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Association of State Flood Plain Managers

Association of State Flood Plain Managers Association of State Flood Plain Managers
Association of State Flood Plain Managers

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NFIP Oct. 1 Changes Announced
Monday, October 8, 2018

ASFPM Flood Insurance Committee Co-chairs Bruce Bender and Steve Samuelson Share NFIP Oct. 1 Program Changes

FEMA implemented some minor updates to the NFIP Oct. 1. Two notable changes are:

  • Re-establishing the ability to cancel an NFIP policy when a policyholder has a non-NFIP policy. This allows for an insured to switch to a private flood insurance policy if their agent provides cheaper coverage (and it is acceptable to the lender). While an entire article can (and has been) written on the pros and cons of private flood insurance, this is a “buyer be aware” situation as cheaper is not always better!
  • Extending Eligibility for Newly Mapped Rating Procedure. Previously, properties newly identified to be in an SFHA were eligible for the "newly mapped" rating procedure if the applicant obtained coverage that is effective within 12 months of the map revision date. Effective Oct. 1, 2018, FEMA expanded the eligibility to be either within 12 months of the map revision date or within 45 days of initial lender notification if the notification occurred within 24 months of the map revision date. Bottom line: the property owner should be encouraged to purchase a Preferred Risk Policy BEFORE the new maps take effect because the risk is higher, even though the maps aren’t effective.

Another notable change occurred Oct. 1, 2018. In the past, FEMA limited the ability for companies that wrote the NFIP flood policies on FEMA’s behalf (known as Write Your Own companies, or WYOs) to also write private flood insurance policies. This limitation was removed in the latest version of the annual arrangement that each WYO signs with FEMA. While that opens up the opportunity for more companies to potentially join the private flood market, it has not been holding back the market's growth--the residential private flood insurance market has gone from about 10 companies just six years ago to nearly 60… and growing.

FEMA also released an Oct. 1 Bulletin announcing the planned changes to the NFIP that will be implemented April 1, 2019 (and Preferred Risk Policies changes Jan. 1, 2020). Highlights include:

  • An 8.2% premium increase (on average), resulting in an average premium of $1,115. Post-FIRM Zone "A" rates will see increases of 0-3%.
  • PRPs will increase 5% Jan. 1, 2020 and the Newly Mapped procedure multiplier will be 15%, as in the past. The estimated average per policy will be over $1,000 for the first time.
  • A Severe Repetitive Loss premium for all policies covering properties with an SRL designation is being introduced. The SRL premium will be 5% for all SRL policies.
  • FEMA is updating Primary Residence Determination Guidance to allow a 2-4 family building to be a primary residence for the purposes of assessing the HFIAA surcharge.
While FEMA is planning to remove the Coastal Barrier Resources System boundaries and Otherwise Protected Areas from the FIRMs as of Nov. 6, 2018, this update does not address how wording may be revised in the NFIP Flood Insurance Manual. This Bulletin is focused only on changes directly affecting rating.

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