The document discusses changes to the National Flood Insurance Program (NFIP) resulting from the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12) and the Homeowner Flood Insurance Affordability Act of 2014. Key points include: BW-12 reauthorized NFIP for 5 years and focused on fiscal solvency; the 2014 act rolled back some BW-12 provisions and set longer timelines for phasing out subsidies; subsidies will not be extended to new policies or lapsed policies; existing subsidized policies will be grandfathered in but new policies will be on a glide path to full rates.

1. What You Need To Know – Florida Association of Realtors District 1
Lisa S. Jones, CFM, CPM, ANFILisa S. Jones, CFM, CPM, ANFILisa S. Jones, CFM, CPM, ANFILisa S. Jones, CFM, CPM, ANFI
3/27/2014 © Carolina Flood Solutions LLC

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The NFIP Reform is no fairytale
Homeowner Flood Insurance Affordability Act of 2014
(GW-HR3370)
Biggert-Waters NFIP Reform Act of 2012

3. BW-12
•Reauthorized the National Flood Insurance
Program (NFIP) for 5 years through September
30, 2017
•Focus was fiscal solvency of program
•Signed July 6, 2012
Homeowners Flood Insurance Affordability Act
(HFIAA) of 2014
•Retreat from some BW-12 provisions, set some
longer glide paths to full risk rating
•Signed March 21, 2014
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Section 3. (gSection 3. (gSection 3. (gSection 3. (g) NO EXTENSION OF SUBSIDY TO NEW POLICIES OR) NO EXTENSION OF SUBSIDY TO NEW POLICIES OR) NO EXTENSION OF SUBSIDY TO NEW POLICIES OR) NO EXTENSION OF SUBSIDY TO NEW POLICIES OR LAPSED POLICIESLAPSED POLICIESLAPSED POLICIESLAPSED POLICIES....—
The Administrator shall not provide flood insurance to prospective insured's at rates
less than those estimated under subsection (a)(1), as required by paragraph (2) of
that subsection, for—
(1) any property not insured by the flood insurance program as of the date of
enactment of the Biggert-Waters Flood Insurance Reform Act of 2012;
(2) any property purchased after the date of enactment of the Biggert-Waters Flood
Insurance Reform Act of 2012;
((((3) any policy under the flood insurance program3) any policy under the flood insurance program3) any policy under the flood insurance program3) any policy under the flood insurance program that hasthat hasthat hasthat has lapsed in coverage,lapsed in coverage,lapsed in coverage,lapsed in coverage, as aas aas aas a
result of the deliberateresult of the deliberateresult of the deliberateresult of the deliberate choice ofchoice ofchoice ofchoice of the holder of such policy;the holder of such policy;the holder of such policy;the holder of such policy; unless the decision of theunless the decision of theunless the decision of theunless the decision of the
policy holder to permit the lapse in coverage was as a result of the property coveredpolicy holder to permit the lapse in coverage was as a result of the property coveredpolicy holder to permit the lapse in coverage was as a result of the property coveredpolicy holder to permit the lapse in coverage was as a result of the property covered
by the policy no longer being required to retain such coverage;by the policy no longer being required to retain such coverage;by the policy no longer being required to retain such coverage;by the policy no longer being required to retain such coverage;
(4) any prospective insured who refuses to accept any offer for mitigation assistance
by the Administrator (including an offer to relocate), including an offer of mitigation
assistance—
(A) following a major disaster, as defined in section 102 of the Robert T. Stafford
Disaster Relief and Emergency Assistance Act (42 U.S.C. 5122); or
(B) in connection with—
(i) a repetitive loss property; or
(ii) a severe repetitive loss property.

6. Grandfathering Subsidy EliminationGrandfathering Subsidy EliminationGrandfathering Subsidy EliminationGrandfathering Subsidy Elimination
• SectionSectionSectionSection 207 (207 (207 (207 (result of a map changeresult of a map changeresult of a map changeresult of a map change)))) eliminated;eliminated;eliminated;eliminated;
however it was replaced with new grandfathering
section
• Existing grandfathered policies to continue to be
grandfathered . . . but
• New policiesNew policiesNew policiesNew policies (after date of enactment of HFIAA) for
properties newly identified in SFHAs will be on a glide
path to full actuarial rates.
Year 1 . .PRP rates
After year 1:rate increase path for phase-out of pre-FIRM subsidy
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AllAllAllAll policies get apolicies get apolicies get apolicies get a newnewnewnew ANNUAL surcharge:ANNUAL surcharge:ANNUAL surcharge:ANNUAL surcharge:
• $25 for primary residence properties,
• $250 for non-residential properties and non-primary
residential properties.
The surcharges would be deposited in the NFIP ReserveNFIP ReserveNFIP ReserveNFIP Reserve
FundFundFundFund, which was established to ensure funds are
available for meeting the expected future NFIP
obligations.

8. New 1% goalNew 1% goalNew 1% goalNew 1% goal
FEMA is instructed to try and minimize the number
of policies with annual premiums that exceed one
percent of the total coverage provided by the policy
Existing V-Zone rates already exceed this!
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• Optional deductiblesOptional deductiblesOptional deductiblesOptional deductibles as high as 10,000 for residential properties &
mandatory disclosuredisclosuredisclosuredisclosure of optional deductibles and consequences;
• Waives the Mandatory PurchaseWaives the Mandatory PurchaseWaives the Mandatory PurchaseWaives the Mandatory Purchase of flood insurance for detacheddetacheddetacheddetached
structures;structures;structures;structures;
• Restores the substantial improvementsubstantial improvementsubstantial improvementsubstantial improvement threshold back to 50% FMV50% FMV50% FMV50% FMV
• Flood Insurance Rate Map CertificationFlood Insurance Rate Map CertificationFlood Insurance Rate Map CertificationFlood Insurance Rate Map Certification
• Successful map appeal expense reimbursement:Successful map appeal expense reimbursement:Successful map appeal expense reimbursement:Successful map appeal expense reimbursement: adds communities
• Designation of a Flood Insurance Advocate for homeowners on:Designation of a Flood Insurance Advocate for homeowners on:Designation of a Flood Insurance Advocate for homeowners on:Designation of a Flood Insurance Advocate for homeowners on:
• Flood Insurance;Flood Insurance;Flood Insurance;Flood Insurance;
• Map appeals,Map appeals,Map appeals,Map appeals,
• Risk; and,Risk; and,Risk; and,Risk; and,
• MitigationMitigationMitigationMitigation

