FEMA Homeowner Flood Insurance Affordability Act

Transcription

1 FEMA Hmewner Fld Insurance Affrdability Act Fact Sheet 0 n March 21, 2014, President Obama signed the Hmewner Fld Insurance Affrdability Act f2014 int law. Cmplete text f the Act is available at: /beta.cngress.gv//bill/113thcn gress/huse-bi /text. This law repeals and mdifies certain prvisins f the Biggert-Waters Fld Insurance Refrm Act, which was enacted in 2012, and makes additinal prgram changes t ther aspects f the prgram nt cvered by that Act. Many prvisins f the Biggert Waters Fld Insurance Refrm Act remain and are still being implemented. WhileFEMA actively wrks t implement the new law, we encurage plicyhlders t maintain and keep current fld insurance plicies. FEMA des NOT recmmend cancelling a fld insurance plicy. Cancelling fld insurance plicies nw will leave plicyhlders unprtected during spring flding and may cause plicyhlders t lse imprtant discunts n their rate if they reinstate in the future. The new law lwers the recent rate increases n sme plicies, prevents sme future rate increases, and implements a surcharge n all plicyhlders. The Act als repeals certain rate increases that have already gne int effect and prvides fr refunds t thse plicyhlders. The Act als authrizes additinal resurces fr the Natinal Academy f Sciences (NAS) t 1 cmpanies, and ther stakehlders t implement these Cngressinally mandated refrms and t wrking tward ur shared gals f helping families maintain affrdable fld insurance, ensuring the financial stability f the NFJP, and reducing the risks and cnsequences f flding natinwide. FEMA will als cntinue t identify and publish special fld hazards and fld risk znes as authrized and required by Cngress. FEMA has actively begun analyzing and priritizing implementatin fthe new law. We will be wrking with the private Write Yur Own insurance cmpanies in the next few weeks t seek their input and expertise prir t issuing business practice bulletins. It is nt pssible fr changes t happen immediately. While the new law des require sme changes t be made retractively, applying t certain plicies written after July 6, 2012, ther changes require establishment f new prgrams, prcesses and prcedures. FEMA's initial pririty is assessing ptential changes t the NFIP's business prcesses t stp plicy increases fr certain subsidized plicyhlders as utlined in the Act. FEMA als plans t issue guidance in the mnths ahead fr the Write Yur Own insurance cmpanies t begin issuing refunds as utlined in the law ~Q ~~ I NATIONAL FLOOD INSUR~NCE I'ROGRAM fr sme plicyhlders wh were previusly impacted by subsidy phase uts. Mre infrmatin n the new law and its impacts n the NFIP will be frthcming.

2 REFUNDS Fr certain fld insurance plicies affected by the Pre-Fld Insurance Rate Map(Pre-FIRM) subsidy eliminatin required by BW-12, the new law mandates refunds fthe excess premiums that thse plicyhlders were charged pursuant t the requirements fbw-12. Refunds will nt affect all subsidized plicyhlders wh received rate increases as directed by Cngress in BW-12, nly plicyhlders fr whm the rate increases under BW-12 were revked by the new law. Refunds will affect nly a small percentage f the verall NFIP plicy base. Prir t restring and refunding premiums, FEMA is required by the Hmewner Fld Insurance Affrdability Act t cnsult with its partner insurers (Write-Yur-Own insurance cmpanies r WYOs) t develp guidance and rate tables. In accrdance with the new law, FEMA will wrk t develp and finalize its guidance and rate tables within eight mnths. The law prvides WYO insurance cmpanies between six and eight mnths t implement the changes and update systems t implement the guidance. FEMA is wrking clsely with the WYO insurance cmpanies t develp a timetable fr prcessing refunds expediently. REFUNDS APPLY TO: Plicyhlders in high-risk areas wh were required t pay their full-risk rate after purchasing a new fld insurance plicy n r after July 6, REFUNDS MAY APPLY TO: Plicyhlders wh renewed their plicy after the Hmewner Fld Insurance Affrdability Act was enacted n March 21, 2014 and whse premium increased mre than 18 percent. REFUNDS DO NOT APPLY TO: Plicyhlders paying the 25 percent annual rate increases, as required by Cngress in BW-12, fr a Pre-FIRM subsidized nn-primary residence, 2 business, Severe Repetitive Lss prperty, r building that was substantially damaged r imprved. Plicyhlders whse full-risk premium is less than the Pre-FIRM subsidized premium, r wh were nt vercharged accrding t any retractive revisins t the Pre-FIRM subsidized rates required by the new law. Plicyhlders wh saw usual, annual rate increases in 2013 r 2014, r plicyhlders wh paid the 5 percent fee, as required by BW-12, fr the NFIP Reserve Fund, will nly see a refund if their premium renewal was after March 21, 2014 and their ttal premium, including the reserve fund, exceeded 18 percent. PREMIUM RATES FOR SUBSIDIZED POLICIES The new law requires gradual rate increases t prperties nw receiving artificially lw (r subsidized) rates instead f immediate increases t full-risk rates required in certain cases under BW-12. FEMA is required t increase premiums fr mst subsidized prpe11ies by n less than 5 percent annually until the class premmm reaches its full-risk rate. It is imprtant t Fld Insurance Plicy image. FEMA image. nte that clse t 80 percent fnfip plicyhlders paid a full-risk rate prir t either BW-12 r HFIAA, and are minimally impacted by either law. With limited exceptins fld insurance premiums cannt increase mre than 18 percent annually. There are sme exceptins t these general rules and limitatins, The mst imprtant fthese exceptins is

