Burnett preparing for nk rising tides-091913

RHODE ISLAND EMERGENCY MANAGEMENT AGENCY

National Flood Insurance Program – What changes are happening in Rhode Island?

North Kingstown Community Center September 19, 2013


National Flood Insurance Program Background

• National Flood Insurance Act of 1968 – Established the NFIP – Required mapping of flood-prone areas – Made flood insurance available to all residents of

communities that meet floodplain management requirements

– Afforded communities ability to obtain certain types of disaster assistance


The NFIP: How It Works


Flood Insurance Facts • Standard homeowners insurance doesn't cover flooding.

• Flood Insurance is required if you live in a Special Flood Hazard Area (SFHA) or high-risk area AND have a federally backed mortgage or other commitment (reverse mortgage, line of credit, etc.)

• A lender can require flood insurance, even if a structure is NOT in the SFHA.

• Flood insurance can be purchased through a local insurance agent.


Rhode Island NFIP Facts • All 39 communities and 1 Tribe participate in the National

Flood Insurance Program (NFIP).

• Currently 16,123 policies in Rhode Island (Data as of Sept. 16, 2013) – Bristol: 2,141 – Kent : 2,439 – Newport: 3,016 – Providence: 2,668 – Washington: 5,859

• Average RI Premium is $1,343/annually

North Kingstown • Entered the NFIP

on 7/14/1972 • Currently 911

policies in force • 18 V Zone • 528 A Zone • 365 X Zone


Important Terms • Base Flood: Flood that has a 1% chance of being equaled or

exceeded in any given year.

• Flood Insurance Rate Map (FIRM): An official map where FEMA has delineated the special flood hazard area.

• Pre-FIRM structure: A structure built before the community’s first FIRM became effective. (Before 7/14/1972 for North Kingstown)

• Post-FIRM structure: A structure built after the community’s first FIRM became effective. (After 7/14/1972 for North Kingstown)

• Special Flood Hazard Area (SFHA): Areas subject to the Base Flood or greater in any given year. These include V Zones and A Zones.


Mapping: Why New Maps? • There is a nationwide project underway to update the FEMA

FIRMs. A combination of new data and outdated maps has propelled the project.

• The maps were created by FEMA contactor, STARR, through extensive modeling using new transects, surveys and coastal analyses.


Projected Effective Dates • Bristol County: May 16, 2014 • Kent County: September 18, 2013 • Newport County: September 4, 2013 • Providence County: September 18, 2013 • Washington County: October 16, 2013

• The preliminary maps will go effective county-wide on these dates.

• If communities want to remain in good standing with the NFIP (and they do), each impacted community will adopt the floodplain ordinance and corresponding panels.


• Congress passed the Flood Insurance Reform Act of 2012 (Biggert-Waters 2012), which will: – Make the NFIP more financially stable by raising rates on certain

classes of property to reflect true flood risk; and – Trigger rate changes for certain properties within a revised or

updated map area to accurately reflect the flood risk. • Intent is to eliminate subsidies for:

– Structures built prior to the first flood insurance map in a community (pre-FIRM)

– Policies based on the map in effect when structure was built (grandfathering)

• Artificially low rates and discounts no longer are sustainable.

Changes are Coming to the NFIP


• Revised Premium Rates – V Zones (Coastal velocity zones)

• Post-FIRM: Premium will increase 11% • Pre-FIRM: Premiums will increase 17%

– A Zones • Post-FIRM: Premium will increase 6% • Pre-FIRM: Premiums will increase 16%

– X Zones (outside the SFHA) • Standard-Rated Policy: Premium will increase 8% • Preferred Risk Polices (PRP): Premiums will increase 1% • Revised Premium Rates

• Reserve Fund – 5% reserve fund assessment is to be included for all policies other than PRP’s.

• Federal Policy Fee – Increasing from $20$22 for PRP policies and from $40$44 for all other policies

Program Changes Effective Oct. 1, 2013


• Not everyone – 43% of NFIP policies in RI receive subsidies. • Owners of subsidized non-primary residences in a Special Flood

Hazard Area will see 25% increase annually until rates reflect true risk – began January 1, 2013.

