Update on the Homeowners Flood Insurance Affordability Act (HFIAA)

Last week we had provided news about the US Congress passing the Homeowners Flood Insurance Affordability Act (HFIAA) at the end of March.  Since then, FEMA has published an overview of the the bill found on their website and in the FEMA Resource Library.  This overview document can also be found on our Flood Hazard Management webpage.

We have also started to get some information on how HFIAA will impact people in Vermont specifically, as well as the impacts to flood insurance nationally.  Here is a short summary:

• It will take some time to start to implement provisions of the new law:
• In the short term, there may still be individuals that get hit with full actuarial rates due to a new policy on a preFIRM residence (home built before the first Flood Insurance Rate Maps were created).  This new policy could be due to a lapsed flood insurance policy or a new policy being written due to a transfer of the property and/or a requirement by a lender for flood insurance;
• There will also be a lag for people who will be expecting refunds due to the change in their flood insurance premium as a result of the HFIAA.
• If you are a property owner living in Bennington County or in the Town/Village of Richmond here in Vermont:  FEMA will be releasing new preliminary or effective DFIRMs in the coming year.  Richmond's new DFIRMs are scheduled to become effective on 8/2/2014.  Bennington County's new DFIRMs are anticipated to become effective about one year from now (March 2015).  If the new preliminary DFIRMs show your house to be located in the mapped flood hazard area where you had not been shown to be located in the flood hazard area on previous FIRMs, you may be eligible for a grandfathered flood insurance rating.  Anyone who may be eligible for receiving grandfathered flood insurance rates is encouraged to get flood insurance BEFORE the new DFIRMs become effective for your community.  For more information regarding FEMA's grandfathering policy, please see an earlier post that was written for the Washington County map update process.  Please note that the estimated flood insurance premiums discussed may be different due to the effects of either Biggert Waters Flood Insurance Reform Act of 2012 (BW12) or HFIAA.  

UPDATE **For Properties newly mapped into the FEMA Special Flood Hazard Area: your first year would be rated as a Preferred Risk Policy (PRP) rate - i.e. as if you are not located in the flood hazard area.  Policy ratings in subsequent years would be based on the same phase-in method used to eliminate pre-FIRM suubsidies.

• Flood Insurance premiums are going up for everyone.  While the HFIAA is allowing a phase-in of higher rates for primary homeowners, the law is still enabling a push for all policies to eventually reach full actuarial rates.  Property owners should seriously consider mitigating their home or structure(s) to reduce their flood risk and reduce the cost of flood insurance.  Additional information about mitigating your home or structure can be found on the VT Flood Resilience Sharepoint site found under either "Step 5: Insure" or "Step 3: Reduce".  

If you are a local official or someone else that may be helping individuals affected by the changes from the HFIAA, the Association of State Floodplain Managers (ASFPM) will be offering two upcoming webinars in May and June focused on the changes to Biggert Waters 2012 from HFIAA (see dates below).  From the ASFPM announcement, the first webinar in early April filled up and these two follow up webinars are also expected fill up quickly.  

Homeowners Flood Insurance Affordability Act (HFIAA) of 2014 (AKA Grimm-Waters 2014) meets Biggert-Waters 2012: Impacts and Implications

Learn how the Homeowner Flood Insurance Affordability Act modifies and expands on BW-12 implications

1 core CEC for CFMs

$30 for ASFPM Individual Members*

$45 ASFPM Chapters/Agencies/Corporate Partners*

$60 Non-members

*Members must enter the event promo code at registration to receive the preferred rate.  ASFPM members should register through the ASFPM Membership Login page.  

More information about the webinars can found by clicking on the webinar flyer links below:

Friday, May 2nd, 2014; 2:00pm-3:00pm (EDT)

Thursday, June 26th, 2014; 2:00pm-3:00pm (EDT)

Homeowner Flood Insurance Affordability Act of 2014 - What's Changed from BW12?

