Important Flood Information – (NFIP) National Flood Insurance Program Changes Effective April 1, 2016

Over the past several years, there have been many National Flood Insurance Program changes (NFIP). From the implementation of the Biggert-Waters Flood Insurance Reform Act (BW12) in 2012 to the Homeowners Flood Insurance Affordability Act (HFIAA) introduced in 2014, much work has been done in an effort to stabilize the NFIP without heavily impacting policyholder pricing.

Effective April 1, 2016, there will be additional NFIP changes. So what’s changing?

National Flood Insurance Program Fee Increases

• Federal policy fee increases on preferred risk policies from $22 to $25, standard policies from $45 to $50. The federal policy fee for RCBAP policies will vary depending on the number of units in a building
• Preferred risk policy reserve fund assessment fee increases from 10% to 15%

National Flood Insurance Program Rate Increases

• Rate increases will vary depending on what flood zone your property is in
• 25% rate increase for certain Pre-FIRM subsidized policies:
  • Non-Residential Business properties* (*this does not apply to Other Non-Residential properties which can be identified by completing the business use questionnaire)
  • Non-Primary residences
  • Severe Repetitive Loss properties
  • Substantially damaged/improved properties

Pre-FIRM Subsidized Policies

• FEMA is eliminating subsidies for certain Pre-FIRM properties that lapse and are reinstated after 90 days from expiration or when the lapse occurred while the property was subject to the mandatory purchase provision
• Buildings with subsidized rates that lapse for more than 90 days will have full risk rates applied and are subject to a 30-day wait
• Properties that have been in the private market for more than 120 days after NFIP coverage expired will have full risk rates applied

Newly Mapped Program

Properties will no longer be eligible for the Newly Mapped program/rates if:

• The NFIP policy has lapsed more than 90 days after expiration – this applies if the coverage is with the same or a different NFIP insurer
• The property is not covered by the NFIP as of 3/31/2016 and was newly mapped into a Special Flood Hazard Area (SFHA) by a Flood Insurance Rate Map (FIRM) revision between 10/1/2008 and 4/1/2015

                              Note:

• Post-FIRM properties newly mapped into an SFHA between 10/1/2008 and 03/31/2015 and not covered under the NFIP as of 3/31/2016 may qualify for built-in-compliance grandfathering rates
• Pre-FIRM properties newly mapped into a SFHA between 10/1/2008 and 03/31/2015 and not covered under the NFIP as of 3/31/2016 may qualify for Pre-Firm subsidized rates
• Properties newly mapped as of 4/1/2015 have 12 months after the FIRM map revision date to obtain coverage in the Newly Mapped program (after 12 months these properties will be placed in the standard flood program)

It’s important to note, if you have an existing NFIP flood policy, changes in the program will not affect your policy until your renewal. New flood policies quoted and bound on or after 4/1/2016 will be subject to the new changes.

We’re here to help. If you would like to learn more about this, talk with your account manager or one of our flood insurance specialists to help with any questions.