FEMA Provides Early Notice for 2017 Program Changes

Filed in Business Management, Capitol Hill, Environmental by on November 11, 2016 0 Comments

fansThe Federal Emergency Management Agency (FEMA) has announced a rate increase as part of the next round of changes to the National Flood Insurance Program (NFIP) that take effect April 1, 2017.

These changes will further implement the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA) and the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12). Congress passed BW-12 and HFIAA to reauthorize and reform the program.

The average annual increase in premiums per policy is 5.4% when certain surcharges and fees are accounted for: The average policyholder will see their premium increase from $953 to $1,005.

FEMA also announced that the premium rates for four categories of Pre-FIRM subsidized policies — non-primary residential, business, Severe Repetitive Loss (SRL) (including cumulatively damaged properties), and substantially damaged/substantially improved — must be increased 25% annually until they reach full-risk rates.

In general, the average annual premium-rate increases for all other risk classes are limited to 15%, while the individual premium-rate increase for any individual policy is limited to 18%.

The average annual premium-rate increase for all other Pre-FIRM subsidized policies must be at least 5%.

It is important to note that there are some limited exceptions to the 18% cap: These include those policies on properties required by statute to be subject to 25% annual premium-rate increases, instances of mis-rating, premium-rate increases resulting from changes in the Community Rating System class, and increases in the amount of insurance purchased.

FEMA also made notes of those components of the NFIP program that are not changing: Policies issued on or after April 1, 2017 will include the HFIAA surcharge of $25 for single-family primary residences and $250 for all other policies, which went into effect April 1, 2015. There will also be no change in the deductible factors, Federal Policy Fee, Reserve Fund Assessment, Probation Surcharge, or ICC Premiums.

FEMA also provided new information to help determine premiums for policies issued under the “newly mapped” procedure through December 2018. Properties newly mapped into the special flood hazard area (SFHA) receive a Preferred Risk Policy (PRP) premium for the first year, and their subsequent premiums gradually increase to full-risk rates through use of a PRP premium multiplier. The multipliers are tied to the date the property was newly mapped into the SFHA and the date of the renewal.

Meanwhile legislators and regulators are looking ahead to the next round of program re-authorization. Congress must pass NFIP re-authorization by Sept. 30, 2017.

NAHB has taken part in several hearings and roundtables to discuss NFIP re-authorization and implementation issues. Congress plans to release draft legislation by the end of 2016.

For more information, contact Tamra Spielvogel at 202-266-8327.

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