Changes to the National Flood Insurance Program: From Biggert-Waters. to Grimm-Waters. Click to edit Master title style

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1 Changes to the National Flood Insurance Program: From Biggert-Waters Click to edit Master title style to Grimm-Waters Click to edit Master subtitle style Thomas Ruppert Coastal Planning Specialist Florida Sea Grant With thanks for slides and information to: Sue Hopfensperger, Insurance Services Office, The Association of State Floodplain Managers, & Susan Wilson, FEMA Region IV

2 A Numbers Game... Over 80% of homes Over $2 billion $24 billion

3 Outline NFIP background BW12 Pre-FIRM or post-firm???? GW14 What it means to you Discussion

4 Average Annual Flood Losses Slide courtesy of Sam Medlock, ASFPM $10+ billion annually by 2010 Three-fold increase from early 1900s Per capita damages increased by more than a factor of 2.5 in the previous century--in real dollar terms 1910s 1920s 1930s 1940s 1950s 1960s 1970s 1980s 1990s 2000s Average Annual Flood Damages $2.2 $2.0 $2.9 $2.4 $3.4 $2.2 $4.9 $3.3 $5.6 $10.0 Billions (adjusted to 1999 dollars)

5 NFIP Background Federal response to long-term problem Change from just structural approach 100-year storm as Base Flood Elevation Premium cost = type of property and difference b/n BFE and elevation NFIP policies only available in participating communities Cost of insurance influenced by community actions (or inactions!)

6 Does the Property Requires Flood Insurance? Everyone lives in a flood zone! The NFIP s Special Flood Hazard Area and the Base Flood Elevation not safety standards If you have a federally backed mortgage (lenders must require or face massive penalties)

7 Pre-FIRM vs. Post-FIRM FIRM = Flood Insurance Rate Map Pre-FIRM = pre-1975 or first FIRM in area Post-FIRM = all built after a FIRM developed Treated differently in 2012 and 2014 changes

8 Flood Zones Special Flood Hazard Areas (SFHA) A or V zones (A, AE, AH, AO, AR, V, VE,or A99) Often marked with a BFE (base flood elevation) Moderate to low risk Zones B, C, or X Undetermined risk Zone D

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10 FEMA s analysis and interpretation rules A Warning

11 From Biggert to Grimm: Homeowner Flood Insurance Affordability Act of 2014 (a.k.a. HFIAA) Stops immediate loss of subsidies for new policies or home sales Existing policy rates for new owners Reinstates grandfathering Adds surcharges

12 HFIAA Changes Primary residence only needs to be lived in more than 50% of year rather than 80% Requires signed verification form and: Driver s license Automobile registration Proof of insurance for a vehicle Voter s registration Documents showing where children attend school: or Homestead Tax Credit form for primary residence

13 Possible NIFP Change impacts to pre- FIRM property

14 HFIAA Changes REFUNDS for certain properties (mostly pre- FIRM that paid more than an 18% annual increase due to BW-12) Refunds NOT available for: Pre-FIRM non-primary residences Severe repetitive loss properties Grandfathered properties (post-firm) Premiums for these may still increase up to 25%/yr.

15 HFIAA Changes If newly mapped into a flood zone, PRP for first year, then up to 18%/yr. increase to real-risk rate Eligibility for PRP lost if there is a claim

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17 What doesn t change? Does not change rules for: Non-primary residences Severe repetitive loss Business property Substantially damaged/improved (but does move threshold back to 50% from 30%) Still increase 25% per year as of Oct. 1, 2013

18 HFIAA Changes Primary residence only needs to be lived in more than 50% of year rather than 80% Requires signed verification form and: Driver s license Automobile registration Proof of insurance for a vehicle Voter s registration Documents showing where children attend school: or Homestead Tax Credit form for primary residence

19 HFIAA Changes REFUNDS for certain properties (mostly pre- FIRM that paid more than an 18% annual increase due to BW-12) Refunds NOT available for: Pre-FIRM non-primary residences Severe repetitive loss properties Grandfathered properties (post-firm) Premiums for these may still increase up to 25%/yr.

20 What this means to you Pre-FIRM or post-firm? Post-FIRM no impact from BW-12 and HFIAA except usual rate increases and new fees/surcharges Pre-FIRM Must have documentation of primary residence to keep any subsidy Subject to increases even if not sold and maintained coverage as primary residence

21 What this means to you: Pre-FIRM impacts (continued) Pre-FIRM impacts (continued): Easier to sell?... Maybe, as purchasers keep subsidy If full-risk is cheaper, you get that Encourage buyers and sellers to get an ELEVATION CERTIFICATE (E.C.)

22 What this means to you: Pre-FIRM impacts (continued) Refunds for a few properties (pending guidance) New policy after July 6, 2012 Maybe to post-march 21, 2014 renewals whose increased exceeded 18% NO REFUNDS for: Non-primary residences Severe repetitive loss Substantially damaged or improved properties (after July 6, 2012) Grandfathered properties

23 HFIAA Changes Policy Issues Addresses NFIP debt issues by a new surcharge on all NFIP policies until subsidies ended for all policies Allows for installment plan rather than escrow Increases maximum allowable deductibles Encourages minimizing policies costing more than 1% of coverage amount

24 Some Good Outcomes from Focus on Flood Insurance Increased awareness of flood risk Stronger focus on mitigation More support for the Community Rating System If you want cheaper flood insurance, SUPPORT LOCAL POLICIES THAT IMPROVE FLOOD PLAIN MANAGEMENT

25 For more information: ng/insurance-issues-coast/ irstlevelmenuid=187&siteid=1 With thanks for slides and information to: Sam Medlock, Association of State Floodplain Managers, Sue Hopfensperger, Insurance Services Office, & Susan Wilson, FEMA Region IV Thomas Ruppert Florida Sea Grant Coastal Planning Specialist