Biggert-Waters Flood Insurance Reform Act of 2012 (BW12)Understanding the October 1, 2013 Changes

2

BW-12 Implementation Timeline

DATE BW-12 IMPLEMENTATION STEP

July 6, 2012 BW-12 enacted; reauthorizes the NFIP for five years and requires FEMA to eliminate certain discounts and subsidies

January 1, 2013 Upon policy renewal, subsidized rates began to phase out for non-primary residences

October 1, 2013 Upon policy renewal, subsidized rates will begin to phase out for business properties, SRL properties, and others. Immediate move to full-risk rates after sale/purchase of property, or policy lapse.

Late 2014 FEMA anticipates implementing Section 100207 of BW12 (grandfathering, map changes, etc.)

3

BW-12: What’s Changing?Certain subsidized policies will be phased out at a rate of 25% per year until they reach the full risk rate:

Non-primary residences (January 1, 2013); Business properties ; and Severe repetitive loss properties (1-4 family residences), and properties where

claims payments exceed fair market value

Primary residences in Special Flood Hazard Areas will be able to keep their subsidized rates unless or until:

The property is sold / purchased; There is a lapse in insurance coverage; or They suffer severe, repeated flood losses. The full risk rate will be immediately applied to properties with a sale or lapse

in coverage on or after July 6, 2012.

4

Percent of subsidized Policies per state (as of December 31,

2012)

http://www.fema.gov/bw12

5

Interactive Map

http://www.fema.gov/bw12

6

When Maps Change Phase in will apply for all new

Flood Insurance Rate Maps (FIRMs) that are adopted by communities on or after July 6, 2012

Expected to be implemented late 2014

Premiums will transition from the current premium to the new premium over 5 years in 20% increments.

7

Notice to Policyholders W-13016 (March 29, 2013)

October 1,2013, Program Changes

W-13033 (June 14, 2013) Procedures for Processing Renewals of Certain Pre-FIRM

Subsidized Policies that are New, Lapsed, or Assigned W-13041 (July 10, 2013)

Additional Guidance on the Procedures for Processing Renewals of Certain Pre-FIRM Subsidized Policies that are New, Lapsed, or Assigned

W-13046 (August 8, 2013) Final Letter Related to Processing Renewals of Certain Pre-

FIRM Subsidized Policies that are New, Lapsed, or Assigned

8

W-13041

http://www.nfipiservice.com/Stakeholder/pdf/bulletin/w-13041.pdf

9

WYO Bulletin W-13041Documentation needed : Elevation Certificate Clear exterior photographs of the front and back of the

building Application completed and signed by the agent Annual premium determined with full-risk premium rates or

tentative premium rates

10

WYO Bulletin W-13046

Final Letter Related to Processing Renewals of Certain Pre-FIRM Subsidized Policies that are New, Lapsed, or Assigned:

New policies written with an effective date on or after July 6, 2012

Policies written as new business, or existing policies assigned to a new owner as a result of a property purchase on or after July 6, 2012

Policies that have lapsed and been reinstated on or after October 4, 2012

11

W-13046

http://www.nfipiservice.com/Stakeholder/pdf/bulletin/w-13046.pdf

12

Example #1: Buying/Selling a House in a Special Flood Hazard Area

For Sale Flood insurance required Full-risk rates apply, not

pre-FIRM subsidized rates Plan ahead: consider risk

as you plan and budget Obtain an Elevation

Certificate (EC) as soon as possible to learn your full-risk rate – you could save money

Consider mitigating, including elevating the home, before listing it for sale

SOLD

13

Example #2: Building/Rebuilding a Home in a Special Flood Hazard Area

Be aware of building in a high-risk flood zone

Risk changes over time, so consider current and future flood risks

Build higher/stronger than current standards to lower risk and flood insurance premiums

Talk to local floodplain manager to learn about new maps or data that may be available

Building higher may increase home value

14

Example #3: Policy Renewal (Subsidized) Primary Home

Policy purchased Prior to July 6, 2012 Retain subsidized rate as long

as home is a primary residence and continuous coverage is maintained

Rates subject to routine actuarial adjustment plus increase for Reserve Fund

Effective after October 2013, full-risk rates would apply if :

• New purchase

• Policy lapses

• Severe Repetitive Loss

15

Example #4: Policy Renewal (Subsidized) SRL Home, Non-Primary or Business Property

Previous premium did not reflect the home’s full flood risk

Premium will increase 25 percent a year until it reaches the full-risk rate

Rates subject to routine actuarial adjustment plus increase for Reserve Fund

Obtain an Elevation Certificate (EC) as soon as possible to learn your full-risk rate – you could save money

16

Saving Money on Flood Insurance FEMA has programs to help owners reduce their risk and save

money on flood insurance

• Community-wide discounts through the Community Rating System (CRS)

• FEMA grant programs support rebuilding and relocating

• Use of higher deductibles to lower premium costs

But the smartest way to save may be to build higher

17

STAY INSURED Letting your flood

insurance policy lapse could be costly

ElevationCertificate

LEARN YOUR RISK Get an Elevation

Certificate for your home (risk can change)

GET INSUREDBeproactive:

don’t risk the Dconsequences

of a flood

REDUCE YOUR RISK

Building or Rebuilding

? BuildHigherThan

current standards

ResilientAddress

Your

Risk

Tools and Resources

19

Insurance Agent Training & Info Sign up for WYO Alerts – http://www.nfipiservice.com/mailing_list.html

Toll Free numbers : http://www.nfipiservice.com/storm_sandy.html

Training is available through FEMA for insurance agents, adjusters and lenders www.fema.gov/business/nfip/trainagt.shtm

Sign up for agent training emails - https://public.govdelivery.com/accounts/USDHSFEMA/subscriber/new?topic_id=USDHSFEMA_212

NFIP Training offers workshops and webinars http://www.nfipiservice.com/training/schedule_agents.html

YouTube BW12 Video http://www.youtube.com/watch?v=tpeqSQr3ngY+

20

Resources

Fact Sheets - http://www.riskmap6.com/Resources.aspx FloodSmart for Consumers - www.FloodSmart.gov FloodSmart for Agents – www.Agents.FloodSmart.gov Flood Insurance Manual - http://www.fema.gov/flood-insurance-manual Risk Communication Guidebook for Local Officials -

http://www.riskmap6.com/guidebook.aspx Flood Insurance Reform Act Webpage - http://www.fema.gov/bw12 NFIP iService Bureau - http://www.nfipiservice.com Region 6 Mitigation - http://www.fema.gov/region-vi-mitigation-division

21

Resources Audio PPT in English – Understanding the Impacts of the NFIP -

http://www.riskmap6.com/documents/resource/Changes%20to%20the%20NFIP-%20Understanding%20BW12_Stakeholder_AudioPPT.ppt

Audio PPT in English – Understanding the October 1, 2013 Changes – http://www.riskmap6.com/documents/resource/BW12%20Oct2013%20Changes%209232013_Audio.pptx

22

FEMA Region 6 – Jack.Graham@fema.dhs.govLisa.Jennings@fema.dhs.gov