NC Department of Revenue 2013 Advanced Real Property Seminar

1. NC Department of Revenue 2013 Advanced Real Property Seminar Biggert-Waters National Flood Insurance Reform Act of 2012 John Gerber, PE, CFM

2. Biggert-Waters Flood Insurance Program Reform Act of 2012 • Signed into Law July 6, 2012 • Extends financing & authority for the NFIP through September 30, 2017 • Since 2008 Congress passed 18 stop-gap extensions • Sited as BW 12

3. Biggert-Waters Flood Insurance Program Reform Act of 2012 Pre-FIRM subsidies to be phased out (rates increase 25% per year) • Non-primary residences (living in the home < 80% of the time) ~ 305,000 nationally & 4759 NC pre-FIRM subsidized policies will begin phasing into full risk rates. Rates will increase on average over 150 percent • Business properties and Severe Repetitive Losses ~ 90,000 nationally and 2143 NC commercial properties and 11,000 nationally & 707 NC SRL properties will begin phasing in to full-risk rates.

4. Biggert-Waters Flood Insurance Program Reform Act of 2012 Pre-FIRM subsidized rate to full risk rate for : • The sale or purchase of property • A lapse in insurance coverage • Substantial damage or substantial improvement (30%) • Properties uninsured as of BW-12 enactment • Refuses mitigation grants ~ 650,000 nationally and 7,728 NC existing pre-FIRM policies will convert to full-risk rates when sold to a new owner

5. Biggert-Waters Flood Insurance Program Reform Act of 2012 • Grandfathering To Be Phased Out: • For any property newly mapped into SFHA or subject to a revised map: any property located in an area that is participating in the national flood insurance program shall have the risk premium rate charged for flood insurance on such property adjusted to accurately reflect the current risk of flood to such property, • Anticipated to take effect 1 October 2014. Rates to increase 20% each year for 5 years until they reach full actuarial rates for the map in effect. • ~ 515,000 grandfathered policies, premiums may increase 200%

6. Biggert-Waters Flood Insurance Program Reform Act of 2012 • Average of 10% increase after Oct. 1, 2013 • V Zone – Post-FIRM 11%, Pre-FIRM 17% • AE Zone – Post-FIRM 6%, Pre-FIRM 16% • Zone A – 8% • X Zones – Standard 8%, PRP 1%, ext. 19%

8. Biggert-Waters Flood Insurance Program Reform Act of 2012

9. Biggert-Waters Flood Insurance Program Reform Act of 2012 • Streamlines FMA, RFC and SRL program to allow mitigation of repetitive or severe repetitive loss structures; • Creates a reserve fund • Establishes the TMAC to advise FEMA administrator and SRP • Modifies use of CDBG funds to include flood insurance outreach and community building code administration

10. Biggert-Waters Flood Insurance Program Reform Act of 2012 • Greater civil penalties for lender non-compliance ($350 to $2,000) • Lenders required to escrow and maintain control of claim payments • Study the economic cost of vouchers for low-income • Study of the capacity of the private reinsurance market

11. Insurance discount for freeboard Coverage: $250K Building/$100K contents QUESTIONS??

12. Premium Increases Due to Reform Act October 1, 2013 Rates - provided by Spencer Rogers, NC Sea Grant

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 But the smartest way to save may be to build higher

18. Top 10 CRS Community Savings

19. QUESTIONS??