National Flood Insurance Program Installment Payment Plan

SUPPLEMENTARY INFORMATION:

I. Background

A. The National Flood Insurance Program

Congress created the National Flood Insurance Program (NFIP) through enactment of the National Flood Insurance Act of 1968 (NFIA) (title XIII of Pub. L. 90-448, 82 Stat. 572), 42 U.S.C. 4001 et seq. The NFIP is a Federal program enabling property owners in participating communities that adopt and enforce floodplain management regulations to purchase insurance as a protection against flood losses. A consumer may purchase an NFIP federally-backed flood insurance policy either: (1) directly from the Federal Government through a direct servicing agent (referred to as “NFIP Direct”); or (2) from a participating private insurance company through the Write Your Own (WYO) Program. The Standard Flood Insurance Policy (SFIP) sets out the terms and conditions of insurance. See44 CFR part 61, appendix A. FEMA establishes terms and conditions of coverage and sets premiums for coverage. The terms, coverage limits, and flood insurance premiums are the same whether a policy is purchased from the NFIP Direct or a private WYO insurance company in the WYO Program. See44 CFR 62.23(a). Under the regulations in place prior to this rule change, FEMA required policyholders to pay their applicable SFIP annual premium in full at the time of application. 44 CFR 61.4(b). Requiring payment of the annual premium in full at the time of application reduced administrative costs to the program, and because of the seasonal nature of flooding, ensured the receipt of premium and exposure to risk would align. In 2012, Congress passed the Biggert-Waters Flood Insurance Reform Act (BW-12), amending the NFIA to mandate that FEMA provide NFIP policyholders who were “not required to escrow their premiums and fees for flood insurance as set forth under section 102 of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4012a) with the option of paying their premiums annually or in more frequent installments.” Sec. 100205(d), Public Law 112-141, 126 Stat 405. The Homeowner Flood Insurance Affordability Act of 2014 (HFIAA) amended BW-12 and the NFIA regarding the frequency of the installments by striking the language “annually or in more frequent installments” and inserting “annually or monthly” instead. 42 U.S.C. 4001 et seq.; sec. 11, Public Law 113-89, 128 Stat. 1025 (2014). The NFIP, having operated for several decades within an annual payment structure for premiums, provides payment compliance measures that will apply to the amended regulations discussed herein. The changes in this rule will bring FEMA's regulations into compliance with the nondiscretionary statutory mandate to provide policyholders with the option of paying their premiums annually or in monthly installments.

B. Installment Plans Reduce Barriers To Purchasing Flood Insurance

This rulemaking, in addition to fulfilling a statutory mandate, will also reduce barriers to purchasing flood insurance. In administering the NFIP, FEMA provides information to help communities and individuals better understand their flood risk. However, flood risk knowledge by itself is not enough if households cannot act to protect themselves. Providing an option for monthly installments will expand access to flood insurance to meet the evolving needs of the Nation. The option to pay in installments may also increase policyholders' budgetary flexibility by alleviating cash flow pressure, as they could use the deferred payment to address other monthly needs.

Some consumers may lack the financial ability to pay the entire premium at one time. In this scenario, consumers will need to either finance their purchase of flood insurance through debt ( e.g., interest-bearing credit cards) or forego flood insurance protection entirely. Both outcomes can exacerbate negative financial outcomes following a flood disaster, as many consumers may lack adequate funds to recover. The installment plan relieves the immediate financial pressure on policyholders from paying the entire premium amount at one time.

Finally, the ability to pay in installments may result in more policyholders retaining their flood insurance protection. Under the NFIP's current annual premium payment requirement, a policyholder who pays annually typically only interacts with their flood insurance coverage at the time of initial purchase or renewal. The policyholder must pay the full cost of flood insurance all at once, creating a different trade-off dynamic than when the cost is spread out. Facing a one-time annual payment, a policyholder may rationalize a decision to opt out of renewing on grounds that they perceive their risk to be low or that they will instead save the money spent on premium to self-fund repairs. In contrast, policyholders who make more frequent flood insurance payments will have an ongoing reminder that they are protected against flood, and may be more aware of flood alerts, news about flooding, and more accurately perceive their risk. At the time of renewal, the ability to pay in installments may support a decision to retain flood insurance.

II. Final Rule

FEMA is revising 44 CFR parts 61 and 62 as follows to add an installment plan payment option for NFIP policies.

