NFIP – National Flood Insurance Program Changes October 1, 2013-Part II
This post is a continuation series from NFIP – National Flood Insurance Program Changes October 1, 2013 - Part I. This important information was obtained from Mary Petty of AAA Insurance Agency.
Result of NFIP changes – Elimination of No Waiting Period due to Lender Requirement
Impacts policies where there is a loan on a structure in a Special Flood Hazard Area (SFHA).
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Zones beginning with A or V
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Lender determines a flood insurance policy has not been issued.
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Structure owner is required to purchase a flood insurance policy.
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30 day waiting period will be imposed on these new business policies
Result of NFIP changes – No Extension of Subsidy to New Policies or Lapsed Policies for Pre-FIRM Properties in SFHAs and Zone D (New Business)
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The NFIP will no longer provide any extension of premium rate subsidy to new or lapsed Pre-FIRM properties/policies. (a) These properties are subject to full risk rating. (b) These properties will require an Elevation Certificate (EC) including photos. (c) Tentative or provisional rates may be used for 1 year only until an EC is provided.
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New business Pre-FIRM application submission will use Post-FIRM rating procedures.
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Section 100205(B) of BW 12 eliminates the NFIP grandfather rules for all new business Pre-FIRM structures receiving subsidized rates. (a) Except for Pre-FIRM structures that were built in compliance and have a construction date that is on or after the community’s initial FIRM date and before January 1, 1975. (b)Does not impact policies issued under the existing PRP Eligibility extension program
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Certain Pre-FIRM properties and/or policies in Special Flood Hazard Areas (SFHA’s), zone beginning with A or V, and zone D will be impacted by the changes referenced above. (a) New business applications effective 10/1/2013. (b) Renewals of policies that initially were effective on or after July 6, 2012, are subject to full risk rating on the first renewal effective on or after 10/1/2013. (d) Lapsed NFIP policies. (d1) Pre-FIRM subsidized policies that experience a lapse on or after 10/1/2013. (d2) Lapsed policies which are reinstated on or after 10/4/2012 on or after 10//4/2012 and before 10/1/2013 will be subject to full risk rating on the first renewal effective on or after 10/1/2013. (d3) A lapsed Pre-FIRM subsidized policy cannot be reinstated on or after 10/1/2013, and loses eligibility for grandfather rules under “continuous coverage”. (d4) A new application and Elevation Certificate (EC) will be required. (d5) One exception to this is when a Pre-FIRM subsidized policy lapses due to community suspension.
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Properties purchased after the date of enactment of BW12. (a) Renewal of policies receiving subsidized rates and covering a property purchased on or after July 6, 2012, are subject to full risk rating on the first renewal effective on or after 10/1/2013. (b) Mid-term assignment due to purchase of Pre-FIRM properties rated using subsidized rates will be subject to full risk rating (pro rata) effective the date of purchase, using the current map information. (c) Applications will now include a new data element to record the property purchase date.
Result of NFIP changes – Introduction of Reserve Fund
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The Biggert Waters Act of 2012 requires FEMA to build up a reserve fund to help meet the expected future obligations of the NFIP in higher than average loss years.
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The Fund will be phased in
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Effective 10/1/2013, a Reserve Fund ratio will be applied to each National Flood Insurance Program (NFIP) Policy.
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Excludes Preferred Risk Policies (PRPs) and Group Flood Insurance Policies (GFIPs)
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Reserve Fund amounts will be part of the premium calculation for application policies
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For policies effective on or after 10/1/2013, the Reserve fund amount is 5% of the total premium
NFIP – National Flood Insurance Program Changes October 1, 2013-Part II
Please watch for the Part III on NFIP!
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