3 that plicies fr the fllwing prperties will cntinue t see up t a 25 percent annual increases as required by BW-12 until they reach their full-risk rate: Older business prperties insured with subsidized rates; Older nn-primary residences insured with subsidized rates; Severe Repetitive Lss Prperties insured with subsidized rates; and buildings that have been substantially damaged r imprved built befre the lcal adptin f a Fld Insurance Rate Map (lmwn as Pre-FIRM prperties). In rder t enable new purchasers f prperty t retain Pre-FIRM rates while FEMA is develping its guidelines, a new purchaser will be allwed t assume the prir wner's fld insurance plicy and retain the same rates until the guidance is finalized. Als, lapsed plicies receiving Pre-FIRM subsidized rates may be reinstated with Pre-FIRM subsidized rates pending FEMA's implementatin f the rate increases required by the Hmewner Fld Insurance Affrdability Act. NEW SURCHARGE ON ALL POLICIES A new surcharge will be added t all plicies t ffset the subsidized plicies and achieve the financial sustainability gals fbw-12. A plicy fr a primary residence will include a $25 surcharge. All ther plicies will include a $250 surcharge. The fee will be included n all plicies, including full-risk rated plicies, until all Pre FIRM subsidies are eliminated. GRANDFATHERING The new law repeals a prvisin fbw-12 that required FEMA, upn the effective date f a new r updated Fld Insurance Rate Map, t phase in premium increases ver five years by 20 percent a year t reflect the current risk f fld t a prperty, effectively eliminating FEMA's ability t grandfather prperties int lwer risk classes. Als fr newly mapped in prperties, the new law sets first year premiums at the same rate ffered t prperties lcated utside the Special Fld Hazard Area (preferred risk plicy rates). With limited exceptins, fld insurance premiums cannt increase mre than 18 percent annually. FLOOD INSURANCE ADVOCATE The new law requires FEMA t designate a Fld Insurance Advcate t advcate fr the fair treatment fnfip plicy hlders. The Advcate will: Luisiana hme raised abve base fld elevatin. FEMA pht. 3 Educ ate prperty wners and plicyhlders n individual fld risks; fld mitigatin; measures t reduce fld insurance rates thrugh effective mitigatin; the fld insurance rate map review and amendment prcess; and any changes in the fld insurance prgram as a result f any newly enacted laws; Assist plicy hlders and prperty wners t understand the prcedural requirements related t appealing preliminary fld insurance rate maps and implementing measures t mitigate evlving fld risks; Assist in the develpment f reginal capacity t respnd t individual

