National Flood Insurance Program Announces Updates, Rate Increases

flood insurance iconUpdates to the National Flood Insurance Program (NFIP) that became effective April 1 include a 6.9% increase in the average premium rate for standard flood insurance policies, rising from $994 to $1,062.

Also, after remaining constant for several years, the Federal Emergency Management Agency (FEMA) announced a rate increase for the Increased Cost of Compliance (ICC) premium included in the standard NFIP policy. This provision provides additional coverage in the event of a claim if the policyholder needs to elevate the property or take other action to bring their home into compliance with local floodplain ordinances.

ICC coverage remains at $30,000 despite efforts to raise the amount during the ongoing NFIP reauthorization debate.

Premium changes will go into effect for Preferred Risk Policies on Jan. 1, 2019.

‘Write Your Own’ Updates

FEMA has also announced plans to change “Write Your Own” insurance companies that sell flood insurance policies on behalf of the NFIP. The changes would take effect in October for insurers interested in participating in the program in fiscal 2019.

Among the changes are two that could have a broad impact on the NFIP program and the ongoing effort to reauthorize it.

First, FEMA intends to modify the restrictions on these insurers. In relaxing the “non-compete” requirements of the program, FEMA will be loosening the constraints on how companies can offer their own separate private flood insurance policies. In addition, FEMA plans to reduce compensation for Write Your Own companies to 30% of premiums from 30.9%.

Both of these actions have been included, in some version, as a part of the legislative debate to overhaul the NFIP. Elimination of the non-compete requirements was included as part of the House-passed legislation and both House and Senate lawmakers have proposed lowering the compensation rate.

For a full list of program changes, including updates to primary residence determination, see WYO Service Bulletins W-17061 or W-17068 released by FEMA.

For additional information, contact Tamra Spielvogel at 800-368-5242 x8327.

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