FEMA Sends News Flood Insurance Premiums Rate Sheets to Insurers

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WASHINGTON -- The Federal Emergency Management Agency is sending new flood insurance premiums rate sheets to insurers, reflecting changes made by Congress in the program after complaints a 2012 law was leading to exorbitant increases.

The new premiums, according to a memo sent to Write Your Own insurance companies, reflect the Homeowner Flood Insurance Affordability Act of 2014, passed in March, which limits annual rate increases to no more than 18 percent for individual polices. Average rate increases in each risk class are limited to no more than 15 percent per year. It means some rates can rise as high as 18 percent, as long as the average for the class isn't above 15 percent.

After the law passed, FEMA temporarily returned to rates in effect before the 2012 Bigger-Waters law took effect. The new rates contained in the new FEMA memo will be effective on October 1.

David Miller, associated administrator of the federal insurance and mitigation administration for FEMA, said the new rates will be used to calculate refunds for people who were hit with an immediate increase to market rates -- those who purchased homes after Biggert Waters took effect in July 2012 or those who let their flood insurance policies lapse. Some of those increases were double, triple, even 10 times or higher previous premiums.

"FEMA anticipates finalizing its guidance by July 2014, with refunds beginning in fall 2014," Miller said.

The new premiums for subsidized policyholders, which FEMA says constitutes approximately 20 percent of its 5.5 million policyholders, will generally show increases ranging from 5 percent to 18 percent. Still, the increases are significantly lower than the $5,000, $10,000 even $20,000 increases reported by some policyholders, according to Sen. Mary Landrieu, D-La.

"Insurance companies now have the information they need to update flood insurance policies to comply with the new law," Landrieu said. "While it will be another few months before insurance companies can fully implement these rates, NFIP policyholders will be protected from aggressive annual rate increases we saw under Biggert-Waters. Today's announcement also sends a strong signal to homeowners and prospective homeowners that they will not lose the equity in their homes they worked to build."

The Homeowner Flood Insurance Affordability Act represented a compromise between a Senate bill, co-sponsored by Landrieu and Sen. David Vitter, R-La., and House legislation sponsored by Rep. Michael Grimm, R-N.Y., and Bill Cassidy, R-Baton Rouge. Co-sponsoring the bill were Reps. Steve Scalise, R-Jefferson and Cedric Richmond, D-New Orleans and many others.

"It looks like FEMA's implementation of the Homeowner Flood Insurance Affordability Act is moving in the right direction," Cassidy said. "I will continue to make sure Louisiana policyholders are treated fairly and that they start seeing flood insurance relief as soon as possible."

Landrieu, who is facing a strong re-election challenge by Cassidy and two other Republicans, said more needs to be done.

"I will continue to press FEMA to release the additional guidance insurance companies will need to calculate and process refunds to individuals that paid more than they should," Landrieu said. "With the beginning of the 2014 hurricane season is just a day away, it is critical that homeowners and businesses know about increased affordability in flood insurance before we get into the heart of the season."

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