referred to FEMA’s Privacy Office for review.

11. Provide additional justification for any question of a sensitive nature (such as sexual behavior and attitudes, religious beliefs and other matters that are commonly considered private). This justification should include the reasons why the agency considers the questions necessary, the specific uses to be made of the information, the explanation to be given to persons from whom the information is requested, and any steps to be taken to obtain their consent.

There are no questions of a sensitive nature necessary required from respondents.

 12. Provide estimates of the hour burden of the collection of information. The statement should:



 a. Indicate the number of respondents, frequency of response, annual hour burden, and an explanation of how the burden was estimated for each collection instrument (separately list each instrument and describe information as requested). Unless directed to do so, agencies should not conduct special surveys to obtain information on which to base hour burden estimates. Consultation with a sample (fewer than 10) of potential respondents is desired. If the hour burden on respondents is expected to vary widely because of differences in activity, size, or complexity, show the range of estimated hour burden, and explain the reasons for the variance. Generally, estimates should not include burden hours for customary and usual business practices.

FEMA Form 086-0-1 is completed by an estimated 5,859 property owners. The average burden per response is 12 minutes and the total annual burden hours are 1,171.8.

FEMA Form 086-0-2 is completed by an estimated 2,958 property owners. The average burden per response is 7.5 minutes and the total annual burden hours are 369.75.

FEMA Form 086-0-3 is completed by an estimated 19,920 property owners. The average burden per response is 9 minutes and the total annual burden hours are 2.988.

FEMA Form 086-0-5 is completed by an estimated 1,090 property owners. The average burden per response is 8 minutes and the total annual burden hours are 145.33.

FEMA Form 086-0-4 is completed by an estimated 20 architects or engineers. The average burden per response is 6.5 hours and the total annual burden hours are 130.

The Renewal Premium Notice is completed by an estimated 93,514 property owners. The average burden per response is 3 minutes and the total annual burden hours are 4,675.7.

 b. If this request for approval covers more than one form, provide separate hour burden estimates for each form and aggregate the hour burdens in Item 13 of OMB Form 83-I.

c. Provide an estimate of annualized cost to respondents for the hour burdens for collections of information, identifying and using appropriate wage rate categories. The cost to the respondents of contracting out or paying outside parties for information collection activities should not be included here. Instead this cost should be included in Item 13.

Table A.12: Estimated Annualized Burden Hours and Costs
Type of Respondent	Form Name / Form Number	No. of Respon-dents	No. of Respon-ses per Respon-dent	Total number of Responses	Avg. Burden per Response (in hours)	Total Annual Burden (in hours)	Avg. Hourly Wage Rate	Total Annual Respon-dent Cost
Individual and Household, Business or other for profit, Not-for-profit institutions, Farms, State, local, or Tribal Government	Flood Insurance Application / FEMA Form 086-0-1	5,859	1	5,589	.2 Hours (12 Minutes)	1,171.8 Hours (70,308 Minutes)	$30.66	$35,927
Individual and Household, Business or other for profit, Not-for-profit institutions, Farms, State, local, or Tribal Government	Flood Insurance Cancellation / Nullification Request Form / FEMA Form 086-0-2	2,958	1	2,958	.125 Hours (7.5 Minutes)	369.75 Hours (22,185 Minutes)	$30.66	$11,337
Individual and Household, Business or other for profit, Not-for-profit institutions, Farms, State, local, or Tribal Government	Flood Insurance General Change Endorsement / FEMA Form 086-0-3	19,920	1	19,920	.15 Hours (9 Minutes)	2,988 Hours (179,280 Minutes)	$30.66	$91,612
Individual and Household, Business or other for profit, Not-for-profit institutions, Farms, State, local, or Tribal Government	Flood Insurance Preferred Risk Policy Application / FEMA Form 086-0-5	1,090	1	1,090	.133 Hours (8 Minutes)	145.33 Hours (8,720 Minutes)	$30.66	$4,456
Individual and Household, Business or other for profit, Not-for-profit institutions, Farms, State, local, or Tribal Government	Renewal Premium Notice / No Form	93,514	1	93,514	.05 Hours (3 Minutes)	4,675.7 Hours (280,542 Minutes)	$30.66	$143,357
Business or other for profit	V-Zone Risk Factor Rating Form and Instructions / FEMA Form 086-0-4 (including reference to the Coastal Construction Manual CD)	20	1	20	6.5 Hours (390 Minutes)	130 Hours (7,800 minutes)	$48.50	$6,305
Total		123,361		123,361		9,480.58		$292,994

• Note: The “Avg. Hourly Wage Rate” for each respondent includes a 1.4 multiplier to reflect a fully-loaded wage rate.

