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NFIP Update at March 2015 Membership Breakfast

We had a great turnout this morning, Friday, March 20th, at the King & Prince for our Monthly Membership Breakfast.

For those that missed Fred McGinty's presentation at the King & Prince, please go here for your own copy of the Flood Insurance Changes white paper, courtesy of McGinty-Gordon & Associates, a GIAR Affiliate.

And please take a moment, to thank Fred for stopping by and giving our members a highly informative heads up on what changes we can expect come April 1st for our community.


Senate Passes Flood Insurance Bill



The Homeowner Flood Insurance Affordability Act limits yearly premium increases to an average of 15 percent per year for each of the nine property categories listed by FEMA, and stipulates that no individual policyholder pay an increase of more than 18 percent per year. It calls on FEMA to "strive" to reach the goal that most policyholders have a premium of no more than 1 percent of the value of their coverage -- in other words, $2,000 for a $200,000 policy.

The bill also reinstates the flood insurance program's grandfathering provision, meaning homes that complied with previous flood maps would not be hit with large increases when new maps show greater risk of flooding. It also ends a provision that required an immediate hike to actuarial levels when a home changes ownership -- slowing home sales in many communities designated high risk by FEMA flood maps.

It also provides refunds of premiums for people who purchased homes after Biggert-Waters became law in July, 2012, and learned the change in ownership marked a sudden end to subsidized flood insurance premiums -- sometimes resulting in dramatic increases when policy renewals were due.

And it requires the Federal Emergency Management Agency, as it completes new flood maps, to obtain input from local communities and account for non-federal levees and other locally funded flood protection. It also requires FEMA to complete a study on how to keep the program affordable as it moves to make the program more solvent.

The retention of subsidized rates in the House bill is funded by a $25 surcharge for most homeowner policyholders, and a $250 fee for non-residential property or non-primary residence homeowners. Still, the bill retains a provision in Biggert-Waters to eventually make the program self-sufficient by moving toward actuarial rates.

Louisiana lawmakers said the legislation provides important protections for Louisiana residents who faced large increase in premiums under the 2012 Biggert-Waters law. It passed the Senate 72-22 last week after. It passed the House 306-91 on March 4.

Landrieu said in a Congress that has a hard time getting bipartisan support for a "Happy Birthday'' resolution, a unified Louisiana delegation, backed by a national coalition established by Michael Hecht of Greater New Orleans Inc., and the Stop FEMA Now group, founded by New Jersey homeowner George Kasimos, achieved a big legislative victory. 

Said Sen. David Vitter, R-La. "This huge victory saves families in Louisiana and across the country from losing their homes."

Rep. Steve Scalise, R-Jefferson, said the bill's overwhelming margin in both the Senate and House, including support from leading conservatives, reflects that the bill, while providing protection for homeowners, is fiscally responsible and won't add to the deficit. He predicted it would have immediate positive impact on real estate markets -- some of which were stalled by the immediate transition to actuarial rates for homes that change owners.

Rep. Bill Cassidy, R-Baton Rouge, said the bill was a top priority for him and other Louisiana lawmakers, and will bring "long-term, permanent flood insurance relief to families across the nation."

And Rep. Cedric Richmond, D-New Orleans, said: "Homeowners in Louisiana and all across the country have made their voices heard. Rising premium costs have put them under undue strain, and when the President signs this bill into law they will finally see some much needed relief."

But Sen. James Inhofe, R-Okla., said the bill "abandons the much-needed reforms to the National Flood Insurance Program that were instituted in the Biggert-Waters Reform Act of 2012."

"That bill set the NFIP on a course to quickly remove Federal subsidies from the program and make it actuarially sound," Inhofe said.



Senate Passes Flood Insurance Bill



The Homeowner Flood Insurance Affordability Act repeals the Federal Emergency Management Agency's authority to increase premium rates at time of sale or new flood map, and refunds the excessive premium to those who bought a property before FEMA warned them of the rate increase. It also limits premium increases to 18 percent annually on newer properties and 25 percent for some older ones.

Additionally, the bill adds a small assessment on policies until everyone is paying full cost for flood insurance.

"As the leading advocate for home and property owners, NAR applauds this bill for the relief and protection it will bring to businesses and families nationwide, who are experiencing financial hardship because of the extreme and sudden premium increases," said Brown. "We believe this legislation will bring relief to property owners by ensuring a slow and steady phase in of risk-based increases."