A. 44 CFR 61.4: Special Terms and Conditions

Section 61.4(b) requires that flood insurance applicants pay their full policy premium at the time of application. FEMA is removing paragraph (b) because it conflicts with the option to pay by monthly installment plan. FEMA will retain paragraph (a) of § 61.4, as that section is unrelated to installment plans, will undesignate paragraph (a), and will rename § 61.4 “Properties in violation of law, regulation or ordinance” as this more accurately describes the contents of this revised section.

B. 44 CFR 61.10: Requirements for Issuance or Renewal of Flood Insurance Coverage

Section 61.10 provides that FEMA will not issue or renew flood insurance unless FEMA receives: (a) the full amount due (including applicable premiums, surcharges, and fees); and (b) a complete application, including the information necessary to establish a premium rate for the policy, or submission of corrected or additional information necessary to calculate the premium for the renewal of the policy. FEMA is revising paragraph (a) to specify that FEMA will not issue or renew flood insurance unless it receives the full amount due, which is either presentment of the full annual premium, or presentment of the first of a series of monthly premium installment payments inclusive of all surcharges, fees, and assessments.

The revised paragraph (a) requires the first payment to include all surcharges, fees, and assessments because the NFIA categorizes premiums separately from the surcharges, fees, and assessments of administrative expenses the agency is authorized to collect. See, e.g., 42 U.S.C. 4014(a)(1)(B)(ii); 42 U.S.C. 4014(a)(1)(B)(iii). In 1990, Congress authorized the Federal Policy Fee (FPF) which helps pay for the administrative expenses of the program, including the floodplain management and mapping activities FEMA is required to fund. 42 U.S.C. 4017a.; sec. 100212, Public Law 112-141, 126 Stat. 992. In BW-12, Congress also authorized FEMA to establish and maintain a National Flood Insurance Program Reserve Fund to cover future claim and debt expenses, especially those from catastrophic disasters. 42 U.S.C. 4014(a)(1)(B)(iii).

As a result of these statutory distinctions, FEMA currently separates the premium from the fees/surcharges/assessments in the annual bill, allowing policyholders to see their flood risk. Combining divided fees and surcharges with all the installment premium payments might distort the important risk assessment signal to policyholders. See, e.g., 42 U.S.C. 4014(a)(1)(B)(ii)-(iii). In this rulemaking, FEMA continues to separate the premium from the fees/surcharges/assessments and requires payment of the fees and surcharges up front instead of dividing them over the life of the policy. Fees and surcharges are both used to carry out certain mandatory operational activities, such as floodplain management and mapping, and fund the interest-earning National Flood Insurance Reserve Fund. 42. U.S.C. 4017(a); 42 U.S.C. 4017(c). Upfront payment of fees and surcharges with the initial premium payment will reduce administrative costs for the NFIP, a benefit to all policyholders, and align the NFIP with other commercial services familiar to policyholders ( e.g., cable, where installation fees, taxes and the like are due up front).

FEMA is moving to paragraph (a) the language currently in paragraph (b) that explains FEMA must receive a complete application or submission of corrected or additional information necessary to establish a premium.

FEMA is revising paragraph (b) to include paragraphs (b)(1) and (2). The Standard Flood Insurance Policy currently provides that FEMA will reduce coverage on a policy if the premium it receives is not sufficient to buy the kinds and amounts of coverage requested. See e.g.,44 CFR part 61, appendix A(1), art. VII.D.2. This makes sense in the context of an annual premium payment but not for monthly payments; as such, FEMA has revised paragraph (b) to provide that FEMA will not reduce coverage or reform the policy for any policyholder who makes timely installment payments in accordance with the terms identified in paragraph (a)(1)(i)(B). If a policyholder misses an installment payment, current regulations provide an opportunity to cure, as a policyholder can provide any missed or additional payment and avoid reductions in coverage or policy reformation. See e.g.,44 CFR part 61, appendix A(1), art. VII.D.3.a.(1).

Revised paragraph (b)(1) will further provide that in the event of a claim occurring prior to a policyholder completing all installment payments, the policyholder must remit the balance of the premium owed. The policyholder may settle their balance out of claim proceeds in accordance with the Standard Flood Insurance Policy. See e.g.,44 CFR part 61, appendix A(1), art. VII.D.3.a(3). FEMA is adding this language to avoid a scenario where the policyholder would consider withholding premium for reasons other than ability to pay, such as when they disagree with aspects of FEMA's claim handling, and FEMA would be forced to reduce coverage. See e.g., id. at appendix A(1), art. VII.D.2-3. Giving policyholders the option to pay their remaining premium out of their claims proceeds mitigates this risk.

