Agenda. Introduction. Introduction -Map Study Lifecycle. Insurance Benefits of New Map

Transcription

1 Agenda Introduction Effects of Map Changes on Flood Insurance Lower risk to higher risk ( Grandfathering ) Higher risk to lower risk ( Conversion ) No Change Vertical Datum change Summary Levees Levees Levees Outreach Questions Bruce A. Bender Bender Consulting Services, Inc. Dorothy Martinez, CFM- GeoLearning/H2OPartners, Inc. National Flood Conference, San Diego, CA April 12-14, 2010 Introduction Map Changes = Impact on Residents & Businesses Maps are changing and the changes affect you The risk of flooding is real; know the level of your risk Flood map changes have insurance implications Understand your options and how you can save money New maps = safe communities Introduction -Map Study Lifecycle Insurance Benefits of New Map Adoption Stakeholder, Media & Public Outreach Preliminary Release Stakeholder, Media & Public Outreach Project Scoping Initial Involvement Data/Map Development Stakeholder Outreach Identifies current flood hazard risks Better delineates Base Flood Elevation (BFE) Provides for more accurate rating Allows property owners to make more informed decisions 1

2 Essential Elements of Rating Two rate structures: Community Name Emergency vs. Regular Date of construction Pre-FIRM vs. Post-FIRM Flood Zone Elevation Difference CRS Discount Occupancy type Number of floors Basement/Enclosure Cov./Deductible/Fees Pre-FIRM Old Standards Built before initial FIRM or On or before 12/31/1974 Post-FIRM New Standards or In Compliance On or After the initial FIRM or After 12/31/1974 whichever is LATER Preferred Risk vs. Standard Effective Dates Preferred Risk Rates Must be in Zone B, C, or X at time of application AND each subsequent renewal* Fixed premiums; fixed limits Limited loss history Standard Rates Rate Tables provided in Flood Insurance Manual Risks not eligible for Preferred Risk Policy Flexible limits NOTE: *A building which becomes ineligible for PRP due to a zone change will renew using Standard Rates. However, the old low- or moderate-risk zone can still be locked in. 30-days 1-day 0 days Effects of Map Changes on Insurance Effects of Map Changes On Flood Insurance 1. Fashions change 2

3 Effects of Map Changes on Insurance Effects of Map Changes on Insurance 1. Properties move into a high-risk zone (A or V) from a low- or moderate risk zone (B,C,X) (e.g. Grandfathering) 2. Properties move into a low- or moderate risk zone (B, C, X) from a high-risk zone (A or V) (e.g. Conversion) 4. There is a change in vertical datum 5. There is no change.but are they fully insured? 3. There is a change in Base Flood Elevation (BFE) Map Grandfather Rules Properties Mapped from Lower Risk Zones to Higher Risk Zones (Grandfathering) Low Risk High Risk BENEFIT OPTIONS: Use the current rating criteria for that property; or Have the premium rate determined by: the BFE and/or flood zone on the FIRM (old map) in effect when the building was originally constructed (for those built in compliance); or when coverage was first obtained (for those with continuous coverage) Grandfather Rule Locking In Before a Map Change For properties moving from low-moderate risk zones to high risk zones* Two Opportunities Lock in current zone or BFE before a map revision (Pre- and Post-FIRM structures) Lock in previous flood zone or BFE after a map revision (mostly Post-FIRM structures) Buy before a new FIRM becomes effective Applies to Pre-FIRM and Post-FIRM structures Can be purchased up to the day before the map s effective date Coverage must be maintained continuously for Pre- FIRM structures Policy can be assigned to a new owner *Also applies to properties being mapped from an A zone to a V zone 3

4 Locking In Before a Map Change Locking In Before Map Revision Example Property Owner Options Purchases a policy before the map changes; e.g. Preferred Risk Policy* if in B, C, X zone; Already has a policy and keeps the prior zone and base flood elevation for rating as long as continuous coverage is maintained; or Uses the zone that provides the lowest rate Zone X in 2000 *Note: At the first renewal, the PRP must be re-written with standard X rates; the ZONE is grandfathered in not the rate. Pre-FIRM Building $333 PRP Locking In Before Map Revision Example Which Zone Do You Use? Preliminary June 2006 ZONE AE Post-FIRM Example*: X zone vs. AE zone (At BFE) At BFE At BFE Not Grandfathered: $2,162 SFIP (AE Zone) $6,486 in 3 years Grandfathered: $ 333 PRP (1 st year) $1,307 SFIP-X (yr 2-3) $2,947 in 3 years Locked X Zone $333 PRP (1 st Year) $1,307 SFIP-X (year 2 & 3) $2,947 in 3 years New AE Zone (At BFE) $333 PRP (1 st Year) $1,428 SFIP (Year 2 & 3) $3,189 in 3 years Which Zone Do You Use? Locking in After Map Revision +2 above BFE Post-FIRM Example*: X zone vs. AE zone (+2 BFE) Locked X Zone: $ 333 PRP (1st year) $1,307 SFIP-X (yr 2 & 3) $2,947 in 3 years New AE Zone (+2 BFE): $ 333 PRP (1 st year) $ 547 SFIP (yr 2 & 3) $1,427 in 3 years +2 above BFE Second Chance Option Building was constructed in compliance with a specific FIRM Applies primarily to Post-FIRM structures Can lock in previous zone or previous BFE 4

