Florida News | FEMA - Flood Insurance Overhaul Starts Next Year

Published on March 20, 2019

The Federal Emergency Management Agency (FEMA) announced the rollout of National Flood Insurance Program (NFIP) updates that will become effective next year.

While FEMA released few specific details about the new program, it appears to downplay the role of flood zones in determining a home's cost of coverage in favor of other variables, such as the distance from a potential flooding source rather than an all-or-nothing "in a flood zone" or "not in a flood zone" test.

As part of Monday's announcement, FEMA noted important dates: The new program becomes effective on Oct. 1, 2020, and homeowners will find out how much their policy will go up or down on April 1, 2020.

FEMA said the new plan would assess properties individually and consider multiple variables, such as the potential for hurricanes, the homes distance from a body of water and the risk from coastal surges. It would also consider new "loss-estimation technology" that can account for threats from climate change and a home's replacement cost.

Florida – home to about 35 percent of all NFIP policies – could see a big impact from the proposed changes. It's likely that homeowners in current flood zones would see an increase in their flood insurance premiums, but the state already pays more into NFIP than it gets back in post-flood claims, so some homeowners should see their rates go down.

NFIP currently expires on May 1, 2019, and Congress is working on a solution to extend it for at least a few years. Should lawmakers reach agreement, it's unclear how a legislative fix might impact the just-announced FEMA regulatory fix.

Under U.S. law, FEMA is limited in its ability to raise rates. It's also unclear how those limitations might impact increases under NFIP's new risk model.

Source: The Wall Street Journal, March 19, 2019, Lalita Clozel