1. Biggert-Waters Flood Insurance Reform Act of 2012 (BW12)
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2. Biggert-Waters Flood Insurance Reform Act of 2012 (BW12)
Understanding the October 1, 2013 Changes
As FEMA moves into the next phase of implementation of Biggert-Waters NFIP reform, we wanted to highlight what is happening, what the agent will need to do, the effects on the property owners and where to go for more information.
October 1 brings a large piece of BW12 implementation. Please keep in mind that Section , or as we call it 205, applies to policies that are rated using the subsidized rate tables, i.e. Pre-FIRM Special Flood Hazard Areas and Zone D. Post-FIRM construction and eligible Pre-FIRM structures that are rated using the Post-FIRM actuarial tables are not affected. In other words, if we are using an elevation certificate to rate a policy, the October 1 changes have no affect. We can still grandfather elevation rated policies as well as assign and write new business even if one of the triggers has occurred.
Grandfather Rule: Available for property owners who had a flood insurance policy in effect when a new flood map became effective and then maintained continuous coverage, or who built in compliance with the FIRM in effect at the time of construction.

3. BW-12 Implementation Timeline
DATE
BW-12 IMPLEMENTATION STEP
July 6, 2012
BW-12 enacted; reauthorizes the NFIP for five years and requires FEMA to eliminate certain discounts and subsidies
January 1, 2013
Upon policy renewal, subsidized rates began to phase out for non-primary residences
October 1, 2013
Upon policy renewal, subsidized rates will begin to phase out for business properties, SRL properties, and others. Immediate move to full-risk rates after sale/purchase of property, or policy lapse.
Late 2014
FEMA anticipates implementing Section of BW12 (grandfathering, map changes, etc.)
So to review, here is the timeline for upcoming changes in the NFIP.
The Flood Insurance Reform enacted on July 6, 2012, reauthorized the NFIP and required FEMA to eliminate certain discounts and subsidies.
January 2013 began the phasing out of subsidies for Pre-FIRM, non-primary residences.
Implementation of Section is anticipated in late This section deals with the Grandfather Rule and map changes.
See your Insurance Agent to learn how these changes will affect your personal property.
If you are looking for an agent, we suggest you visit and use the agent locator tool.

4. BW-12: What’s Changing?
Certain subsidized policies will be phased out at a rate of 25% per year until they reach the full risk rate:
Non-primary residences (January 1, 2013);
Business properties ; and
Severe repetitive loss properties (1-4 family residences), and properties where claims payments exceed fair market value
Primary residences in Special Flood Hazard Areas will be able to keep their subsidized rates unless or until:
The property is sold / purchased;
There is a lapse in insurance coverage; or
They suffer severe, repeated flood losses.
The full risk rate will be immediately applied to properties with a sale or lapse in coverage on or after July 6, 2012.
Among other things, this law requires FEMA to take immediate steps to eliminate a variety of flood insurance subsidies. The new law eliminates some artificially low rates and discounts which are no longer sustainable. Many insurance rates will reflect full risk rise on some policies.
Here is a quick summary of the changes in flood insurance rates that are planned for First, in January, subsidized rates started to be to be phased out for Non-primary residence defined by the NFIP as a building that will be lived in for less than 80 percent of the year. Second, some policies that previously could be issued at lower rates will move to full-risk rates.
What is a subsidized rate?
Available for homes built before a community adopted it’s first FIRM. This type of policy does not collect sufficient premiums as a whole.
Not everyone that is subsidized will be affected immediately by the new law. While about 20 percent of all NFIP policies pay subsidized rates, only about 5% are actually affected by Section 205 of BW12.
On October 1, 2013, subsidized rates on pre-FIRM business properties and severe repetitive loss properties will also increase at 25% per year until they reach full-risk rates. Each property’s risk is different. This includes any property that has incurred 4 paid losses more than $5000 each or two claim payments that exceed the fair market value of the property. At 25% per year, it may take many years to reach an adequate level of premium for the exposure.
The NFIP defines a business property as any non-residential building that produces income, or a building designed for use as office or retail space, or for wholesale, hospitality or similar uses. New applications will identify business properties separate from other non-residential buildings. Business properties will be rated as non-residential until the rulemaking process is complete. We are hoping that over the years of increasing premium that mitigation actions will take place to lessen the exposure to floods.
FEMA will , also, begin to apply immediate full-risk rates after a property is purchased, after the owner has allowed a policy to lapse, and when a new policy is issued for a building not covered by a flood insurance policy as of July 6, 2012, the date the BW-12 was enacted. It’s important to note that after October 2013, subsidized rates can no longer be assigned to the new owner. The new owner will immediately begin paying full risk rates for insurance. Letting a flood policy lapse could prove costly. Tentative rates can be used for up to one (1) year and an elevation certificate, along with photos, must be obtained to continue the coverage.
Properties will have their full risk premiums determined by using the information on the elevation certificate.

