Flood Insurance Changes for 2015

The changes taking place in April include an increase in the Reserve Fund Assessment, the implementation of anannual surcharge on all new and renewed policies, an additional deductible option, an increase in the Federal Policy Fee, and rate increases for most policies. Key changes include: • Implementing annual rate changes that set rates using rate-increase limitations set by HFIAA for individual premiums and rate classes: ○○ Limiting increases for individual premiums to 18 percent of premium. ○○ Limiting increases for average rate classes to 15 percent. ○○ Mandatory increases for certain subsidized policyholders under Biggert-Waters and HFIAA. • Increasing the Reserve Fund assessments required by Biggert-Waters. • Implementing annual surcharges required by HFIAA. • Guidance on substantially damaged and substantially improved structures, and additional rating guidance on buildings constructed before their communities’ first Flood Insurance Rate Maps (FIRMs) became effective (known as pre-FIRM structures). • Implementing a new procedure for properties newly mapped into the Special Flood Hazard Area (SFHA) and existing Preferred Risk Policy Eligibility Extension (PRP EE), a cost-saving flood insurance coverage option for property owners whose buildings were newly mapped into an SFHA. The premiums will be the same as the PRP, which offers low-cost flood insurance to owners and tenants of eligible residential and non-residential buildings located in moderate- to low-risk areas for the first year (calculated before fees and assessments) to comply with provisions of HFIAA. • Reformulating expense loading on premiums, reducing the expense load on the highest-risk policies as an interim step while investigating expenses on policies as required by Biggert-Waters. The changes will take effect on April 1, 2015.

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