DETAILS FROM SEN SCHUMER ON THE NEW FLOOD BILL: The Homeowner Flood Insurance Affordability act of 2014 puts the following requirements in place: · Remove certain rate increase “triggers” – The repeal of these “triggers” will allow the person buying a home to be treated the same as the person selling it. With the removal of these triggers, no policyholder will experience the rate shock of moving to full risk rates overnight. · Reinstate “grandfathering” – This means that those who played by the rules and built to code will no longer have to worry about catastrophic rate increases as a result of remapping. · Lower rate increases – This lowers FEMA’s annual flood insurance increase authority from 20% (what it currently is under the Biggert-Waters bill) to 15%. · Refund excess premium charges – Under this bill, those who have paid drastic rate increases as a result of a property sale will be refunded for those excessive charges. · Enable and require FEMA to complete its affordability study – This bill provides FEMA the funding necessary to complete the affordability study mandated in the Biggert-Waters Act and requires FEMA to submit the study, along with an affordability framework, to Congress. Schumer, Gillibrand and their colleagues in both the Senate and House also worked to add a series of important provisions to the House bill, including the following: · Individual property rate increase cap – provides that most individual rate increases cannot exceed 18%. Under FEMA’s annual increase authority, the average increase is capped at 15%. But without this individual cap, policyholders might still have experienced significant rate increases above 15%. · Affordability goal – In setting premium risk rates, in addition to striving to achieve actuarial soundness, 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. · Rate increase protection for newly mapped properties – requires FEMA to extend premium rate protection to all properties newly mapped into a special flood hazard area for the first year. Upon renewal, these properties can receive average rate increases of 15% and no individual policyholder may receive an increase of more than 18%. Without this language, there would be no cap on rate increases for properties newly mapped into a special flood hazard area, which often results in the highest rate increases. · Mapping protections – requires FEMA to notify communities of remapping and work with communities on appropriate data and mapping models. Members of Congress are also to be notified of proposed flood map changes within the relevant state or congressional district. · Consumer protection – ensures policyholders receive clear information relating to their policy risk following certain changes in their policies such as opting for high deductibles or foregoing flood insurance on certain detached structures. · Protection of small businesses, non-profits, houses of worship, and residences – requires FEMA to monitor and report on affordability for small businesses, non-profits, houses of worship, and residences with less than 25% area median home value. If FEMA finds detrimental effects on affordability, it must provide to Congress recommendations to address these effects.
Posted on: Mon, 17 Mar 2014 13:26:15 +0000
Trending Topics
Recently Viewed Topics
© 2015