5. Percent of subsidized Policies per state (as of December 31, 2012)
This graphic estimates the percentage of subsidized policies in each state that may be affected by Biggert Waters legislation.
At the bottom of the website is a link for an interactive map where you can locate information to the state or even county/parish level

6. Interactive Map http://www.fema.gov/bw12
Left hand side, select Content, check state or county/parish, then go to map and click on any State or county/parish area. This will give you an estimate of how many subsidized policies there are and approximately how many people may be affected.

7. When Maps Change
Phase in will apply for all new Flood Insurance Rate Maps (FIRMs) that are adopted by communities on or after July 6, 2012
Expected to be implemented late 2014
Premiums will transition from the current premium to the new premium over 5 years in 20% increments.
Phase in will apply for all new Flood Insurance Rate Maps (FIRMs) that are adopted by communities on or after July 6, 2012
This is expected to be implemented late 2014
Premiums will transition from the current premium to the new premium over 5 years in 20% increments. 7

8. Notice to Policyholders
W (March 29, 2013)
October 1,2013, Program Changes
W (June 14, 2013)
Procedures for Processing Renewals of Certain Pre-FIRM Subsidized Policies that are New, Lapsed, or Assigned
W (July 10, 2013)
Additional Guidance on the Procedures for Processing Renewals of Certain Pre-FIRM Subsidized Policies that are New, Lapsed, or Assigned
W (August 8, 2013)
Final Letter Related to Processing Renewals of Certain Pre-FIRM Subsidized Policies that are New, Lapsed, or Assigned
FEMA issued a series of Bulletins to the Write Your Own companies concerning the implementation of BW12. FEMA announced a number of program changes necessitated by the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12) in NFIP Bulletin dated March 29, 2013, including other manual changes.
The June 14, 2013 bulletin provides supplemental guidance on implementation of BW-12 Section Effective October 1, 2013, the NFIP can no longer provide premium rate subsidies to policies for pre-FIRM properties purchased after the date of enactment of BW 12, policies that lapsed, or new policies for Pre-FIRM structures. These properties will require an Elevation Certificate (EC) including photographs to determine full-risk rating using the current FIRM. Policies rated in D zones or Unnumbered V zones do not require an EC, but must provide at least two photographs before the policy can be renewed. More will be discussed on the next slide.
The bulletin issued on July 10, 2013, provided the renewal process for policies that are affected by the October 1, 2013 changes or triggers. This Bulletin included the notice that must be sent to all affected renewal policies at least 60 days prior to the policy expiration date. The first series of letters were issued on or about August 2, 2013.

9. W-13041
Bulletin W contains the sample letter that is being sent to property owners who are affected by the October 1 triggers: new, lapsed or assigned policies. As renewals come up, this letter will be sent 60 days prior to the expiration date of the policy. This letter provides information to the insured on how to renew his/her policy. The first letters were mailed the first of August. It clearly states that a renewal offer will not be made for the flood insurance policy until certain actions are taken by the insured.
To view the full letter, go to the website noted.

10. WYO Bulletin W-13041 Documentation needed : Elevation Certificate
Clear exterior photographs of the front and back of the building
Application completed and signed by the agent
Annual premium determined with full-risk premium rates or tentative premium rates
This bulletin provides additional guidance on the actions required to renew policies that were newly purchased, lapsed or assigned after enactment.
The following will be required:
Elevation Certificate for rating the risk
photographs of the front and back of the building
Renewal application completed and signed by the agent
Annual premium determined with full-risk premium rates or tentative premium rates

