Flood Insurance Trends

Flood insurance refunds to begin Oct. 1

WASHINGTON – July 21, 2014 – Rep. Bill Cassidy (R-LA) says that the National Flood Insurance Program (NFIP) is continuing to implement the Grimm-Cassidy Substitute Amendment to the Homeowner Flood Insurance Affordability Act of 2014.

As a result, insurance companies will begin to issue refunds for applicable policyholders beginning Oct. 1, 2014, and all checks should be sent before Dec. 31, 2014. The refunds will go to homeowners that paid higher flood insurance rates before Congress passed the Act and Pres. Obama signed it.

The Grimm-Cassidy Substitute Amendment to the Homeowner Flood Insurance Affordability Act (H.R. 3370) effectively lowers many flood insurance premium rates. It reinstates grandfathered rates, repeals the home sale/new policy rate increase trigger, provides refunds for people who bought pre-FIRM subsidized homes without being informed of rate increases and caps flood insurance rate increases, among other things.

Most flood insurance rates will still increase but at a slower rate than before.

Homebuyers already benefit from the Act. Effective May 1, people who purchased new homes after Biggert-Waters became law, or who didn’t have insurance before that date or whose insurance lapsed, were required to paid flood insurance premiums at the rate that was charged on Oct. 1, 2013.

© 2014 Florida Realtors®

How will the President’s signing of the Grimm-Waters Bill affect you?

On March 21, 2014, President Obama signed the Homeowner Flood Insurance Affordability Act (Grimm-Waters) which repeals and modifies many provisions of the Biggert-Waters Flood Insurance Reform Act of 2012 (BW12).

No doubt we will all start receiving inquiries as to when agents and policyholders will start seeing the Grimm-Waters changes, and many requests for premium refund checks. It is important to know, and to communicate to others, that though the bill has now been enacted, it will probably take months for the changes to be implemented. This is because FEMA needs to analyze all the changes in the bill, determine how they will implement each piece, develop any new rates, document the Program changes in the Flood Insurance Manual, Edit Specification Manual and the TRRP Manual, and then allow time for the changes to be implemented by and incorporated into the WYO and NFIP systems. Of course, any rate related changes also have to take into consideration the lead-time necessary to account for the renewal billing process.

FEMA is currently exploring options for the earliest possible implementation timelines, but has not yet provided any guidance, so it is impossible to know for sure when any of these changes will be fully implemented. That may be the best answer, for now, for any inquiries you may receive in regards to this subject.

In the coming days and weeks we will probably begin to see news articles detailing the changes that this new law will bring. Please remember that until FEMA officially publishes guidance on the Program changes, these articles are educated guesses, and should be treated as such.

As a reminder, some of the bigger changes we expect to come from the Grimm-Waters bill:

  • A return to subsidized rates for Pre-FIRM properties;
  • Premium refunds for some Pre-FIRM policyholders who experienced large premium increases due to BW12 (Note, there is already a bill in Congress to clarify that refunds would be paid only on policies for Primary Residences, not on policies for second homes or commercial businesses);
  • A new premium payment plan;
  • A new policy fee (perhaps called a Premium Surcharge) of $25 for Primary Residence policies and $250 for all other policies; and
  • Limiting future rate increases for any class of properties to a maximum of 15%, and for any individual policy to a maximum of 18%.

We will continue to keep you informed as we get more information and further details on the implementation timelines. Please do not hesitate to contact your Sales Manager if you have any questions or concerns. Thank you for your business and support!

Lehn & Vogt Insurance

2980 S McCall RD
Englewood, FL 34224


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This Month in Real Estate

Each month, we publish a series of articles of interest to homeowners — money-saving tips, household safety checklists, home improvement advice, real estate insider secrets, etc.  Whether you currently are in the market for a new home, or not, we hope that this information is of value to you. Please feel free to pass these articles on to your family and friends.