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Biggert-Waters Flood Insurance Reform Act of 2012 (BW12) – Oct 2013 Changes
Biggert-Waters Flood Insurance Reform Act of 2012 (BW12)Understanding the October 1, 2013 Changes
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BW-12 TimelineDATE BW-12 IMPLEMENTATION STEP
July 6, 2012 BW-12 becomes law; reauthorizes the NFIP for five years and requires FEMA to eliminate discounts and subsidies
January 2013 Subsidized rates phased out for non-primary residences
October 2013 Subsidized rates anticipated to phase out for business properties, SRL properties, and others. Move to full-risk rates after sale/purchase of property, substantial damage/improvement or policy lapse.
Late 2014 FEMA anticipates implementing phase-in of full risk rates for properties affected by map changes
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BW-12: What’s ChangingSubsidies being phased out
Non-primary residences (January 1, 2013) Business properties Severe repetitive loss properties (1-4 family residences), and properties where
claims payments exceed fair market value
New policies to be issued at full-risk rates After the sale/purchase of a property After a lapse in insurance coverage After substantial damage/improvement For properties uninsured as of BW-12 enactment As new or revised Flood Insurance Rate Maps are issued (grandfathered policies
planned to be phased out over 5 years)
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Changes to Other Subsidized RatesChanges as of October 1, 2013
Rates on pre-FIRM commercial buildings Increase by 25% a year until they reach full-risk rates.
Rates for repetitively flooded buildings
(known as Severe Repetitive Loss properties) of one to four family residences increase 25% a year until they reach full-risk rates
Includes buildings with cumulative flood insurance payments that meet or exceed fair market value
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Direct Move to Full-Risk RatesChanges as of October 1, 2013
After the sale/purchase of a property Subsidized rates can no longer be assigned to the new owner.
After a policy lapse Policyholders should know that allowing a policy to lapse could be costly.
When a new policy is issuedPolicies for buildings uninsured as of the date BW-12 was enacted
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Percent of subsidized Policies per state (as of December 31,
2012)
http://www.fema.gov/bw12
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Notice to Policyholders W-13016 (March 29, 2013)
October 1,2013, Program Changes W-13033 (June 14, 2013)
Procedures for Processing Renewals of Certain Pre-FIRM Subsidized Policies that are New, Lapsed, or Assigned
W-13041 (July 10, 2013) Additional Guidance on the Procedures for Processing
Renewals of Certain Pre-FIRM Subsidized Policies that are New, Lapsed, or Assigned
W-13046 (August 8, 2013) Final Letter Related to Processing Renewals of Certain Pre-
FIRM Subsidized Policies that are New, Lapsed, or Assigned
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W-13041
http://www.nfipiservice.com/Stakeholder/pdf/bulletin/w-13041.pdf
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WYO Bulletin W-13041Documentation 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
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WYO Bulletin W-13046Final 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
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W-13046
http://www.nfipiservice.com/Stakeholder/pdf/bulletin/w-13046.pdf
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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
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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
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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• Substantial improvement
or damage
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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
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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
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STAY INSURED Letting your flood
insurance policy lapse could be costly
ElevationCertificate
LEARN YOUR RISK Get an Elevation
Certificate for your home (risk can change)
GET INSUREDBeproactive:
don’t risk the Dconsequences
of a flood
REDUCE YOUR RISK
Building or Rebuilding
? BuildHigherThan
current standards
ResilientAddress
Your
Risk
Tools and Resources
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Insurance Agent Training & Info Sign up for WYO Alerts – http://www.nfipiservice.com/mailing_list.html Toll Free numbers : http://www.nfipiservice.com/storm_sandy.html Training is available through FEMA for insurance agents, adjusters and lenders
www.fema.gov/business/nfip/trainagt.shtm Sign up for agent training emails -
https://public.govdelivery.com/accounts/USDHSFEMA/subscriber/new?topic_id=USDHSFEMA_212
NFIP Training offers workshops and webinars http://www.nfipiservice.com/training/schedule_agents.html
FEMA Flood Map Changes Course http://www.h2opartnersusa.com/nfiptraining/mapping_changes.html
YouTube BW12 Video http://www.youtube.com/watch?v=tpeqSQr3ngY+
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Resources Fact Sheets - http://www.riskmap6.com/Resources.aspx FloodSmart for Consumers - www.FloodSmart.gov FloodSmart for Agents – www.Agents.FloodSmart.gov Flood Insurance Manual - http://www.fema.gov/flood-insurance-manual Risk Communication Guidebook for Local Officials -
http://www.riskmap6.com/guidebook.aspx Flood Insurance Reform Act Webpage - http://www.fema.gov/bw12 Audio PPT in English – Understanding the Impacts of the NFIP -
http://www.riskmap6.com/documents/resource/Changes%20to%20the%20NFIP-%20Understanding%20BW12_Stakeholder_AudioPPT.ppt
NFIP iService Bureau - http://www.nfipiservice.com Region 6 Mitigation - http://www.fema.gov/region-vi-mitigation-division
