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NFIP Continues to Issue Changes Under Flood Insurance Reform

The National Flood Insurance Program (NFIP) is out with numerous changes under the Biggert-Waters Flood Insurance Reform Act of 2012 to be effective October 1, 2013...
April 2, 2013

The National Flood Insurance Program (NFIP) is out with numerous changes under the Biggert-Waters Flood Insurance Reform Act of 2012 to be effective October 1, 2013. We are not including the entire package (400 pages) yet because FEMA/NFIP has advised that it is not intended as a public information or education piece – and that it is it not yet complete. PIA National is in the process of reviewing this material and is asking NFIP for further clarification on a number of items. A preliminary overview will be presented at the PIA spring meetings next week.

One item that will have major impact concerns lender-required flood insurance:

Effective October 1, 2013, the NFIP will no longer allow an exception to the 30-day waiting period for lender-required flood insurance policies. Specifically, this rule applies to policies that are required as a result of a lender determining that a loan on a building in a Special Flood Hazard Area that does not have flood insurance coverage should be protected by flood insurance. The bulletin w-13017 then goes on to list several exceptions.

We do not know what the reaction from the lender community will be. While most lender NFIP mandates apply to the SFHA zones, increasingly lenders are exercising their rights to require property owners even outside these zones to retain NFIP insurance. As such, this new NFIP practice will apply to these policies as well. It is critically important, because of other changes under the Biggert-Waters Flood Insurance Reform Act of 2012, for policyholders and lenders to pay NFIP insurance premiums on new and renewal business in-full and on time. If not, property owners seeking reinstatement afterward may face very different NFIP underwriting or rating treatments.

w-13017 FEMA/NFIP iService Bulletin March 29, 2013

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