10. • Requires an Affordability Framework
• Study of Voluntary Community-Based Flood
Insurance Options
• Requires mapping of non-structural flood
mitigation features such forests, marshlands,
etc.
• Requires FEMA to clearly communicate full
flood risk determinations to individual property
owners regardless of whether their premium
rates are full actuarial rates
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11. • Preserves basic structure of BWPreserves basic structure of BWPreserves basic structure of BWPreserves basic structure of BW----12121212, does not repeal
most of it
• It modifiesmodifiesmodifiesmodifies some annual increasessome annual increasessome annual increasessome annual increases and generally
increases glide path to full actuarial rates
• Contrary to the name, it did not do much to address
flood insurance affordability
Addressed immediately going to full risk rates upon sale
or new policy .. . Good
Some provisions nibble around the edges
Lots of studies . . .no implementation or even pilots
Some peoples total policy costs will be higher under
HFIAA than under BW-12!
All subject to FEMA’s final interpretation!All subject to FEMA’s final interpretation!All subject to FEMA’s final interpretation!All subject to FEMA’s final interpretation! 11

12. • Primary residence changes from 80% occupancy to 50%
• Will be verified with:
Driver’s license
Automobile registration
Proof of insurance for a vehicle
Voter’s registration
Documents showing where children attend school
Homestead Tax Credit Form for Primary Residence
• Coverage amount increase to $500,000 for 5-or-more-
unit residential structures contents remains at
$100,0000.

13. A building that will be lived
in for 80 percent or more
of the year (292 days or
approx 10 months).
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Changes to 50%
on June 1, 2014

15. •Flood Insurance is required
• Federally backed Mortgage in a SFHA
• Structure located in Zones
AE (A1-A30), VE (V1-V30), V , AH, AO, A
• Flood insurance required for secured Property
located in a SFHA
• Coverage Required- Amount of loan
Down payment? Is policy holder underinsured?
Proper rating
• OptionalOptionalOptionalOptional for Zones B, C, or Xfor Zones B, C, or Xfor Zones B, C, or Xfor Zones B, C, or X –––– Maybe eligible forMaybe eligible forMaybe eligible forMaybe eligible for
Preferred Risk PolicyPreferred Risk PolicyPreferred Risk PolicyPreferred Risk Policy ---- cheap & simple applicationcheap & simple applicationcheap & simple applicationcheap & simple application
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16. •FEMA Map Service Center
https://msc.fema.gov
•Community Official
•Current Home Owner’s Elevation Certificate,
or NFIP Policy’s Declaration’s Page
•Flood Hazard Determination Form
•Prior Letter of Map Change
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18. •Flood insurance may not be available
depending on when the structure was
built, substantially damage or
improved compared with the CBRS or
OPA Designation date
•Appeals to boundaries decided by US Fish
and Wildlife Service not FEMA.
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Substandard
Levee
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20. • Peace of Mind Coverage (Structures
located in B, C or X Zones)
• Participating Communities in the
Regular Program
• Coverage Available
Contents only
Building and Contents
• Limited Loss History Eligibility
Requirements
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21. •Provides for continuous coverage
•Current policy holder can transfer docs (e.g.,
elevation certificate, etc.)
•Grandfathered rates (subsidized rates, except
Pre-FIRM, Non-primary) available until
further notice from FEMA.
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22. • Does Community Participate in the NFIP?
CRS Discount?
• Date of construction
Pre-/Post-FIRM
• Structure/Property located in the floodway?
CBRS or OPA?
Impacts ability to improve, expand or use and
may increase costs
• ASK - Any prior flood claims or Flooding
history? Repetitive Loss?
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23. Timetable for change:Timetable for change:Timetable for change:Timetable for change:
• FEMA has up to 8 months to develop the guidance for theFEMA has up to 8 months to develop the guidance for theFEMA has up to 8 months to develop the guidance for theFEMA has up to 8 months to develop the guidance for the
insurance companiesinsurance companiesinsurance companiesinsurance companies
• Insurance companies have up to 6 months after FEMAInsurance companies have up to 6 months after FEMAInsurance companies have up to 6 months after FEMAInsurance companies have up to 6 months after FEMA
releases the guidance to retool software and implementreleases the guidance to retool software and implementreleases the guidance to retool software and implementreleases the guidance to retool software and implement
the changesthe changesthe changesthe changes
•FEMA will clearly communicate when theseFEMA will clearly communicate when theseFEMA will clearly communicate when theseFEMA will clearly communicate when these
changes are madechanges are madechanges are madechanges are made
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Up to 14 monthsUp to 14 monthsUp to 14 monthsUp to 14 months

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Lisa S. Jones, CFM, CPM, ANFI
(803) 730-8626
lisa@carolinafloodsolutions.comlisa@carolinafloodsolutions.comlisa@carolinafloodsolutions.comlisa@carolinafloodsolutions.com
3/27/2014 © Carolina Flood Solutions LLC
www.carolinafloodsolutions.com