• “Type of Respondent” should be entered exactly as chosen in Question 3 of the OMB Form 83-I

According to the U.S. Department of Labor, Bureau of Labor Statistics website (www.bls.gov) the wage rate category for All Workers (property owners of various occupations), is estimated to be $21.90 per hour and adjusting by the 1.4 multiplier equals a rate of $30.66; therefore, the estimated burden hour cost to respondent property owners is estimated to be $286,689 annually.

According to the U.S. Department of Labor, Bureau of Labor Statistics website (www.bls.gov) the wage rate category for Surveyors and Engineers is estimated to be $34.64 per hour and adjusting by the 1.4 multiplier equals a rate of $48.50; therefore, the estimated burden hour cost to respondent property owners is estimated to be $6,305 annually.

13. Provide an estimate of the total annual cost burden to respondents or recordkeepers resulting from the collection of information. The cost of purchasing or contracting out information collection services should be a part of this cost burden estimate. (Do not include the cost of any hour burden shown in Items 12 and 14.)

The cost estimates should be split into two components:

a. Operation and Maintenance and purchase of services component. These estimates should take into account cost associated with generating, maintaining, and disclosing or providing information. Include descriptions of methods used to estimate major cost factors including system and technology acquisition, expected useful life of capital equipment, the discount rate(s), and the time period over which costs will be incurred.

b. Capital and Start-up-Cost should include, among other items, preparations for collecting information such as purchasing computers and software, monitoring sampling, drilling and testing equipment, and record storage facilities.

Annual Cost Burden to Respondents or Record-keepers
Data Collection Activity/Instrument	*Annual Capital Start-Up Cost	*Annual Operations and Maintenance Cost (such as recordkeeping, technical/professional services, etc.)	Annual Non-Labor Cost	Total Annual Cost to Respondents
	(investments in overhead, equipment and other one-time expenditures)		(expenditures on training, travel and other resources)
V-Zone Risk Factor Rating Form FEMA 81-25 (including reference to the Coastal Construction Manual CD)	0	$13,000	0	$13,000
Premium Cost to Respondents (19,920 policies x $320 average cost per premium)	0	$6,374,400		$6,374,400
Total	0	$6,387,400	0	$6,387,400

The cost to the property owner (e.g., applicants for flood insurance for whose building the V-Zone Risk Factor Rating Form FEMA 086-0-4 is being completed) is estimated to be a fee of $650 charged (6.5 hrs. x $100/hr.) equaling $650 to the applicant by the private sector professional (architect/engineer) completing the V-Zone Risk Factor Rating Form. This estimated cost would be based on an average of 20 respondents x an average cost of $650 per V-Zone Risk Factor Rating Form is estimated to be approximately $13,000. Each policy is charged an estimated average premium for insurance of $320, and the total number of policies renewed each year is 19,920, for a total of $6,374,400. The total cost to respondents is estimated to be $6,387,400 annually.

14. Provide estimates of annualized cost to the federal government. Also, provide a description of the method used to estimate cost, which should include quantification of hours, operational expenses (such as equipment, overhead, printing and support staff), and any other expense that would have been incurred without this collection of information. You may also aggregate cost estimates for Items 12, 13, and 14 in a single table.

ANNUALIZED COST TO THE FEDERAL GOVERNMENT
Item	Cost ($)
Contract Costs [processing policy forms and customer service] See Note 1 below	$6,500,000.
Staff Salaries [One GS-14 estimated annual salary $116,000; spending approximately 2% of time with NFIP forms] See Note 2 below	$ 3,260.
Facilities [cost of storage area for forms] See Note 3 below	$ 600.
Printing (34,750 forms printed annually x $0.069 rounded) See Note 4 below	$ 2,408.
Postage [18,773 x $0.80] See Note 5 below	$ 15,018.
Total	$ 6,521,286.

Note 1: The contract costs for NFIP includes all expenses such as processing flood applications, endorsements, cancellations, and customer service.

Note 2: It is estimated that one GS-14 Step 5 spend approximately 2% of his/her time analyzing NFIP forms to see if any changes are needed and responding to program changes and program experiences. Total amount equals $116,419 x 2% x 1.4 (wage rate multiplier) = $3,260.

Note 3: The annual storage cost associated with the five NFIP Policy Forms is $600. This is based on a cost of $10 per month per form for twelve months, or $10 per month times 5 forms times 12 months.