Source: "Cost of Flood Insurance Rises, Along With Worries," The New York Times (Oct. 12, 2013)

Read more:




Flood Insurance PAG Holds First Meeting


Earlier this past summer, NAR President Gary Thomas appointed a Presidential Advisory Group (PAG) to investigate the impacts that federal legislation passed last year to reform the National Flood Insurance Program (NFIP) will have on the real estate industry and property owners.  The PAG held its first face-to-face meeting in Washington, DC on Oct. 1-3.  The focus of this meeting was to educate PAG members on how the NFIP operates, the current status of the program, how the changes brought by the new law will reform the program, and to what extent flood insurance premium rates will increase.  The PAG also made several recommendations on how the program can operate more effectively, so that it remains solvent and actuarially responsible without unduly burdening property owners.  The PAG will submit a report to President Thomas at the Annual Conference in San Francisco.


When Superstorm Sandy slammed into New York and New Jersey last fall, it sent massive floods through the streets of coastal towns and cities across the Northeast, turning areas like Toms River, N.J., into something like a war zone.

 But nearly a year later, residents there and in many other coastal communities across the U.S. face a potentially far more devastating menace: a nationwide revamp of flood insurance rates, forcing premiums that were once around $500 per year into the $5,000-, $10,000- and even $20,000-a-year range and higher.

 "The adverse effect of [this] would be more devastating than Hurricane Katrina," Louisiana Insurance Commissioner Jim Donelon said in an interview with, noting the crippling economic damage the historic 2005 storm left behind on the Gulf coast. "Because it will render literally thousands of properties in my state worthless."

 What's prompting reactions like this is the Flood Insurance Reform Act of 2012, passed by Congress last summer and often called "Biggert-Waters" for its two Congressional sponsors: former Illinois Rep. Judy Biggert and Rep. Maxine Waters of California. 

The act made sweeping changes to the National Flood Insurance Program (NFIP) – which has been the only provider of flood insurance for homes and businesses across the U.S. since its creation in 1968 – with the goal of raising rates to reflect the true actuarial risk of properties in flood zones.

Click to read more and watch the video

By Austin Perez & Russell Riggs
With NAR's support, Senator Mary Landrieu (D-LA) successfully added a 1-year delay of "grandfathered" flood insurance rates to the Senate Homeland Security Appropriations Bill as approved by committee on July 18. The House-passed version also includes this provision. Next, the full Senate must vote on the measure.

A grandfathered rate is a discount given to a homeowner when the community's flood risk is increased with a map update, because the home was built and maintained in compliance with the previous standards. These homes are often allowed to keep the lower rate from the older flood map.

These grandfathered as well as other subsidized flood insurance rates are being phased out under the Biggert-Waters Act that extended the National Flood Insurance Program for five years.  The amendment would delay the phase-out for properties "grandfathered" under older rates in areas remapped into higher-priced flood zones before Sept. 30, 2014. 
The law's other phase-out provisions – for older second homes and business properties and for homes purchased after July 2012 – will continue to go into effect on Oct. 1, 2013.  NAR is working on a longer delay and expanding it to include the other subsidy phase-outs, in addition to grandfathered properties.
NAR Legal Guidance on Flood Insurance Disclosures
The 2012 Biggert-Waters Flood Insurance Reform Act reauthorized the federal program for five years.  Because the Act also phases out rate subsidies for older property owners and buyers, and some could spend considerably more on flood insurance as a result, brokers and agents have asked about the disclosure of the rate changes.  NAR's General Counsel offered this legal guidance in the marketing and sale of property for which flood insurance may be required, or that is located in areas where the purchase of flood insurance may be prudent.
 Questions most commonly asked regarding the recent changes to the Biggert-Waters Flood Insurance Reform Act of 2012
 A breakdown of the impact on National Flood Insurance Program (NFIP) changes
originally by The Island Packet, published again on 7/19/2013 in the Aiken Standard
from the National Association of REALTORS®
Federal Flood Insurance Reform Panel
Friday, June 14th, at the King & Prince


Robin Lance, 2013 Georgia Association of REALTORS® President
Savannah Board of REALTORS®
Prudential Coastal Georgia
(912) 657-4680

Vicki Phillips, 2013 Golden Isles Association of REALTORS® President
Hodnett Cooper Real Estate
11 Trade Street, Ste 100
Brunswick, GA 31525
(912) 638-4750

Steven Fischer, National Association of REALTORS® Director 
ERA Savannah 
10500 Abercorn St., Suite I
Savannah, GA  31419
(912) 927-1088

Rob Dunagan, Allstate Insurance
Address: 41 Professional Dr, 
Brunswick, GA 31520
(912) 265-6626

Fred McGinty, McGinty-Gordon Insurers
McGinty-Gordon and Associates
225 Marina Drive
St. Simons Island, GA 31522 
(912) 638-6537 ext. 118

Bobby Shupe, Shupe Surveying
3837 Darien Highway
Brunswick, GA 31525
(912) 265-0562

Royce Hobbs, Moderator
Sand Dollar Realty & Development
318 Sandcastle Lane
St. Simons Island, GA 31522
(912) 230-1090


And we'd like to extend a very special thank you to Justin Hale of The Reckless Royalty for filming and producing this video record