11. WYO Bulletin W-13046
Final Letter Related to Processing Renewals of Certain Pre-FIRM Subsidized Policies that are New, Lapsed, or Assigned:
New policies written with an effective date on or after July 6, 2012
Policies written as new business, or existing policies assigned to a new owner as a result of a property purchase on or after July 6, 2012
Policies that have lapsed and been reinstated on or after October 4, 2012
This bulletin provides a sample Letter sent to affected policy holders that discusses the actions the policyholder must take to ensure continued coverage.
This change applies to:
• New policies written with an effective date on or after July 6, 2012
• Policies written as new business, or existing policies assigned to a new owner as a result of a property purchase on or after July 6, 2012
• Policies that have lapsed and been reinstated on or after October 4, (90 Days After enactment)
This bulletin also has new rate tables for policies be rated under the PRP Eligibility Extension that include a 20% increase. Agents be aware of using the correct rating table.
A copy of the letter can be found on the WYO Bulletin website.
**Separate Rate Table for PRP Eligibility Extension Rates

12. W-13046
If a policy has expired but is within 30 days of the expiration date, this letter will explain the actions required of the policy holder to ensure continued coverage.
The full letter can be found at the website.

13. Example #1: Buying/Selling a House in a Special Flood Hazard Area
Flood insurance required
Full-risk rates apply, not pre-FIRM subsidized rates
Plan ahead: consider risk as you plan and budget
Obtain an Elevation Certificate (EC) as soon as possible to learn your full-risk rate – you could save money
Consider mitigating, including elevating the home, before listing it for sale
For Sale
SOLD
Buyers and Sellers need to know their risk. Obtaining an Elevation Certificate and comparing the lowest floor elevations to the BFE on the current map will show this. If the lowest floor is below the base flood elevation, the value and marketability of the structure could be affected. With the risk identified through the EC, the agent can then calculate the premium.
By purchasing certain Pre-FIRM structures located in a Special Flood Hazard Area, a Buyer may pay higher rates immediately.
If the structure is located in Special Flood Hazard Areas, the purchase of flood insurance will be required of receiving a Federal mortgage. The cost of the flood insurance could have an impact on the buyer’s mortgage qualification.
Seller may want to consider a mitigation action such as floodproofing a non-residential building or elevation. By raising the lowest floor above the Base Flood elevations, the premiums are reduced.
Note: If the property was transferred to a new owner as an inheritance, gift, or other transfer of ownership without purchase or assignment to an estate or trust, subsidized rates can still apply.

14. Example #2: Building/Rebuilding a Home in a Special Flood Hazard Area
Be aware of building in a high-risk flood zone
Risk changes over time, so consider current and future flood risks
Build higher/stronger than current standards to lower risk and flood insurance premiums
Talk to local floodplain manager to learn about new maps or data that may be available
Building higher may increase home value
Building in the Special Flood Hazard Area requires structures to comply with minimum floodplain management regulations. Compliance with these regulations will, in turn, lead to lower flood insurance premiums. Some communities exceed the minimum standards , resulting in even lower premiums. Encouraging policyholders to build to elevations higher than the minimum required substantially reduces the cost of flood insurance.
Note: If a property is substantial improved or substantially damaged, full risk rates will be assessed.

15. Example #3: Policy Renewal (Subsidized) Primary Home
Policy purchased Prior to July 6, 2012
Retain subsidized rate as long as home is a primary residence and continuous coverage is maintained
Rates subject to routine actuarial adjustment plus increase for Reserve Fund
Effective after October 2013, full-risk rates would apply if :
New purchase
Policy lapses
Severe Repetitive Loss
If the structure was purchased prior to July 6, 2012, the new rate will be similar to old rate with the exception of minor annual, adjustments for inflation.
If the structure is in the Special Flood Hazard Area or Zone D and Pre-FIRM, rates could change in the future if any one of the BW12 triggers applies- new policy purchase, purchase of structure, policy lapse, SRL.
Please refer to the Tools and Resources guide at the end of this presentation in order to stay informed of changes related to BW12.