5 Locking in Previous Zone After Map Revision Second Chance Option Which structures can benefit? Mostly applies to Post-FIRM structures (built after initial FIRM in the community) Provide the insurance agent either: A copy of the previous flood map showing the previous zone A letter from local community official Always use the zone that gives the best rate Note: Continuous Coverage is not required Which Zone is Best to Lock In? $2,947 in 3 years $3,921 in 3 years $1,641 REMEMBER that Zone X may not in be 3 years the best rate! Locked in Post-FIRM X Zone BEFORE map revision: $333* PRP (1st year) $1,307* SFIP-X (yr 2 & 3) Locked in Post-FIRM X Zone AFTER map revision: $1,307* SFIP (1 st year) $1,307* SFIP (yr 2 & 3) New Post-FIRM AE Zone (+2): $ 547* SFIP (1 st year) $ 547* SFIP (yr 2 & 3) REMEMBER that Zone X may not be the best rate! Benefits of Elevation 1. Better Rates 2. Higher above ground = Safer Locking in Previous BFE After Map Revision Second Chance Option Which structures can benefit? Mostly applies to Post-FIRM structures (built after initial FIRM in the community) Proof Required A copy of the previous flood map showing the previous Base Flood Elevation (BFE) An Elevation Certificate A letter from community official Always use the BFE that provides best rate Note: Continuous Coverage not required Lowest Floor Elevation: 77 feet Lowest Floor Elevation: 77 feet +1 above BFE Approx $776-1 below BFE $5,614 5

6 Locking In a Previous BFE 1996 Zone AE BFE: 56 LFE: 57 Post-FIRM Example*: OLD BFE vs. Current Old BFE +1-1 New BFE Locked Old BFE (+1): $ 776 SFIP (3 years) $2,328 in 3 years Use current BFE (-1): $ 5,614 (3 years) $16,842 in 3 years +1 above BFE $ Zone AE BFE: 65 LFE: 57 Substantial Damage/Improvement Grandfathering does NOT apply if the building is: Substantially damaged; or Substantially improved -8 below BFE $44,014 Map Grandfather Clarifications May 1, 2010 Example: Altered and Compliant* Existing Business- Renewal Policies Cannot be altered to make the LFE level lower than the BFE on that FIRM means: For elevated Buildings, LFE must be at or above the BFE Enclosures must be unfinished and used solely for parking, storage, or building access Proper Openings or Breakaway walls New Business- Post-FIRM Built in compliance with map in effect at the time of construction means: For elevated Buildings, LFE must be at or above the BFE Enclosures must be unfinished and used solely for parking, storage, or building access Proper Openings or Breakaway walls Built in Compliance in 1986 Modified without a permit in 1990 *This applies to Existing Grandfathered Business and New In Compliance Business 6

7 Map Grandfather Clarifications May 1, 2010 Pre-FIRM eligibility Pre-FIRM Construction- Built in Compliance Because there was no FIRM on date of construction, most Pre-FIRM construction are ineligible for the Built in Compliance grandfathering rule. Exceptions: Communities with initial FIRM dates prior to 12/31/1974 Applies to Pre-FIRM construction only if the date of construction was on or before 12/31/74 AND was also on or after the FIRM date 1. Pre-FIRM structure 2. Built in Built in compliance with 1970 FIRM Conversion Properties Being Mapped from a High-Risk Zone to a Low-Moderate Risk Zone (Conversion) High Risk Low Risk For properties moving from high to lowmoderate risk zones Created to encourage policyholders to maintain coverage ( Risk is reduced; not removed ) Conversion Conversion Procedure: Ensure property is eligible for PRP (e.g. losses, zone) Chose proper PRP building limit (note: contents are included) Rewrite existing SFIP as a PRP, using last renewal date before map change Results: No gaps in coverage (no 30-day wait) A refund to the policyholder ( Stay covered and get money back ) Strengthened customer loyalty for the agent Agent keeps commission on old and new policy 7

8 No Change PROPERTIES WITH NO CHANGE Still at risk; know the level of risk If currently has flood insurance: Is it at current replacement cost? Are the contents fully covered? If not currently covered for flood: Do they qualify for a PRP? If they don t want coverage, have them decline in writing to the agent! V.D. Problem EFFECTS OF CHANGE IN VERTICAL DATUM When rating, always look at the vertical datum used on the FIRM and on the EC If they are the same (e.g. both NAVD88 or NGVD 29), no problem If they are different, then you must convert one, or you will have a problem Average conversion factor may be on the map panel Conversion factor will be in the FIS Summary Effects of Map Changes -SUMMARY- Lower Risk to Higher Risk (or BFE): Grandfathering Pre-FIRM Buildings One Chance to lock in the zone Purchase flood insurance before the maps become effective Post-FIRM Buildings Two Chances to lock in zone or BFE Purchase flood insurance before the maps become effective Obtain proof that the building was built in compliance at the time it was constructed Remember: Sometimes the rate is better when using the new maps; both options should be checked! 8

