Update: NFIP Flood Insurance Program Changes

Update: NFIP Flood Insurance Program Changes

The U.S. House of Representatives voted this week to substantially alter the course of recent changes to the National Flood Insurance Program (NFIP) mandated by the Biggert-Waters Flood Insurance Reform Act of 2012. The 2012 law aimed to phase out Federal flood insurance subsidies for property owners and require the Federal Emergency Management Agency (FEMA) to set insurance rates that reflect a property’s actual flood risk.

Some business and home owners in areas that had experienced severe floods saw insurance rates increase substantially (ten times higher for some), which led Congress to act. The Senate passed similar legislation in January, but early indication is that the Senate will take up the House version.

As noted previously on our blog, FEMA has been updating Flood Insurance Rate Maps (FIRMs). Changes to insurance rates were tied to those updates, which often included new estimates of Base Flood Elevations (BFEs). With these new maps came increased premiums. The 2012 law not only eliminated subsidies but also terminated some grandfathering provisions. The new House legislation will reinstate grandfathering, and, according to Insurance Journal

“…provide retroactive refunds for people who have had large flood insurance rate increases due to the sale or purchase of a home, cap average annual premium increases at 15 to 18 percent and allow subsidies for insurance rates that are based on current flood maps.”

In addition, the new House bill requires FEMA to provide Congress and municipalities with more information and advanced notice when a community’s FIRM is remapped.

More information about the legislation can be found at the Boston Globe, and a detailed analysis can be found at Insurance Journal and The Times-Picayune.

Tags: Resiliency


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