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, 2012BW-12 enacted; reauthorizes the NFIP for five years and requires FEMA to eliminate certain discounts and subsidies January 1, 2013Upon policy renewal, subsidized rates began to phase out for non-primary residences October 1, 2013Upon 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 2014FEMA anticipates implementing Section 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)

5 Interactive Map

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 (March 29, 2013)  October 1,2013, Program Changes  W (June 14, 2013)  Procedures for Processing Renewals of Certain Pre-FIRM Subsidized Policies that are New, Lapsed, or Assigned  W (July 10, 2013)  Additional Guidance on the Procedures for Processing Renewals of Certain Pre-FIRM Subsidized Policies that are New, Lapsed, or Assigned  W (August 8, 2013)  Final Letter Related to Processing Renewals of Certain Pre- FIRM Subsidized Policies that are New, Lapsed, or Assigned

8 W

9 WYO Bulletin W Documentation 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 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

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 Elevation Certificate LEARN YOUR RISK Get an Elevation Certificate for your home (risk can change) GET INSURED Be proactive: don’t risk the Dconsequences of a flood REDUCE YOUR RISK Building or Rebuilding? Build Higher Than current standards Resilient Address Your Risk

Tools and Resources

19 Insurance Agent Training & Info  Sign up for WYO Alerts –  Toll Free numbers :  Training is available through FEMA for insurance agents, adjusters and lenders  Sign up for agent training s - =USDHSFEMA_212  NFIP Training offers workshops and webinars  YouTube BW12 Video

20 Resources  Fact Sheets -  FloodSmart for Consumers -  FloodSmart for Agents –  Flood Insurance Manual -  Risk Communication Guidebook for Local Officials -  Flood Insurance Reform Act Webpage -  NFIP iService Bureau -  Region 6 Mitigation -

21 Resources  Audio PPT in English – Understanding the Impacts of the NFIP - %20NFIP-%20Understanding%20BW12_Stakeholder_AudioPPT.ppt %20NFIP-%20Understanding%20BW12_Stakeholder_AudioPPT.ppt  Audio PPT in English – Understanding the October 1, 2013 Changes – Changes% _Audio.pptx

22 FEMA Region 6 –