Revised paragraph (b)(2) will provide that FEMA will require payment in full for premiums in the next policy term for any policyholder who fails to make all installment payments in accordance with the terms identified in paragraph (a)(1). A significant portion of policyholders are subject to seasonal flooding risk, meaning that the likelihood they will file a claim is higher during certain months of the year. For example, many policyholders in Florida face the risk of flooding due to tropical storms and hurricanes, which typically occur from the start of June through November. The purpose of paragraph (b)(2) will be to ensure policyholders are not incentivized to miss payments or cancel their coverage before the end of the policy term (for instance, at the end of hurricane season), as this could potentially create adverse financial consequences for the NFIP.

C. 44 CFR 62.23: WYO Companies Authorized

Section 62.23 governs FEMA's WYO program. Paragraph (h) describes the procedures used by WYO companies in underwriting and servicing flood insurance policies. Paragraph (h)(7) currently authorizes WYO companies to offer premium payment plans so long as the net premium depository requirements specified under the NFIP/WYO Program accounting procedures are met. This subsection also states that a WYO company's cancellation of a policy for non-payment of premium will not produce a pro rata return of the net premium deposit to the WYO company. In effect, this subsection authorizes WYO companies to offer installment payment plans if they pay the full annual premium to the NFIP and bear the risk of policyholders' non-payment of installments.

FEMA is revising paragraph (h)(7) to explain that WYO companies must offer premium payment plans under the terms prescribed by the FEMA Administrator in § 61.10(a)(1). FEMA's current regulations have provided WYO companies the ability to offer payment via installment plan, but to date, no WYO company has chosen to offer it. Because FEMA has a statutory obligation to offer policyholders the option of paying their premium via monthly installment plan, FEMA will require WYO companies to offer installment plans consistent with this rule. See42 U.S.C. 4015. Requiring adherence to FEMA's installment plan terms will ensure that all eligible policyholders with federally backed flood insurance will be treated similarly.

III. Regulatory and Economic Analysis

A. Administrative Procedure Act

1. Good Cause Exemption

The Administrative Procedure Act (APA) generally requires agencies to publish a notice of proposed rulemaking in the Federal Register and provide interested persons the opportunity to submit comments. See5 U.S.C. 553(b) and (c). The Administrative Procedure Act, 5 U.S.C. 553(b)(3)(B), provides that, when an agency for good cause finds that public notice and comment procedures are impracticable, unnecessary, or contrary to the public interest, the agency may issue a rule without providing notice and an opportunity for public comment. FEMA has determined that there is good cause to issue this rulemaking without prior proposal and opportunity for comment. The amendments to the NFIA require FEMA to offer policyholders the option to pay their premiums in monthly installments and the agency lacks discretion to reach a different outcome in response to comment. This rule revises two sections in FEMA's prior regulations requiring policyholders to pay the full amount due on a flood insurance policy before it would issue a policy for flood insurance. FEMA previously interpreted the full amount due to include the annual premium, fees and surcharges, or the amount of premium due at the time of the claim. Previously, the regulations authorized, but did not require, WYO companies to offer the monthly installment plan option to policyholders. The amendment to the NFIA requires FEMA and servicing agent, NFIP Direct, to offer the monthly installment plan as an option to policyholders. The regulations now accurately reflect the statutory language of the NFIA. Considering the statutory mandate, FEMA revises these sections without discretion.

2. Contract Exemption

Section 553(a)(2) of the APA provides an exception to this prior notice and comment requirement for matters relating to public property, loans, grants, benefits, or contracts. The exemption covers both narrow “managerial” proprietary decisions and broader proprietary “matters of interpretation and policy.” Alphapointe v. Dep't of Veterans Affairs, 416 F. Supp. 3d (D.D.C. 2019) ( quoting Nat'l Wildlife Fed'n v. Snow, 561 F.2d 227, 231-32 (D.C. Cir. 1976)). The case law interpreting the requirement sets forth a relatively brief framework for analysis: namely, that the exempted subject matters are “clearly and directly” implicated in the rulemaking at issue. Humana of S.C., Inc. v. Califano, 191 U.S. App. D.C. 368, 590 F.2d 1070, 1082 (1978) (That the governmental function is not strictly “proprietary,” or the regulation's character is not “mechanical,” does not curtail section 553(a)(2)'s permissive effect. Public policy may be sorely affected, and the wisdom of public input manifest, but the statutory exemption still prevails when “grants,” “benefits,” or other named subjects are “clearly and directly” implicated.).

