Volume 8 Issue 9 March 7, 2014

Homeowners Flood Insurance Affordability Act gets Presidential Signature to become Law

The Homeowner Flood Insurance Affordability Act of 2014, (HFIAA14) originated in the House, passed the Senate unchanged and was sent to the president for signature last night. With the anticipated presidential signature, FEMA and the NFIP will begin to set implementation timelines, including the timing of premium refunds as directed by the new law. At Wright Flood we continue to work with the NFIP toward implementation of HFIAA reforms and will keep agents and policyholders informed through communications and website postings. “This new law offers a livable compromise and brings relief to property owners and stability to the real estate market while still providing a path for the NFIP to reach actuarial soundness,” stated Patty Templeton Jones, COO Wright Flood. HFIAA14 directs FEMA and the NFIP to modify flood reforms already in place as well as to modify the future implementation of BW12 Flood Reforms. A Congressional Summary of HFIAA14 is available to read more but some important highlights include:

Removes the sale of a property as a trigger to go directly to actuarial rates and establishes a glide path to reach actuarial rates through annual premium increase caps.

Pre-FIRM policies can now be assumed at sale and placed on glide path toward actuarial rates through annual premium increase caps.

Pre-FIRM policies can be renewed without an Elevation Certificate (EC), but ECs will still be required to ascertain actuarial rates.

Requires FEMA to make refunds to policyholders with new policies after July 6, 2012 that were required to pay actuarial rates due to the BW12 Flood Reforms

Annual premium increases will be limited to a minimum 5% increase and a maximum 18% increase (under BW12 there was no minimum and there was a 20% maximum.)

Establishes a surcharge for all flood policies: $25.00 per primary residences and $250 per policy for non-primary and non-residential properties.

Allows the Grandfathering rules in effect today within the NFIP to remain—by deleting Section 100207 of the BW12 Flood Reform Act

Still in question is how FEMA will interpret the glide path to be established for properties newly mapped into high risk flood zones.

Maintains 25% premium increases for non-primary, business properties and severe repetitive loss properties. ( BW12 Section 1307 items A-E)

Maintains 50% home improvement level as the threshold for compliance with flood mitigation building practices.

Increases the funds available for the Affordability study to $2.5M

Requires FEMA to consult with the WYOs during the entire process of any upcoming changes.

Requires FEMA to allow WYO 6 months to implement any changes.

Even after Presidential signature, FEMA will need some time to determine implementation plans and

advise the WYO insurance companies of new flood policy rules and rates.

Wright Flood will continue to stay involved in both the governmental piece as well as the technical

implementation piece of this issue and keep our agents informed as important information becomes

known.

For more information, please contact your RSM or Wright Flood Marketing at 866-373-5663.