• Owners of subsidized property that has experienced severe repetitive flood losses or that has incurred flood cumulative damage with flood insurance payments exceeding the value of the structure will see 25% rate increase annually until rates reflect true risk – October 2013.

• Owners of subsidized business properties in a Special Flood Hazard Area will see 25% rate increase annually until rates reflect true risk – October 2013.

• Owners of substantially damaged or substantially improved subsidized property will see 25% rate increase.

Who Will Be Affected by Subsidy Changes?


Current & Upcoming Insurance Rate Changes Effective Date Type of Structure Changes

Jan 1, 2013

Non-Primary Pre-FIRM Residence Up to 25% increase per year till full risk

premium is reached

Oct 1, 2013 Pre-FIRM Business Properties Pre-FIRM Severe Repetitive Loss Properties

Up to 25% increase per year till full risk

premium is reached

All new Pre-FIRM policies effective on or after July 6, 2012. Including those due to property being sold, a policy lapse, severe repetitive flood losses, and new policy purchased for any reason.

First renewal or purchase after Oct 1, 2013 will be based on

full risk premium

Oct 1, 2014 When a new map changes the flood zone or flood elevation for any property

5-year phase till full risk rating is reached based

on new map


Direct Move to Full-Risk Rates After the purchase of a property Subsidized rates cannot be assigned to the new

owner After a policy lapse When a new policy is issued Policies for buildings uninsured as of the date that the

law was passed (July 6, 2012) If an offer to mitigate has been refused These changes will start October 1, 2013



What about when a new flood map is adopted?

• If you live in a community which adopts a new, updated Flood Insurance Rate Map (FIRM) : – Charging of insurance premiums based on a prior

FIRM -- grandfathering -- will be phased out. • The Biggert-Waters Act Section 100207 calls for a phase-

out of grandfathering discounts for properties shown on Flood Insurance Rate Maps that are updated.

• But the pain is lessened somewhat, because new rates will be gradually phased in at 20% per year for five years

• Implementation anticipated in 2014


Owners of primary residences in SFHAs will be able to keep their subsidized rates unless or until: You sell your property (new rates will be charged to

next owner if they insure;) You allow your policy to lapse You suffer severe, repeated flood losses; or, You purchase a new policy (after July 6, 2012).

Who Won’t Be Affected by Subsidy Changes?


Home and business owners: Talk to your insurance agent about your insurance options

You’ll probably need an Elevation Certificate to determine your correct rate Higher deductibles might lower your premium

Consider remodeling or rebuilding Building or rebuilding higher will lower your risk and could reduce your

premium Consider adding vents to your foundation or using breakaway walls

Talk with local officials about community-wide mitigation steps Community leaders:

Consider joining the Community Rating System (CRS) or increasing your CRS activities to lower premiums for residents.

Talk to your state about grants. FEMA issues grants to states which can distribute the funds to communities to help with mitigation and rebuilding.

What Can Be Done to Lower Costs?


• Many changes are coming to the Flood Insurance program • Congress acted to make program stronger financially.

• On many more policies, flood insurance rates will reflect full risk.

• Insurance rates will rise on some policies; and • There are specific actions which will trigger rate changes.

• Talk to your insurance agent about how changes may affect your property and flood insurance policy.

• Building or rebuilding higher can lower your flood risk and could save you money.

• FEMA can help communities lower flood risk and flood insurance premiums through: • Community Rating System program; • Various mitigation grants; and • Technical advice on building and rebuilding to mitigate future flood

damage.

What You Need to Remember


Michelle Burnett Rhode Island State Floodplain Manager Rhode Island Emergency Management Agency 645 New London Avenue Cranston, RI 02920 Direct: (401) 462-7048 [email protected]

Contact Information

mailto:[email protected]

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Burnett preparing for nk rising tides-091913