Update...
After many of the new provisions of Biggert-Waters Flood Insurance Reform Act of 2012 (BW12) started going into effect, we had written about discussions and a US Senate bill that was working its way through Congress to roll back many of the BW12 provisions.  While there were many issues that seemed to need some working out, chief among them affordability provisions for the new rates and increasing funding for mitigation projects, a final bill was sent from the House of Representatives to the Senate and was voted on on 3/13/2014.  The President signed the new Homeowners Flood Insurance Affordability Act (HFIAA) into law on 3/21/ 2014.

The new HFIAA certainly does not repeal all of BW12.  You can see a comprehensive list of all of the changes included in the HFIAA that was compiled by the Association of State Floodplain Managers (ASFPM) - Analysis of HFIAA, but here are some of the more prominent provisions and changes resulting from the passage of the bill:

• Repeals provision that triggered full-risk insurance rates for pre-FIRM properties;
• All policyholders will receive an annual surcharge on their flood insurance bill: $25 for primary residences, $250 for all other properties;
• Changes the annual flood insurance policy rate increase cap from a maximum of 20% to a maximum of 15%;
• Establishes a maximum cap of 18% per year in premiums increases on any individual properties (exceptions are noted in the ASFPM Analysis of HFIAA);
• The Act establishes a new, slower path to full-risk rates for some properties (increasing premiums by at least 5% per year) where grandfathering is not possible;
• Provides for some exceptions and options to escrow flood insurance premiums during a real estate closing;
• Increases the residential deductible limits to $10,000 from $5,000

For more information about the background on the passage of BW12 and HFIAA, there is a good article that was published in Slate Magazine.

US Senate Passes Bill to Delay Implementation of BW12

2/12/14 Update:  Here is a FEMA FAQ about the impacts of this bill on the implementation of BW12

There have been several articles (Washington Post, NYT) published today that provided details on the US Senate's passage of a bill to delay the implementation of Biggert-Waters Flood Insurance Reform Act of 2012, or BW12.  There has been discussion about a possible repeal or delays of the BW12 bill for several months.  However, this discussion seems to have gained more steam as homeowners and other people with structures located within the Special Flood Hazard Area are starting to receive their new flood insurance premiums.  More information from ASFPM about some of the efforts that are being made to consider or include other options in any bill that may be brought to the floor in the US House of Representatives. 

For anyone who is not familiar with the BW12 bill, the insurance reform act had several goals including changes to flood mapping, flood grants and reauthorizing the National Flood Insurance Program (NFIP) for an additional five years.  However, the changes that BW12 is best known for are changes to the flood insurance aspect of the National Flood Insurance Program.  Many of the flood insurance changes were designed to make the flood insurance fund more stable by reducing the fund's current deficit to the US Treasury, as well as beginning to create extra savings to help the fund to be able to withstand large scale disaster declarations like Hurricanes Katrina, Ike and Sandy.  Another aspect of the flood insurance reforms was to phase in actuarial rates for flood insurance policies which resulted in some groups of people losing the subsidy that they may have for their policy or losing any subsidy when a new policy was written.  Past posts by Ned include some information about how BW12 would impact flood insurance policies within the State of Vermont.  FEMA's website also has quite a bit of information that goes into much fuller detail about these flood insurance changes.

Many people have recognized that the original bill had issues in implementation and execution of the stated goals and objectives, specifically that the phase in of higher rates happened at a relatively fast rate, that some home or other building owners may go right from a subsidized rate directly to a full actuarial rate overnight and while many policy holders may not want to pay the higher premiums for many reasons, there was a definite contingent of people who would not have an actual ability to pay for the higher rates. 

Despite the myriad of issues with the implementation of BW12, the reasons for the passage of BW12 still remains - trying to have the National Flood Insurance Program be able to be fiscally solvent and support itself by the premiums that are paid into the program and to keep general taxpayers for funding flood recovery efforts.  A third very compelling reason for BW12 focused on having people in a flood hazard area recognize and pay for the true cost and risk of living in a hazard area, especially as we have been seeing more frequent and intense flood events and sea level rise starting to impact properties that may have been less vulnerable in the past.  The idea was that if a person living or working in a hazard area had to pay the actuarial flood insurance rate for living in this risky zone, then more structure owners would undertake mitigation efforts to help reduce their yearly premiums.