9 Summary High-risk to Moderate-Low Risk: Conversion Converts existing policy to PRP No gaps in coverage Policyholder gets a refund and maintains coverage Agent gets to keep both commission Levees Levees.Levees Vertical Datum Changes Ensure to use LFE and BFE that have the same vertical datum or one is converted to the other Levees Levees Levees Levees provide protection. Levees..Levees..Levees If the levee is Flood maps show this risk And these insurance requirements apply Non-accredited High flood risk (SFHA) Flood insurance required for most structures Accredited Moderate flood risk Flood insurance not required but recommended De-accredited High flood risk Flood insurance required for most structures Provisionally accredited Moderate flood risk (2- year documentation window) Temporarily identified as In Need of Maintenance Flood risk remains as currently designated Flood insurance not required but strongly recommended Flood insurance not required but strongly recommended Effects of Map Changes -OUTREACH- 9

10 Maps are Changing; Know What To Say Outreach - Messaging You know what to do; but what do you and your staff say? Outreach is key throughout the mapping process Understand the map change effects on insurance and properly communicate them Stay informed; get involved Mapped Into A High-Risk Area Mapped into Lower Risk or No Change WHAT YOU SHOULD KNOW WHAT YOU SHOULD SAY Grandfathering Offers Savings The National Flood Insurance Program (NFIP) has grandfather rules to Your building has been designated in a high-risk area for recognize policyholders who have either built in compliance with the flood flooding. map or who maintain continuous coverage. These rules allow such You will be required to purchase a flood policy if you carry a policyholders to benefit in the rating for that building. mortgage from a federally regulated or insured lender. Grandfathering is available for new purchasers as well as existing customers. If you don t carry a mortgage, you should still protect your Always use the new map if it will provide a more favorable premium (lower home with flood insurance. National statistics show that you are almost 2 ½ times more likely to have damage by a flood than by rate). fire. Purchasing before the map revision allows you to save on insurance and provides protection earlier Loyal Customers Can Keep Existing Zone (Pre- & Post- FIRM) Customers, who buy a policy before maps are adopted and maintain coverage, Buy now to save later. can retain the lower-risk zone rate. Renew to stay protected and save money. Eligible customers can purchase a PRP now. It will renew to an X zone rated You have one chance to lock in these savings; buy now before the standard policy. maps become effective (for pre-firm structures). Have a policy: maintain continuous coverage. A policy can be assigned to future property owner. Show Compliance With a Previous FIRM for Lower Costs (Post- FIRM only) To keep existing zones when the structure was built: Get a copy of FIRM Lower cost options: show building was built in compliance at effective at time of construction or a compliance letter from community time of construction. official. Makes you eligible for a lower rate, keeps costs DOWN. To keep existing BFE when the structure was built: Get Elevation Cert, and copy of FIRM effective at time of construction; or compliance letter from the community official. WHAT YOU SHOULD KNOW WHAT YOU SHOULD SAY Mapped Into Moderate Low Risk Area Conversion Offers Savings Write a Preferred Risk Policy (PRP). Use existing policy s current effective date, and use closest coverage limit or next highest options if no exact match. Submit PRP application, and insured signed conversion form. No Change in Flood Hazard Status Review of Current Coverage Ensures Protection Do they have flood insurance? If so, is the building limit up-to-date? Contents coverage provided and limit up-to-date? Your risk is reduced, not removed! Eligible for low-cost, Preferred Risk Policy Stay protected and get money back once maps are adopted. No gaps in coverage; no additional money up front. About 25% of all flood claims occur in moderateand low-risk areas. Homeowners insurance doesn t cover damage due to floods. Floods happen anytime, anywhere. Your home is a major investment protect it. What You DON T Say DO Stay Informed & Involved You don t live in a flood zone You don t need flood insurance Check out Mapping Status Report An interactive mapping schedule on Agents.FloodSmart.gov Can now drill down to county and community level data Includes preliminary date, appeal start and end date, letter of final determination date, and effective date 10

11 DO Stay Informed & Involved Summary Get Involved Get know your local floodplain manager Help organize stakeholder meetings Map Changes = Impact on Residents & Businesses Maps are changing and the changes affect you The risk of flooding is real; know the level of your risk Flood map changes have insurance implications Understand your options and how you can save money New maps = safer community STAKEHOLDER ADVISORY GROUP MONTHLY MEETING Resources QUESTIONS? Consumer Site Agent Site FEMA Resource Library: Map Service Center (including historic maps): FEMA Map Information exchange (FMIX): FEMA MAP FEMA Levee site: Map Change and Levee Insurance-Related Outreach Toolkits Bruce A. Bender Bender Consulting Services, Inc babender@cox.net For more information: Dorothy Martinez, CFM GeoLearning/H2O Partners, Inc dorothy@h2opartnersusa.com Thanks for Your Participation I know, but calling it Grandmothering just doesn t have the same effect! 11