Note 4: The annualized printing cost of the NFIP Policy Forms is calculated to be $2,408, based on the printing cost for each form as follows:

Form Numbers	Number of Forms Printed	Cost of Printing Forms
FEMA Form 086-0-1	7,000	$350
FEMA Form 086-0-2	6,000	$300
FEMA Form 086-0-3	10,000	$630
FEMA Form 086-0-4	6,750	$878
FEMA Form 086-0-5	5,000	$250
Total	34,750	$2,408

The printing cost per form is the cost of the forms $2,408 divided by 34,750 forms, which equals $0.069295 rounded to $0.069.

Note 5: The annualized mailing cost associated with the five NFIP Policy Forms is estimated to be approximately $15,018.40. This is based on an average per form mailing cost of $0.80 times the number of forms mailed.

Form Number	Number of Forms Mailed	Cost of Mailing
FEMA Form 086-0-1	4,553	$3,642.40
FEMA Form 086-0-2	6,939	5,551.20
FEMA Form 086-0-3	4,084	3,267.20
FEMA Form 086-0-4	228	182.40
FEMA Form 086-0-5	2,969	2,375.20
Total	18,773	$15,018.40

 15. Explain the reasons for any program changes or adjustments reported in Items 13 or 14 of the OMB Form 83-I in a narrative form. Present the itemized changes in hour burden and cost burden according to program changes or adjustments in Table 5. Denote a program increase as a positive number, and a program decrease as a negative number.

A "Program increase" is an additional burden resulting from an federal government regulatory action or directive. (e.g., an increase in sample size or coverage, amount of information, reporting frequency, or expanded use of an existing form). This also includes previously in-use and unapproved information collections discovered during the ICB process, or during the fiscal year, which will be in use during the next fiscal year.

A "Program decrease", is a reduction in burden because of: (1) the discontinuation of an information collection; or (2) a change in an existing information collection by a Federal agency (e.g., the use of sampling (or smaller samples), a decrease in the amount of information requested (fewer questions), or a decrease in reporting frequency).

"Adjustment" denotes a change in burden hours due to factors over which the government has no control, such as population growth, or in factors which do not affect what information the government collects or

Explain: There is no change to the hour burden for this collection resulting from the modifications to FEMA Forms 086-0-1, 086-0-3, and 086-0-5. There have been minor revisions to the forms to allow respondents to better identify the characteristics of the buildings to be insured. By incorporating these changes, more appropriate risk classifications of the structure can be identified and the most equitable flood insurance rates can then be assigned.

Itemized Changes in Annual Cost Burden
Data collection Activity/Instrument	Program Change (cost currently on OMB Inventory)	Program Change (New)	Difference	Adjustment (cost currently on OMB Inventory)	Adjustment (New)	Difference
Flood Insurance Application / FEMA Form 086-0-1				$22,920.41	$35,927	+$13,006.59
Flood Insurance Cancellation / Nullification Request Form / FEMA Form 086-0-2				$7,232.31	$11,337	+$4,104.69
Flood Insurance General Change Endorsement / FEMA Form 086-0-3				$58,445.28	$91,612	+$33,166.72
V-Zone Risk Factor Rating Form and Instructions / FEMA Form 086-0-4 (including reference to the Coastal Construction Manual CD)				$4,304.30	$6,305	+2,000.70
Flood Insurance Preferred Risk Policy Application / FEMA Form 086-0-5				$2,842.72	$4,456	+$1,613.28
Renewal Premium Notice				$91,456.69	$143,357	+$51,900.31
Total(s)	$0	0	$0	$187,201.71	$292,994	+$105,792.29

Explain: The change in cost burden is due to the application of the 1.4 wage rate multiplier.



16. For collections of information whose results will be published, outline plans for tabulation and publication. Address any complex analytical techniques that will be used. Provide the time schedule for the entire project, including beginning and ending dates of the collection of information, completion of report, publication dates, and other actions.



FEMA does not intend to employ the use of statistics or the publication thereof for this information collection.

17. If seeking approval not to display the expiration date for OMB approval of the information collection, explain reasons that display would be inappropriate.

FEMA will display the expiration date for OMB approval of this information collection.

18. Explain each exception to the certification statement identified in Item 19 “Certification for Paperwork Reduction Act Submissions,” of OMB Form 83-I.

FEMA does not request an exception to the certification of this information collection.

B. Collections of Information Employing Statistical Methods.



THERE IS NO STATISTICAL METHODOLOGY INVOLVED IN THIS COLLECTION.

15