NATIONAL FLOOD

INSURANCE PROGRAMRyan Castle

CEO

Cape Cod & Islands Association of REALTORS® & MLS

How did we get to where we are?July 2012 – Biggert Waters (BW) passes

May 2013 – FEMA announces BW will be retroactive

June 2013 – NAR starts working on fix to flood insurance bill; NAR launches PAG on flood insurance

October 2013 – Rate increases start taking effect for Pre-FIRM properties

January 2014 – Senate passes a 4 year delay

February 2014 – House passes BW overhaul bill; Senate follows suit

March 2014 – President signs BW overhaul bill

May 1st, 2014 – Point of sale flood insurance increases stop and rates are able to be assumed again

October 1, 2014 – Refunds started to be distributed for those who paid too high of premiums; must be issued by end of calendar year

How many flood insurance policies on Cape Cod?

Barnstable 981 35%

Bourne 1,117 70%

Brewster 94 8%

Chatham 430 23%

Dennis 937 34%

Eastham 186 26%

Edgartown 415 34%

Falmouth 1,963 54%

Harwich 423 20%

Mashpee 510 22%

Nantucket 911 28%

Oak Bluffs 212 41%

Orleans 204 26%

Provincetown 576 30%

Sandwich 398 45%

Truro 199 38%

Wellfleet 184 38%

Yarmouth 1,233 55%

# w

flood

policy

% of

policies

subsidized

Buying a Pre-FIRM home/propertySec. 205-Sale/New Policy Trigger

Below full risk rateFor both primary & non-primary occupied

Original BWProperty moved to full risk rate when triggered by a property/new policy purchase – meaning at point of sale full risk rate was price

New lawRepeals Sec. 205-Sale/New Policy Trigger (including the sale of second home or business)

Returns to allowing the new owner to assume the old policy at the current rate (i.e. policy stays with property, not owner)

Annual Premium Increases for PRIMARY Pre-FIRM properties

FEMA will calculate Subsidized Rate the way they always have calculated it yearly.

Subsidized rate = (Annual NFIP Expenses – Revenue from actuarial policyholders)/#Subsidized Policies

From that determination, Subsidized Rates will have a minimum increase and a maximum increase.

Minimum increase stops when you reach full risk rate, so it’s important to know full risk rate.

Prior to Biggert Waters

Capped Subsidized Rate premium increases at 10% per rate class

no cap per property

No Minimum Increase

Biggert Waters

Capped Subsidized Rate premium increase at 20% per rate class

No cap per individual property

No minimum increase

Post Biggert Waters

Caps Subsidized Rate premiumincrease at 15% per rate class

18% cap per individual property

5% minimum increase

Average yearly increase prior to BW: 7%

Projected average yearly increase post BW: 11%

Policy Assessment: $25 assessment on all NFIP primary homes

Pre-FIRM SECOND HOMESEffective June 1, 2014, the NFIP will implement this provision by defining primary residence to be a building that will be lived in by the

insured or the insured’s spouse for more than 50 percent of the 365 days following the policy effective date.

Policy Assessment: $250 on the businesses and second homes in the NFIP

Pre-FIRM SECOND HOMESEffective June 1, 2014, the NFIP will implement this provision by defining primary residence to be a building that will be lived in by the

insured or the insured’s spouse for more than 50 percent of the 365 days following the policy effective date.

Policy Assessment: $250 on the businesses and second homes in the NFIP

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Grandfathered PropertiesSec. 207-Remapping Trigger

Grandfathered: Post-firm homes that were built to compliance at the time it was built but laws have changed since.

Original BW5 year phase out of grandfathered rates triggered by when new flood maps are adopted locally

Expected in coastal SC late 2014 to early 2015

New lawRepeals remapping and phase out trigger AND

Restores Grandfathered properties to how they were treated prior to BW

Stays in flood zone it was built in except if hitshome improvement clause (50% of value)

As flood zone rates increase rate will increase as always has happened

TAKEAWAYSNo more Point of Sale flood insurance premium hikes

Grandfathered rates will stay and not be phased out

Some properties will still have high flood insurance costs

Make sure you are using insurance agent that can give you information on flood insurance

All insurance agents will give you same quote as long as they are entering same information

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FEMA Flood Zone maps

• New maps for determining • Flood Insurance Rates

• Construction techniques required for

building on the property

• Significantly affects thousands of Cape Cod properties• 100 Year Flood Plain moved inland

• 3,000 properties in Dennis

• 1,000 properties in Harwich

• Issued in July 2013

• Lawsuits pending:• Plymouth County

• Town of Rockland

Flood Insurance

Rate Increases

Halted

FEMA Flood Zone maps

ELIMINATION OF POINT OF SALE

FLOOD INSURANCE RATE INCREASES

DOES NOT DELAY

ADOPTION OF NEW FLOOD ZONE MAPS

FEMA Flood Zone maps

Which home is FEMA Flood Zone compliant?

FEMA Flood Zone maps

Flood map designations:1. “V” or Velocity zone

• waterfront with wave action >3’

• 100 year flood plain

2. “Coastal AE” zone• near water, wave action of 1.5’ to 3’

• 100 year flood plain

3. “A / AE” zone• prone to flooding, wave action < 1.5’

• 100 year flood plain

4. “X” zone• 500 year flood plain,

construction techniques and insurance optional

FEMA Flood Zone maps

FEMA Flood Zone maps

Easy to see why FEMA requires structures

to be above the Flood Plain

FEMA Flood Zone maps

• Septic systems are not impacted:• Depends on water table, not flood plain

• New Construction & Renovations may require:• Engineering to mitigate wave action

• Construction on piers

• Mechanicals above flood plain

• Other Flood Plain compliance techniques

• Renovations and Additions fall under the “Substantial Improvement” regulations

FEMA Flood Zone maps

Substantial Improvement Regulations

“The 50% Rule”

• Items to be included

• All structural elements

• All interior finishing elements

• All utility and service equipment

• Cost to demolish storm-damaged building components

• Items to be excluded

• Plans and specifications

• Survey costs

• Permit fees

• Outside improvements

FEMA Flood Zone maps

Substantial Improvement Regulations

“The 50% Rule”• Example of renovation project

FEMA Flood Zone maps

Example of Flood Zone Impacts

“Hyannisport Home”• Current Flood Map

• Property in 500 year flood plain

• Low risk of flood, not subject to substantial improvement regulations

FEMA Flood Zone maps

Example of Flood Zone Impacts

“Hyannisport Home”• Proposed 2014 Flood Map

• Property in VE zone

• High risk with wave action, subject to substantial improvement regulations

FEMA Flood Zone maps

Flood Zone Construction

Riverfront Home in Flood Zone

• Elevated Mechanicals

• Flood Vents