The Association of State Floodplain Managers (ASFPM) released a Policy Paper in October of 2013 that included 9 recommendations of how BW12 could be altered to improve implementation but cautioned against repeal.  This was in order to help keep moving the NFIP towards fiscal solvency as well as continue to focus on the growing demand for mitigating homes and other infrastructure that is located within the FEMA-mapped Special Flood Hazard Area. Many of the 9 ASFPM recommendations that had been made focused on continuing to promote and encourage meaningful mitigation of flood prone homes in a variety of ways.  This included:

• finding more ways to fund mitigation projects and existing hazard mitigation grant programs;
• exploring ways to better incentivize mitigation efforts through tax incentives or long-term flood insurance policy benefits;
• recognizing partial mitigation efforts by homeowners; and
• making loans more available to home and other building owners who may be looking for ways to mitigate their structure from future floods. 

At this time, it looks like it is uncertain how such a BW12 reform/delay bill will fair in the US House of Representatives, but we will surely hear more of this debate in the near future. 

Upcoming ASFPM Webinar November 14th on Biggert-Waters Flood Insurance Reform Act

A third webinar was added by the Association of State Floodplain Managers (ASFPM) about the Biggert-Waters 2012 (BW12) National Flood Insurance Program Reform Act.  A third webinar was added due to the previous two being sold out.  The webinar will help to clarify the changes that are occurring to flood insurance rate changes, the elimination of flood insurance subsidies and questions about how the changes might affect communities. 

The webinar is scheduled for Thursday, November 14 from 3-4pm EST. 

There will be 1 Continuing Education Credit for CFMs that participate in the webinar.

Cost:
$30 ASFPM Individual Members (you should have received an email with an event promo code that will give you this preferred rate)
$45 ASFPM Chapters/Agencies/Corporate Partners
$60 Non-Members

A link to more information about this webinar, and a link to the registration website.

Bennington County DFIRM Update

The Bennington County Preliminary Digital Flood Insurance Rate Map (DFIRM) will be updated by FEMA to include new data provided by the Town of Bennington for flood hazards along the Roaring Branch of the Walloomsac.  The new Preliminary DFIRM will be released in the fall and a new 90-day Review and Appeal Period will open in February 2014. 

At this time it is projected that the Bennington County DFIRM will get a Letter of Final Determination in September 2014 and become effective in March 2015.

The Biggert-Waters Flood Insurance Reform Act of 2012 has expanded the opportunities for map appeals.  Now, where ever the delineation of the flood hazard has changed (not just the Base Flood Elevation) the community can present FEMA with higher quality engineering data for inclusion.  Please see the information at: Changes to FEMA’s Appeals Process.

Communities in Bennington County that are still in the process of updating their flood hazard area bylaws should plan to complete the process before the holidays 2014.

In the meantime, communities may want to update their bylaws to qualify for Flood Resilient Communities incentives under ERAF.

August STARR Webinars for DFIRMs, Elevation Certificates, Biggert-Waters, and Determining a BFE

Hello all,

I’d like to present the upcoming free, online trainings available through STARR. These trainings cover a variety of topics, from the NFIP basics through specifics of elevation certificates, and are presented by STARR staff, FEMA, and State organizations. Many of the courses are eligible for CEC credits for Certified Floodplain Managers.

Please feel free to register for any courses you are interested in attending, and invite or pass information on these courses on to potentially interested communities or organizations in your states. Also, if you are interested in using this online platform for any trainings that your state would like to present, STARR can support you in that effort. Please let me know if you’d like additional information on hosting online trainings.

To register for a course or to check on upcoming courses, navigate to http://j.mp/starrwebtraining  and click the “Upcoming” tab. 