As described more fully in the background section, supra, this rule is clearly and directly related to contracts. The NFIP is a Federal program enabling property owners in participating communities to purchase insurance as a protection against flood losses. A consumer may purchase a SFIP either: (1) directly from the Federal Government through a direct servicing agent (referred to as “NFIP Direct”); or (2) from a participating private insurance company through the Write Your Own (WYO) Program. The SFIP sets out the terms and conditions of insurance. See44 CFR part 61, appendix A. FEMA establishes terms and conditions of coverage and sets premiums for coverage. The terms, coverage limits, and flood insurance premiums are the same whether purchased from the NFIP Direct or the WYO Program. See44 CFR 62.23(a). For an eligible policyholder to obtain flood insurance from the NFIP, they must pay their premium and any surcharges, fees and assessments, and in exchange, they will be covered by the SFIP ( i.e., an insurance contract). This rule provides an additional approach to payment of premium to complete the contractual relationship. This statutory construct is similar to other Federal programs in which Congress has authorized an agency to enter into contracts with individuals and upheld the application of the APA contract exemption to a subsequent agency policy change that ultimately resulted in a change in terms for individual contractees or policyholders. See, e.g., Rainbow Valley Citrus Corp. v. FCIC, 506 F.2d 467 (9th Cir. 1974) (Plaintiffs, three citrus growers in Arizona, sued the Federal Crop Insurance Corporation (FCIC) challenging the FCIC's decision to discontinue citrus insurance in their area, and argued that the decision was in violation of the notice and comment rulemaking requirement under the APA. The Court found in favor of the FCIC, citing to the APA contract exemption.); Housing Authority of the City of Omaha vs. U.S. Housing Authority, 468 F.2d 1 (8th Cir. 1972) (Plaintiffs, local housing authorities, sued the Department of Housing and Urban Development (HUD) alleging that two circulars issued by HUD that required Plaintiffs to include certain tenant's rights in contracts the housing authorities entered into with renters was in violation of the notice and comment rulemaking requirement under the APA. The Court found in favor of HUD citing to the APA contract exemption.).

FEMA acknowledges its general policy to provide for public participation in rulemaking unless it determines that circumstances warrant a departure from that general policy. 44 CFR 1.3(a) and (c). The circumstances presented here warrant such a departure. The statute requires FEMA to offer policyholders the option to pay in monthly installments and notice and opportunity for comment on the revisions is unnecessary because the agency lacks discretion to reach a different outcome regarding installment plan payments for policyholders in response to comment.

B. Executive Orders 12866, “Regulatory Planning and Review,” and 13563, “Improving Regulation and Regulatory Review”

Executive Orders 12866 (Regulatory Planning and Review), as amended by Executive Order 14094 (Modernizing Regulatory Review), and 13563 (Improving Regulation and Regulatory Review) direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility.

The Office of Management and Budget (OMB) has not designated this rule a significant regulatory action under section 3(f) of Executive Order 12866, as amended by Executive Order 14094. Accordingly, OMB has not reviewed this regulatory action.

Need for Regulation

In BW-12 and the HFIAA, Congress amended the NFIA requiring FEMA to provide certain eligible policyholders with a federally backed SFIP, “the option of paying their premiums annually or monthly.” Sec. 100205(d), Public Law 112-141, 126 Stat. 405, 919 (2012) (codified at 42 U.S.C. 4015(g)), as amended by sec. 11(a), Public Law 113-89, 128 Stat. 1020, 1025 (2014). Currently, FEMA and WYO companies bill their customers' NFIP premiums on an annual basis as a lump sum. This rule will fulfill the statutory requirement by allowing residential and commercial policyholders to pay their premiums in 11 to 12 payments over the course of the year.

FEMA, through its subcomponent the Federal Insurance Directorate, is promulgating this rule to implement a monthly installment payment plan option for policyholders not currently paying flood insurance premiums through escrow. The installment plan option is available for residential and non-residential SFIP policyholders.

