Program What to Expect Imp mpact act of ch chang nges es to - PowerPoint PPT Presentation

Changes Coming to the National Flood Insurance Program – What to Expect Imp mpact act of ch chang nges es to the e NF NFIP P un under er Se Sect ction on 205 5 of the e Big iggert gert-Water Waters s Act ct

Changes are Coming to the NFIP Congress ngress passed ed the e Floo ood d Insurance surance Reform form Ac Act of 2012 2 (Biggert gert  Waters ters 2012), 2), which ch will: : Make the NFIP more financially stable by raising rates on certain classes of • property to reflect true flood risk; and Trigger rate changes for certain properties within a revised or updated map • area to accurately reflect the flood risk. The e changes nges will mean an rate e increas reases es for many ny policyh cyholde olders s over er  time. me. Buy uying ng or se sellin ling g a proper perty ty, , or allowing owing a p policy cy to lapse se may trigger ger  rate e changes. nges. There ere are invest estme ments nts you and your ur communit mmunity y can make ke to reduce ce  the e impact ct of rate e change nges. s. 2

What is Changing?  Flood ood insuran urance ce rates es  Rates for most properties will more accurately reflect risk.  Subsidized rates for non-primary residences are being phased out now.  Other subsidized rates will be eliminated over time:  New policies sold after July 6, 2012 to cover previously uninsured properties; and  Purchase of a property, allowing a policy to lapse, repetitive loss or cumulative damage, or other events, could trigger rate changes beginning in 2013. • When a community adopts a new flood map, discounts like grandfathering will be phased out – meaning premiums will increase over time. Expected in 2014  Flood ood risks ks and the costs ts of floodin ooding  Weather patterns, erosion, and development are a few factors increasing flood risk in many communities.  Better science, improved tools and more data are providing more accurate definition of flood hazards.  More buildings and other infrastructure are being built in areas at risk for flooding and replacement costs continue to grow. 3

Who Will Be Affected by Subsidy Changes?  Not t ever veryon yone e – only 20% of NFIP policies receive subsidies – and an even smaller number will see immediate changes.  Owners of subsidized non-pr prima imary ry reside sidenc nces s in a Special Flood Hazard Area will see 25% increase annually until rates reflect true risk – began January 1, 2013.  Owners of subsidized propert erty y that has exper perien ienced ced severe vere repet petit itive ve flood ood losse ses or that has incurred flood cumulative damage with flood insurance payments exceeding the value of the structure will see 25% rate increase annually until rates reflect true risk – beginning late 2013.  Owners of subsidized bus usine ness ss proper perti ties es in a Speci cial l Flood ood Hazard rd Ar Area will see 25% rate increase annually until rates reflect true risk -- beginning late 2013.  Owners of substantially damaged or substantially improved subsidized property will see 25% rate increase. 4

Who Won’t Be Affected by Subsidy Changes?  Ow Owners ners of primar ary y reside dence nces in SFHAs As will be able e to keep eep their eir sub ubsi sidi dize zed d rates es un unless ess or un until: l: • You sell your property (new rates will be charged to next owner if they insure;) • You allow your policy to lapse; • You suffer severe, repeated flood losses; or, • You purchase a new policy (after July 6, 2012). 5

When Will Changes Occur?  Now ow – Changes nges un underwa derway: y:  Full-risk rates will apply to property not previously insured, newly purchased, or to a policy which is repurchased after a lapse.  Premiums for older (pre-FIRM) non-primary residences in a Special Flood Hazard Area will increase by 25 percent each year until they reflect the full- risk rate – began January 1, 2013.  Later ter in 2013: 3:  Premiums for pre-FIRM business properties, severe repetitive loss properties (1-4 residences), and properties where claims payments exceed fair market value will increase by 25 percent each year until they reflect the full-risk rate.  Normal rate revisions which occur annually, and increases will include a 5% assessment to build a catastrophic reserve fund.  Late te 2014: 4:  Premiums for properties affected by map changes will increase over five years at a rate of 20 percent per year to reach full-risk rates. 6

Why the Changes to the NFIP? 1968 1968: : Congress ngress creat ated ed the e NFIP FIP to make ke affordable ordable flood ood insura uranc nce  genera nerall lly y available able (flood damage is not covered by most homeowners’ insu sura rance nce policies ies)and )and to decre rease Feder ederal l disa saste ter r ass ssistanc tance expenditure penditures. s. To partici cipat ate, e, comm mmun unit ities ies adopt pt and enforce force flood odplain lain mana nagem gemen ent t  meas asures ures for r all new w devel velopme opment. nt. For r struc uctu tures res bui uilt t befo fore re FEM EMA A mapped ed the e Speci cial al Flood ood Hazard rd Ar Area  (SFHA) FHA) (called led pre-FIRM IRM proper perti ties), es), the e NFIP FIP made de flood od insuran urance ce available able at sub ubsidized idized rates es that t did d not t reflect lect the e true ue risk k of flood oding ing . 45 years rs later: r: Flood ood risk sks conti tinue, nue, and the e costs sts and consequ nsequen ences ces of  floodin ooding g are increa reasi sing. ng. Ar Artifi fici cially ally low w rates es and d discounts counts no longer nger are sus ustai aina nable. ble.  In 2012, 2, Congress ngress passed sed legisl slati tion on to make ke the e program ram more re  sus ustain ainable able and financi ancially ally soun und over er the e long g term. rm. 7

What Can I Do to Lower Costs?  Home me and bus usiness iness owne ners: s:  Talk to your insurance agent about your insurance options  You’ll probably need an Elevation Certificate to determine your correct rate  Higher deductibles might lower your premium  Consider remodeling or rebuilding  Building or rebuilding higher will lower your risk and could reduce your premium  Consider adding vents to your foundation or using breakaway walls  Talk with local officials about community-wide mitigation steps  Comm mmuni nity ty leaders ders:  Consider joining the Community Rating System (CRS) or increasing your CRS activities to lower premiums for residents.  Talk to your state about grants. FEMA issues grants to states which can distribute the funds to communities to help with mitigation and rebuilding. 8

What Do I Need to Remember?  Many y changes nges are coming ming to the e Flood ood Insur surance ance progra ram  Congress acted to make program stronger financially.  On many y more re policies cies, , flood od insuran urance ce rates es will reflect lect ful ull risk. k.  Insurance rates will rise on some policies; and  There are specific actions which will trigger rate changes.  Talk to your ur insuran urance ce agent nt about ut how w changes nges may y affect ect your ur propert perty y and flood od insuran urance ce policy. cy.  Bui uilding ding or rebu buil ildi ding ng higher her can lower wer your flood od risk sk and coul uld d sa save e you u mon oney. ey.  FEM EMA A can help lp comm mmuni niti ties es lowe wer flood od risk k and flood od insuran urance ce premiu miums ms through: rough:  CRS program;  Various mitigation grants; and  Technical advice on building and rebuilding to mitigate future flood damage. 9