Below are the courses available in August:

August 14, 12:00 pm Eastern – Using DFIRMs and Other Digital Flood Data

This one-hour beginner level session will provide a basic overview of digital flood insurance rate maps (DFIRMs) including how to use the DFIRM database in ArcGIS, using flood hazard data for mitigation and public outreach, and online resources for non-GIS users. The target audience are state and local officials that use DFIRMs for day to day floodplain management duties and/or beginner level GIS staff that support those functions. 1 CEC for ASFPM CFMs

August 15, 1:00 pm Eastern – Elevation Certificates for A Zones

Training on the proper way to complete FEMA Form 81-31 and best practices for using the Elevation Certificate in the floodplain development review process. Special consideration to using the form in A Zone without a BFE. 2 CECs for ASFPM Certified Floodplain Managers (CFMs) that register and attend individually and pass the learning objectives quiz at the end of the session.

August 21, 2:00 pm Eastern – Biggert-Waters NFIP Reform Act of 2012

The Biggert-Waters National Flood Insurance Program Reform Act of 2012 (BW-12) resulted in major changes to the NFIP. This session will provide an overview of the changes and implementation. This is an important informational opportunity for all local officials participating in the NFIP. Continuing Education and Professional Development Credits are available.

August 22, 1:00 pm Eastern – Elevation Certificates

Training on the proper way to complete FEMA Form 81-31 and best practices for using the Elevation Certificate in the floodplain development review process. 2 CECs for ASFPM Certified Floodplain Managers (CFMs) that register and attend individually and pass the learning objectives quiz at the end of the session.

August 28, 2:00 pm Eastern – Determining a Base Flood Elevation

Training on methods for determining base flood elevation in AE and A Zones using the FIRM/FIS and other resources, including tips for developing BFEs for A Zones. 1 CEC for CFMs.

Please contact Alex Sirotek from STARR if you have any questions.

Alex Sirotek, CFM 

STARR 

FEMA Region 1 Regional Service Center 

99 High Street, 3rd Floor 

Boston, MA 02110 

617-574-4402

Flood Insurance Premiums Rising for Older Homes

A number of changes are underway with the National Flood Insurance Program in response to the Biggert-Waters NFIP Reform of 2012.  These changes include steps to make the program financially solvent - in particular by eliminating or phasing out existing subsidies in the program.

New flood insurance policies are now required to pay actuarial rates.   This situation includes older homes and structures in flood hazard areas that have long benefited from a subsidized flood insurance rate.

Older structures (built before the first Flood Insurance Rate Maps typically in the late 1970s) are called "Pre-FIRM" (Pre-Flood Insurance Rate Map) structures.   A new flood insurance policy for a Pre-FIRM structure is now required to pay actuarial rate for the class of "Pre-FIRM" structures.  The specific premium still reflects the value of the structure and the deductible.

New policies or policies renewed after October 1, 2013 will need an Elevation Certificate (EC).  An Elevation Certificate describes the location of the building in relation to the elevation of the flood water (Base Flood Elevation).  An EC has been required for new Post-FIRM structures - but this is the first time that it will be needed for older Pre-FIRM structures.  With an Elevation Certificate, Pre-FIRM structures will get rated based on their specific actual risk situation - notably the elevation of the lowest floor (including the basement).

Please see the Summary on Biggert-Waters.  The summary includes links to additional FEMA information and other resources.

If you have a current flood insurance policy on a residential Pre-FIRM structure - the rates will rise to actuarial cost at 20% / year.

Please contact your homeowners insurance agent to discuss flood insurance costs and how you may be able to reduce your costs by making your structure safer and less risky.  This is particularly important as it will affect the situation at a future time of sale.

Vermont communities may want to consider steps to help property owners get Elevation Certificates - such as encouraging neighbors to hire a surveyor together, and/or to establish more local elevation benchmarks.

Communities may also want to pursue the FEMA Community Rating System (CRS) to provide access to discounts on flood insurance rates.