A monthly installment payment plan is in keeping with the property and casualty insurance industry standard. Aligning with these consumer expectations will make it easier for consumers to consider acquiring flood insurance. Additionally, some consumers may lack the financial ability to pay the entire premium at one time. The option to pay in installments may increase policyholders' budgetary flexibility by alleviating cash flow pressure, as they could use the deferred payment to address other needs.

Affected Population

NFIP enables homeowners, renters, and businesses in participating communities to purchase Federal insurance protection against losses from floods. Communities participate in the NFIP after they agree to adopt and enforce minimum floodplain development regulations designed to reduce future flood risk in Special Flood Hazard Areas (SFHAs).

As of April 30, 2024, according to FEMA's PIVOT database, there were 4,664,515 NFIP policies in force, including 3,248,737 residential Dwelling Form Policies, 290,800 Commercial Policies, 1,115,443 Condominium Association Policies and 9,535 Group Flood Insurance Policies (GFIPs). GFIPs are not included in the population of policyholders that will pay monthly, which means the affected population of potentially eligible individual policies is 4,654,980 (3,248,737 + 290,800 + 1,115,443).

FEMA expects the number of individual policyholders who will make the change from paying annually to paying monthly will be much less than the total eligible affected population. FEMA estimates that 45 percent of potentially eligible individual policyholders are residential mortgage holders who already pay their NFIP premiums on a regular basis (generally monthly) into an escrow account as required under section 102 of the Flood Disaster Protection Act of 1973. FEMA does not have enough information to estimate how many condominium association policyholders might switch from an annual payment to a monthly payment. Condominium associations typically include flood insurance payments in their condominium association fees which means such associations typically collect the premium before the renewal premium is due. FEMA does not expect condo associations to utilize installment plans because these associations will have the available cash reserves to pay a yearly premium. Switching to monthly payments would increase uncertainty and unnecessarily complicate their accounting practices.

Excluding these two populations from the analysis decreases the total population from approximately 4.7 million policyholders to 1.9 million policyholders. Specifically, according to PIVOT data, in 2023 there were 1,794,911 residential policyholders who did not have a mortgage and were not condominium associations who would most likely opt for installment plans as they must currently make an annual lump sum payment. Additionally, FEMA expects 76,876 small businesses and houses of worship (according to PIVOT data) to change to monthly payment installments because they typically have smaller cash reserves on hand. This makes a total of 1,871,787 (1,794,911 + 76,876) out of 4,664,515 policyholders that will utilize monthly installment plans to pay their flood insurance premiums. For the purposes of this analysis, FEMA assumed that all eligible policyholders, excluding residential mortgage holders, condominium associations, and larger commercial policyholders will utilize installment plans. This leaves 1,453,826 mortgage-paying residential policyholders, 1,115,443 condominium association policyholders, and 211,175 commercial property policyholders that are not expected to opt for installment plans. This may overestimate the number of policyholders paying in installments and the overall economic impact of this rule.

Baseline and Affected Population

Following OMB Circular A-4 guidance, FEMA assessed impacts of this rule against a no-action baseline. The no-action baseline considers what the world will look like without this rule. Accordingly, measuring the rule against a no-action baseline shows the effects of the rule as compared to current FEMA practice, because FEMA has not implemented the option to pay flood insurance premiums through installment plans. Currently, SFIPs are issued on a one-year term, and policyholders must pay full annual premiums at the inception of policy coverage and at annual renewal.

FEMA used policies-in-force data from 2023 to 2024 to estimate the number of affected NFIP policyholders. During this period, the number of NFIP policies was 4,720,559 on April 1, 2023 and 4,672,375 policies on April 1, 2024. FEMA was not able to forecast an increase in currently uninsured property owners purchasing flood insurance once the installment plan option is available. However, FEMA anticipates the flexibility provided through implementation of an installment payment plan will likely result in greater retention of policyholders and incentivize greater participation in the NFIP.

Flood insurance premiums are subject to change year-to-year due to any number of factors that may cause unexpected increases in yearly premiums. The option to pay in installments may relieve some of the burden of changes in flood insurance premiums. Due to the numerous factors affecting premium rates and the rate of flood insurance uptake nationwide, FEMA is unable to forecast the impact that the availability of installment plans may have on affordability or future participation in the NFIP.

