Like many federal programs, the National Flood Insurance Program (NFIP) must be reauthorized every so many years. With the passage of Biggert-Waters Flood Insurance Reform Act of 2012, the federal government reauthorized the program for 5 years, and as 2017 zooms by we are quickly approaching the deadline. As of September 30th if the program is not reauthorized the availability of Flood insurance will stop and the home market will come to a screeching halt.
Therefore, members of the House of Representatives and Senate are hard at work in Washington D.C. drafting and reviewing new legislation. On June 15, 2017 the House Financial Services Committee approved 2 bills which will allow for reauthorization of the NFIP with some drastic changes.
The first bill (H.R. 2874), labeled the “21st Century Flood Reform Act”, has met some conflict amongst different interest groups, but passed with a 30 to 26 vote. The highlights of the bill are as follows:
- Reauthorizes the NFIP for 5 years (until September 30, 2022)
- Reduces the cap on annual premium rate increase from 18% to 15%
- Increases the minimum average annual increase from 5% to 8%
- Allows for monthly payment plans
- Makes all-peril policies (Homeowners policies including Flood coverage) acceptable for mandatory purchase requirements
- Allows for mid-term policy cancellations and refunds if a policyholder obtains private flood insurance
- Makes new construction & homes valued over $1 million ineligible for the NFIP after January 1, 2017 (such properties can get NFIP coverage with a 10% surcharge if no coverage is available in the private market)
- Reduces the compensation Write Your Own (WYO) flood carriers receive
- Eliminates the Write Your Own carrier non-compete clause to allow for private market options
- Distinguishes rates within 2 years for coastal and non-coastal properties
- Changes the way in which multiple loss properties are treated
- Eliminates coverage for properties with excessive lifetime claims
- Creates a voluntary framework for state flood insurance affordability programs
- Requires the NFIP to disclose its premium methodology
- Allows for the availability of flood insurance information upon request, including historical claim payment information
- Requires an annual independent actuarial study for the program
The Committee also voted unanimously to further a second bill (H.R. 2868), which would implement the following:
- Implements an annual premium cap for 1-4 residential properties of $10,000
- Offers premium reductions to owners that implement mitigation efforts
- Conducts a study to determine how to provide flood coverage to unit owners within a cooperative building
It’s important that these bills proceed through the House, Senate, and eventually get onto the President’s desk. We encourage our clients to reach out to their local representatives to voice their opinion on the importance of flood insurance.
If you have any questions about the changing flood landscape please contact our agents or reach out to Brian Ford at bford@insuranceresourcesllc.com or call him at 727-345-0242.