16. Example #4: Policy Renewal (Subsidized) SRL Home, Non-Primary or Business Property
Previous premium did not reflect the home’s full flood risk
Premium will increase 25 percent a year until it reaches the full-risk rate
Rates subject to routine actuarial adjustment plus increase for Reserve Fund
Obtain an Elevation Certificate (EC) as soon as possible to learn your full-risk rate – you could save money
Premiums on certain subsidized policies are not sufficient to offset past or future claim payments . These structures may have experienced repeated flooding without benefit of mitigation. They may also have their lowest floor below the base flood elevation which leads to a higher risk of flooding.
For SRL, Non primary or a business property, A 25% annual rate increase will be charged until the full risk rate is attained.
Mitigation activities , such as elevation or relocation, could reduce the risk and premium. Check with the community for opportunities.

17. Saving Money on Flood Insurance
FEMA has programs to help owners reduce their risk and save money on flood insurance
Community-wide discounts through the Community Rating System (CRS)
FEMA grant programs support rebuilding and relocating
Use of higher deductibles to lower premium costs
The higher the risk, the higher the premium.
Building above the ‘Base Flood Elevation” reduces your chance of flooding.
Properties with their lowest floor below the BFE will have more damage.
Home and business owners whose properties have been flooded must make important decisions about repairing, rebuilding, or relocating their building. Consider elevation when there is an opportunity to mitigate for future flood risk.
Community-wide discounts through FEMA’s Community Rating System program are not affected by BW-12. If your community participates in the CRS program, savings may apply.
Pre-FIRM buildings will not lose CRS discount.
Grant programs may also be available to support rebuilding or relocating – depending on the State’s priorities for use of grant funding.
Higher deductibles can also lower premium costs, however, policyholders will be financially responsible for that expense at the time of loss and some mortgage companies may not allow it. Insurance agents are encouraged to maintain documentation in their files of the policyholder’s request.
But the smartest way to save may be to build higher

18. Address Your Risk Resilient
STAY INSURED Letting your flood insurance policy lapse could be costly
Elevation
Certificate
LEARN YOUR RISK Get an Elevation Certificate for your home (risk can change)
GET INSURED Be
proactive:
don’t risk the Dconsequences
of a flood
REDUCE YOUR RISK
Building or Rebuilding? Build
Higher
Than
current standards
Please edit to ensure brand compliance
Address Your Risk
Resilient
As FEMA moves to implement BW12, knowing the risk and what actions are available to reduce the loss of life and property are important. Many property owners will make hard decisions on what to do. Assisting them with information on what is available to reduce the cost of their insurance through mitigation actions could help reduce claims costs in the NFIP and disaster assistance.

19. Tools and Resources
There are many tools and resources available that will assist you in counseling your clients on the effects of BW12.

20. Insurance Agent Training & Info
Sign up for WYO Alerts –
Toll Free numbers :
Training is available through FEMA for insurance agents, adjusters and lenders
Sign up for agent training s - =USDHSFEMA_212
NFIP Training offers workshops and webinars
YouTube BW12 Video
You can stay informed on changes to the NFIP through WYO alerts and additional workshops and webinars. Additionally, FEMA provides resources for your use and outreach efforts.
Help your clients plan for changes in the NFIP that may affect them and make sure you have the latest Flood Insurance Manual and get WYO Bulletins when they are issued. When premliminary maps are presented to your community, advise your clients on what or how BW12 could affect their insurance by not going to the higher standard.

21. Resources Fact Sheets - http://www.riskmap6.com/Resources.aspx
FloodSmart for Consumers -
FloodSmart for Agents –
Flood Insurance Manual -
Risk Communication Guidebook for Local Officials -
Flood Insurance Reform Act Webpage -
Audio PPT in English – Understanding the Impacts of the NFIP -
NFIP iService Bureau -
Region 6 Mitigation -
Additionally, FEMA provides resources for your use and outreach efforts.

22. FEMA Region 6 – Jack.Graham@fema.dhs.gov
The mission of FEMA is to support communities in becoming more disaster resilient by knowing their risk, planning actions that will reduce flooding, and completing mitigation activities. Everyone can take action to reduce loss of life and damage to property.
FEMA encourages local officials, citizens and stakeholders to understand their risk and make informed choices for their community, families and property and make communities more sustainable and resilient. The NFIP provides Federally backed flood insurance that allows communities, homeowners, and business owners to protect their financial investment. But, insurance alone is not enough. Without taking action to mitigate against future events, we jeopardize our safety, our financial security, and our self-reliance.
If you have questions specific to the Biggert-Waters Flood Insurance Reform Act of 2012, please Lisa or Jack at FEMA Region 6