4 cnstituent cncerns abut fld insurance rate map amendments and revisins; Crdinate utreach and educatin with lcal fficials and cmmunity leaders in areas impacted by prpsed fld insurance rate map amendments and revisins; and Aid ptential plicy hlders in btaining and verifying accurate and reliable fld insurance rate infrmatin when purchasing r renewing a fld insurance plicy. OTHER PROVISIONS The new law permits FEMA t accunt fr prperty specific fld mitigatin that is nt part fthe insured structure in determining a fullrisk rate. The law requires that residential basement fldprfing be cnsidered when develping full-risk rates after a map changes increasing the Base Fld Elevatin in an area where residential basement fldprfing is permitted. The law mandates that FEMA develp an installment plan fr nn-escrwed fld insurance premiums, which will require changes t regulatins and the Standard Fld Insurance Plicy cntract. The law increases maximum deductibles. The law encurages FEMA t minimize the number f plicies where premiums exceed 1-percent f the cverage amunt, and requires FEMA t reprt such premiums t Cngress. DRAFT AFFORDABILITY FRAMEWORK The new law requires FEMA t prepare a draft affrdability framewrk, which is due t Cngress 18 mnths after cmpletin f the affrdability study required by BW-12. The Affrdability Study required by BW-12 is underway and is being cnducted by the Natinal Academies f Sciences, as specified in the BW-12 law. In develping the affrdability framewrk, FEMA must cnsider: accurate cmmunicatin t custmers f the fld risk, targeted assistance based n financial ability t pay, individual and cmmunity actins t mitigate fld risk r lwer cst f fld msurance, the impact f increases in premium rates n participatin in NFIP, and the impact f mapping update n affrdability f fld insurance. The affrdability framewrk will include prpsals and prpsed regulatins fr ensuring fld insurance affrdability amng lw-incme ppulatins. MAPPING The Hmewner Fld Insurance Affrdability Act requires the Technical Mapping Advisry Cuncil (TMAC) t review the new natinal fld mapping prgram authrized under the and 2014 fld insurance refrm laws. The law requires the Administratr t certify in writing t Cngress that FEMA is utilizing "technically credible" data and mapping appraches. The law Digital Fld Insurance Rate Map. FEMA image. 4 als requires FEMA t submit the TMAC review reprt t Cngress.

5 FEMA will be lking t the TMAC fr recmmendatins n hw best t meet the legislatively mandated mapping requirements fr the new mapping prgram including the identificatin f residual risk areas, castal flding infrmatin, land subsidence, ersin, expected changes in fld hazards with time, and thers. As the new natinal fld mapping prgram is being established, FEMA expects there will be pprtunities t make incremental imprvements t current prcedures as it prvides fld hazard data and infrmatin under the Natinal Fld Insurance Prgram (NFIP). FEMA will make thse imprvements where necessary t ensure all nging changes t fld hazards cntinue t be effectively cmmunicated, mitigated, and prperly insured against. The law lifts the $250,000 limit n the amunt that FEMA can spend t reimburse hmewners fr successful map appeals based n a scientific r technical errr. Federal rulemaking is required in rder t implement this prvisin. FEMA is authrized t accunt fr recnstructin r imprvements f fld prtectin, nt just new cnstructin. It authrizes FEMA t cnsider the existing present value f a levee when assessing adequate prgress fr the recnstructin f an existing fld prtectin system. The law extends ce11ain prvisins related t NFIP Fldwall in Grand Frks, Nrth Dakta. FEMA pht. requirements in areas restring disaccredited fld prtectin systems t castal levees and clarifies that the levee needs t be cnsidered withut regard t the level f federal funding fr the riginal cnstructin r the restratin. The law exempts mapping fees fr fld map changes due t habitat restratin prjects, dam remval, culvert re-design r installatin, r the installatin f fish passages. The law requires FEMA t cnsider the effects f nn-structural fld cntrl features, such as dunes, and beach and wetland restratin when it maps the special fld hazard area. The law requires FEMA t enhance Dune grass stabilizes sand dune repaired after Hurricane Sandy in New Jersey. Dunes are a vital first-line f defense against castal strms and flding. FEMA pht. 5 '..... Mre infrmatin and updates: crdinatin with cmmunities befre and during mapping activities and requires FEMA t reprt certain infrmatin t members f Cngress fr each State and cngressinal district affected by preliminary maps. Fr mre infrmatin and updates as they becme available, visit: