NFIP: October 2016 Updates and Community Decision Impacts on Individual Rates

Transcription

1 NFIP: October 2016 Updates and Community Decision Impacts on Individual Rates Carl Watts, Regional Liaison NFIP-iService, Region VI P:

2 NFIP: Review and October 2016 Updates 2 2

3 BW-12 and HFIAA Background: Rates, Refunds and Surcharges Gradual Rate Increases Section 3 and Section 5 of the HFIAA return premium subsidies to Pre- FIRM policies on Primary Residences, Mandates that FEMA continue gradual Pre-FIRM subsidy elimination at no less than 5 percent per year. The Act prohibits increasing premiums by more than an average of 15 percent for any risk class and 18 percent for an individual policy (with some exceptions) A new surcharge will be added to all policies to offset the slow-down of subsidy elimination and increase the solvency of the NFIP program. 3

4 The HFIAA Surcharge Applies to all policies Surcharges are not considered premium and are therefore not subject to premium increase caps required under Section 5 under the new Act Beginning April 1 Primary Residences/Condominium Dwelling Policy Non-Residential and Non- Primary Residence RCBAP and Other Residential $25 $250 $250 4

5 Minimum Deductible BW-12 established new minimum deductibles first implemented October 1, 2013: Pre-FIRM subsidized $1,500 for building coverage up to $100,000 $2,000 for building coverage over $100,000 All others $1,000 for building coverage up to $100,000 $1,250 for building coverage over $100,000 For April 1, 2015, these minimum deductibles apply to the PRP and MPPP, where they were previously omitted (the GFIP remains the only exception). 5

6 High Deductible Option A $10,000 deductible option is available for residential properties effective April 1, 2015 If selecting the $10,000 for a policy with both building and contents coverage, the deductible is $10,000 on each ($20,000 combined) A disclosure must be made at the time of application 6

7 April 1, 2016 Premium Increases and Surcharges Non-Residential Business Property Rates New Rating Methodology PRP & Newly Mapped Subsidy Elimination for Lapsed Policies Reformation of Coverage 7

8 Premium Increases and Surcharges HFIAA Rate Caps for most rates Exception: Pre-FIRM Subsidized 25% Increase Non-Primary Business Severe Repetitive Loss Substantially Improved Other Increase Reserve Fund Assessment PRP from 10% to 15% Federal Policy Fee $45 to $50 for Standard/Newly Mapped $22 to $25 for PRP 8

9 Non-Residential Business Properties 25% Annual Rate Increase for Pre-FIRM beginning April 2016 Non-Residential Occupancy broken into 2 new Building Occupencies Non-Residential Business Other Non-Residential Collection of data began November 2015 Application form updated Renewals updated 9

10 PRP & Newly Mapped Rating New Rating Methodology for PRP & Newly Mapped Identify Base Premium Apply Multiplier Add ICC Reserve Fund Assessment Add HFIAA Surcharge Add Policy Fee 10

11 PRP & Newly Mapped PRP Eligibility Extension (PRP EE) Transitioned to Newly Mapped Ineligible Properties for Newly Mapped More than 12 months from newly mapped date Properties mapped into SFHA on initial FIRM Emergency Program 11

12 Subsidy Elimination for Lapsed Policies For properties that had a prior NFIP policy that lapsed or cancelled while under mandatory purchase, they are not eligible for Pre-FIRM subsidized rates or Newly Mapped procedure Lapsed policy is when premium is received after 90 days from expiration date new application is required Renewals reinstated when premium is received between 30 and 90 days after expiration date, can be reinstated once without losing eligibility for Pre-FIRM subsidy or Newly Mapped Transfer of NFIP policy Validation of prior NFIP coverage required 12

13 Section 28 Clear Communication Requires FEMA to clearly communicate flood risk to policyholders Obtain current map information Began April 1, 2016 for new business Begins October 1, 2016 for certain renewals Pre-FIRM subsidized Standard X zone rated Preferred Risk Policies Newly Mapped Policies Begins October 1, 2017 for remainder of renewals 13

14 Reformation of Coverage Reformation of coverage is revoked Prospective reformation applies only when mis-rating is result of incorrect determination of flood zone or BFE 14

15 Section 28 Clear Communication Premium Refunds If premium refund, carriers process change request to issue refund For mis-rating (based on application information), up to 5 years premium refund If zone /BFE changed since application, premium for current term only Additional Premium If additional premium due, effective date of discovery If within renewal cycle (60 days prior to renewal), effective next renewal 15

16 Resources Write Your Own Bulletins Flood Insurance Manual FloodSmart.gov 16

17 Community Decision Impacts on Individual Rates What you do is reflected in the insurance rates that are charged 17

18 NFIP Goal oreduce loss of life and property due to floods o In SFHAs.. o Build differently from start o Lowest level at or above BFE (dependent on state and local freeboard requirements) o Situate structure sites away from the SFHA, if possible o Mitigate built environment in the SFHA o Retrofit o Basement Fill-In o Wet-floodproofing (garages, crawl spaces, o accessory structures) o Elevation o Dry-floodproofing (non-residential only) 18 18

19 Saving Money on Flood Insurance FEMA has programs to help owners reduce their risk and save money on flood insurance Community-wide discounts through the Community Rating System (CRS) FEMA grant programs support rebuilding and relocating Use of higher deductibles to lower premium costs But the smartest way to save may be to build higher 19

20 Elevation Certificates- Who can complete? o Who can prepare an EC? o Registered & Authorized by State or Local Law o Engineer o Licensed Surveyor o Property owner or his/her representative-if no BFE is available or property is located in AO and Unnumbered A Zones o Community officials who are authorized by Local Law or Ordinance-Transfer of EC Data from a prior EC or Survey 20 20

21 CRS Discounts o How are Flood Insurance Premium Discounts Calculated? o For CRS participating communities flood insurance premium rates are discounted in increments of 5% o Class 1 community would receive a 45% premium discount o Class 9 community would receive a 5% discount o Class 10 is not participating in the CRS and receives no discount)). o The CRS classes for local communities are based on 18 creditable activities, organized under four categories: o o o o Public Information, Mapping and Regulations, Flood Damage Reduction, and Flood Preparedness 21 21

22 Benefits of CRS Participation For CRS participating communities, flood insurance premium rates are discounted in increments of 5% 22 22

23 Building For Comparision Primary Residentional Single Family Slab on Grade Building Coverage = $250,000 Contents Coverage = $100,000 23

24 Pre-FIRM Building = $2,179 Contents = $1458 ICC = $55 Reserve Fund = $554 Federal Policy Fee = $50 HFIAA Surcharge = $25 TOTAL $4,320 24

25 Approximate Zone A With no BFE determined At ground level = $6, = $3, to 4 = $1,705 With an Approximate BFE and Elevation Certificate At BFE to +1 = $2, or more = $835-1 = $6,207 25

26 Post-FIRM Zone AE Single Family, Primary Residence, One Floor, Slab At BFE = $1,598 + $335 = $1,933 + FEES = $2, = $756 + $213 = $969 + FEES = $1, = $453 + $185 = $638 + FEES = $813 Variance Issued -1 = $3,643 + $685 = $4,328 + FEES = $5,080-2 = $5,513 + $ 1,140 = 6,653 + FEES = $7,754-3 = $7,307 + $1,503 = $8,810 + FEES = $10,234 Fed Policy Fee = $50 ICC = $24 HFIAA Surcharge = $25 Reserve Fund of 15% 26

27 Location: Denton, TX New NFIP Call Center Telephone Number: Open: 8-6 CST Fax Number: Web Page: 27

28 Questions? Questions? 28 28