On April 1, 2015 we saw the first round of major changes as a result of the Homeowner Flood Insurance Affordability Act (HFIAA). A year later, we’re about to experience even more changes. The changes are slated for April 1, 2016, and will have an impact on any individual that has a Flood insurance policy. Below is a quick summary of the changes that are coming our way.
Premium Increases
According to the NFIP, the average premium increase for all policies will be 9%. However, individual premium increases will vary due to certain variables such as flood zone, year built (Pre-FIRM vs. Post-FIRM), and property type.
Non-residential business properties are going to see the highest increases, with 25% annual premium increases. Residential properties are also going to see premium increases averaging around 9%. Below is a list of Tampa Bay flood zones and their corresponding average premium increases [Pinellas county properties built after 1974 are typically Post-FIRM]:
- V Zone
- Pre-FIRM Primary Residences: 5%
- Post-FIRM Primary Residences: 10%
- Pre & Post-FIRM Non-Primary Residences: 24%
- AE and A1-A30 Zones
- Pre-FIRM Primary Residences: 5%
- Post-FIRM Primary Residences: 9%
- Pre & Post-FIRM Non-Primary Residences: 24%
- X-Zone (outside of the Special Flood Hazard Area [SFHA])
- Standard-Rated Policies: 3%
- Preferred Risk Policies (PRPs): 5% decrease
It’s important to note that these increases do not take into consideration the probation surcharge, Federal Policy Fee (FPF), and the HFIAA surcharge which are not considered premium, and therefore the total amount charged may exceed the above percentages.
Federal Policy Fee Increases
The Federal Policy Fee is also increasing for all property types. For Preferred Risk Policies the fee is increasing from $22 to $25. For standard-rated policies the fee is increasing from $45 to $50. The revised condo Federal Policy Fee schedule is shown below:
- 1 unit: $50 per policy ($5 increase)
- 2-4 units: $150 per policy ($15 increase)
- 5-10 units: $400 per policy ($40 increase)
- 11-20 units: $800 per policy ($80 increase)
- 21+ units: $2,000 per policy ($200 increase)
Subsidy Elimination for Certain Pre-FIRM Policies
If a Pre-FIRM policy that is using subsidized rates has lapsed as a result of non-payment and payment is received past 90 days, that policy is ineligible for reinstatement with Pre-FIRM subsidized rates. Also properties that are covered by a non-NFIP policy purchased in the private market for a period longer than 120 days after NFIP coverage has expired are considered to have lapsed from the NFIP, thus losing the ability to return to the NFIP at the subsidized rate.
Implementation of Clear Communication
FEMA plans to implement changes to improve an understanding of the risk of flood damage and how flood insurance premiums do or do not correlate with that risk. NFIP Write Your Own companies will now have to verify and report current flood zone and current FIRM information including the Base Flood Elevation to policyholders. These changes will be seen on all new business policies after April 1, 2016 and renewals will be handled in phases starting on October 1, 2016.
Reach Out to Your Trusted Agent!
With all the changes and premium increases, many property owners are looking for lower cost alternatives. If you ever have any questions or would like us to explain the current alternatives to NFIP coverage, please contact your Insurance Resources agent at 727-345-0242 or email Brian T. Ford, CPCU at BFord@InsuranceResourcesLLC.com.
For a complete summary of the NFIP changes please see the attached document: //www.stpete.org/emergency/flooding/docs/April_1_2016_Program_Effects.pdf
