Several changes to the National Flood Insurance Program take effect on April 1, impacting a wide range of builders, developers, businesses, home owners and insurance agents operating in areas covered by the National Flood Insurance Program.
Federal Emergency Management Agency has indicated that the maximum individual rate increase for any individual policy is 18%, with a few exceptions. The guidance also states that average premiums – once certain fees are accounted for – will increase 9% for policies written or renewed on or after April 1. For most risk classes, the average annual premium rate increases are limited to 15%.
Many of the changes are a result of continued implementation of the Homeowner Flood Insurance Affordability Act of 2014 and the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12). Congress passed BW-12 and subsequently Homeowner Flood Insurance Affordability Act to reauthorize and reform the program.
In its summary, Federal Emergency Management Agency notes that changes will also affect mapping, mitigation efforts and program outreach. Each property will see distinct impacts because characteristics such as flood zone, year built (which affects whether it is depicted on the Flood Insurance Rate Map) and property type still play a role in individual premiums.
Other changes include new rating methodology for properties newly mapped into a Special Flood Hazard Area and the elimination of subsidies for certain pre-FIRM policies that lapse and are reinstated past 90 days. In instances where a policyholder wants to return to the National Flood Insurance Program program after the lapse, he or she must obtain an elevation certificate and use the full-risk rate.
Furthermore, Homeowner Flood Insurance Affordability Act Section 28 requires Federal Emergency Management Agency to clearly communicate full flood risk determinations to individual property owners, regardless of whether their premium rates are full-risk rates. To achieve this, Federal Emergency Management Agency will require National Flood Insurance Program insurers to report current flood zone and rate map information for all new business polices effective on or after April 1 and for all renewals effective on or after Oct. 1.
The $25 surcharge for single-family primary residences and the $250 surcharge for all other policies, which went into effect April 1, 2015, remains unchanged.
This round of implementation activity occurs at the same time as regulators look ahead to the next round of program reauthorizations. Congress must pass National Flood Insurance Program reauthorization by Sept. 30, 2017.
In January, the National Association of Home Builders took part in an introductory roundtable and a hearing to discuss National Flood Insurance Program re-authorization. Congress plans to release draft legislation by the end of 2016.
We are well aware of the shocking price increases some properties are facing for flood insurance policies in 2014. Your HBA is working to get Congress to mitigate these changes, and we may have some windows of opportunity to raise the profile of this problem with Congress in the coming weeks.
What we need, however, are some specific examples of price increases. We are aware of plenty of anecdotal stories, as is Congress, but we lack pricing information linked to a specific property.
If you are running into problems with flood insurance, you may be able to help.
What we need: is documentation showing the current policy’s rate and the new rate. We don’t need the property owner’s name but must have the address.
Any information shared with us will be shared with congressional committee staff and, very likely, FEMA. We realize this may make some property owners uncomfortable, but there is always the possibility that FEMA will review and adjust it in light of a congressional inquiry!
It would be incredibly helpful to have some documented case examples to highlight the problem.
Greenville County, in cooperation with the S.C. Department of Natural Resources (DNR) and the Federal Emergency Management Agency (FEMA), is updating its flood management program. The updates include:
- Revising the Flood Insurance Rate Maps (FIRM), which include, in some cases, additional limits on construction in certain areas
- Updating public educational programs which include information on building in flood-prone areas
- Creating a resource page where property owners may determine if their property is in a floodplain
Greenville County has created a resource page on its Flood Management Program that includes important information about building in flood-prone areas. Click here to visit the Flood Management Program page at greenvillecounty.org.
For example, did you know that a Special Flood Hazard Area (SFHA), or floodplain, is defined as having a one percent annual chance of flooding. The standard was chosen as a compromise between the need for building restrictions to minimize potential loss of life and property and the economic benefits to be derived from floodplain development. Development may take place within the SFHA, provided that development complies with local floodplain management ordinances, which must meet the minimum Federal requirements. Flood insurance is required for insurable structures within the SFHA to protect federally funded or federally backed investments and assistance used for acquisition and/or construction purposes within communities participating in the National Flood Insurance Program (NFIP).
Greenville County announced a public meeting on the new Flood Insurance Rate Maps. Representatives from Greenville County, S.C. Department of Natural Resources, and the Federal Emergency Management Agency will be on hand to answer questions.
- December 14, 2011
- 4 p.m. until 8 p.m.
- Greenville County Square, Conference Room A, 301 University Ridge, Greenville SC