NFIP Bulletin: What Changes Can You Expect Next Year?

This week, FEMA released a bulletin outlining NFIP changes that apply to new business and renewals—and may impact you and your flood insurance policyholders when they take effect on or after April 1, 2017.

The bulletin outlines changes including updated premium rates which comply with the premium rate caps established by Biggert-Waters and the Homeowners Flood Insurance Affordability Act of 2014—laws intended to help streamline the program and set the NFIP on a path toward financial solvency.

The changes also include updated premium multiplier tables for polices rated under the Newly Mapped procedure, along with clarifications for policy rating and loss adjustment for Pre-Flood Insurance Rate Map (Pre-FIRM) substantially improved properties.

In its summary of changes, FEMA says the maximum individual rate increase for any individual policy is 18%—with a few exceptions. Premium rates for the four categories of Pre-FIRM subsidized policies must increase by 25% annually until they reach full-risk rates. Average annual premium rate increases for all other risk classes, however, are limited to 15%.

The bulletin also notes, “when premium rate increases are evaluated for compliance with these caps, the probation surcharge, the Federal Policy Fee and the congressionally mandated HFIAA surcharges are not considered premium and, therefore, are not subject to premium rate cap limitations. As a result, the increase in the total amount charged to the policyholder may exceed 18% in some cases.”

FEMA also issued a Newly Mapped multiplier table for calculating the premium for properties newly mapped into the Special Flood Hazard Area (SFHA) through December 2018. Note: Premiums for properties newly mapped into the SFHA will receive a Preferred Risk Policy premium for the first year after being newly mapped into the SFHA, and then their premiums will gradually increase using the multiplier table.

Finally, FEMA’s guidance includes clarifications for the rating of Pre-FIRM substantially improved buildings.

As Congress continues to work on program reauthorization, the Big “I” continues advocating for a long-term extension of the flood program to ensure market stability. The association also strongly believes that flood insurance should be available and affordable to anyone who wants to purchase coverage and will continue to highlight the critical role agents play in selling and servicing NFIP flood policies.

Jen McPhillips is Big “I” assistant vice president of federal government affairs.