Costs

This rule will result in start-up (upfront) and annual costs to FEMA and WYO insurance companies. Over 10 years, FEMA estimates a total cost of $34,181,503 undiscounted. The following is a breakdown of the specific costs to FEMA,WYO companies, and NFIP Policyholders.

Federal Cost s: FEMA expects to incur development costs to adapt current NFIP systems to handle the administration of installment plans and payments that will be processed by the existing pay.gov system. Based on estimates from FEMA subject matter experts, development work will require one General Schedule (GS)-13 Step 5 and eight GS-12 Step 5 equivalent contractors for a total of 700 hours. According to the Office of Personnel Management (OPM), hourly wage rates in the Washington-Baltimore-Arlington locality for GS-13 Step 5 is $60.83 and GS-12 Step 5 staff is $51.15. FEMA assumes the contractors would have equivalent salaries to their respective GS levels. The combined hourly staff wage rate equals $470.03 ((1 × $60.83) + (8 × $51.15)). Additionally, FEMA adds a 1.45 wage multiplier to the wage rate to account for the full cost of employment, making it $681.54 ($470.03 × 1.45) per hour for 700 hours for a total of $477,078 (((1 × $60.83) + (8 × $51.15)) × 1.45 × 700).

To create marketing materials, FEMA subject matter experts estimate a team of four GS-14 level employees working for 40 hours each on this project. Using the prior methodology, OPM wage rate for a GS-14 Step 5 is $71.88 per hour and including the wage multiplier equals $104.23 ($71.88 × 1.45) per hour for a total cost of $16,677 ($104.23 × 4 staff × 40 hours). FEMA expects a total of $493,755 (477,078 + $16,677) for startup costs.

For ongoing costs, FEMA expects to hire two additional GS-13 Step 5 employees to handle the installment plan program full time. This would cost $368,152 (2 GS-13 Step 5 × $126,949 annual salary × 1.45) per year. These costs include the cost for FEMA developing and testing guidance materials, systems, trainings, and marketing content as well as ongoing support for managing installment plans. FEMA anticipates that it will largely use existing NFIP infrastructure and resources to support implementation of installment plans and that annual costs associated with maintaining installment plan policies are comparable to annual policies and thus do not represent an additional cost.

WYO Costs: FEMA's current regulations have provided WYO companies the ability to offer payment via installment plan, but to date, no WYO company has chosen to offer it. Because FEMA has a statutory obligation to offer policyholders the option of paying their premium via monthly installment plan, FEMA will require WYO companies to offer installment plans consistent with this rule. WYO insurers will use their customary business practices to secure monthly payment of flood insurance premiums from policyholders. However, for many WYO insurers, flood insurance premiums are handled separately and will require additional systems or modification of existing systems and infrastructure to support flood insurance installment payment plans. FEMA does not have access to internal WYO insurance company data on their information technology (IT) costs. However, based on FEMA's experience with managing IT costs for insurance purposes, FEMA estimates eight WYO vendors to each incur $200,000 in costs for updating their internal systems for a total upfront starting cost of $1,600,000 ($200,000 × 8) in year 1. Based on feedback from WYO vendors and their finance teams, FEMA expects each of the eight WYO vendors to hire 2 additional staff members for the support and operation of installment plan systems, incurring $1,986,152 (8 × 2 × $85,610 × 1.45) per year. Bureau of Labor Statistics data regarding insurance underwriters is used as a proxy for the salary of the additional hires.

Policyholder Costs: FEMA estimates that there will be no additional financial costs to policyholders. However, it may result in a small amount of time burden to make 12 installment payments in lieu of one annual payment. Policyholders will make payments via automatic payments from a bank account, debit card, or credit card through the pay.gov system. FEMA estimates a total burden hour cost of $8,544,708 for NFIP policyholders to enroll in pay.gov. This estimate is based on an expectation that pay.gov account creation takes 6 minutes on average for a total of 187,179 hours for the estimated 1,871,787 policyholders that will use the system. At a fully loaded wage rate of $45.65 ($31.48 × 1.45) per hour for all workers, this makes a total of $8,544,708 one-time cost for account creation. Policyholders that do not have access to pay.gov payment methods will not be eligible. Policyholders that decide to switch to installment plans will receive their information via already existing marketing sources and thus will not incur additional familiarization costs.

Table 1 shows FEMA, WYO, and policyholder estimated costs over a 10-year period. The total cost over 10 years equals $34,181,503 undiscounted and $31,577,602 discounted at 2 percent in 2023 dollars.