NFIP April 2020 changes: what do they mean?

A number of changes to the National Flood Insurance Program are set to go into effect as of April 1, 2020. The document that FEMA issued outlining the specifics of these changes is, to say the least, not light reading material.

I think it is so vitally important for insurance agents to understand these changes and how they might impact clients – without that knowledge people can’t adequately protect their lives from the devastation of a flooding event – so my team and I reviewed the document. While agents should review the document for themselves, here’s our breakdown of the top things to know:

• There are four notable rate increases: 7.5 percent rate increase for primary residences (SFHA); 23.1 percent rate increase for non-primary residences (SFHA Pre-FIRM); 12.5 percent rate increase for Preferred Risk Policies (PRP); and, 24 percent rate increase for severe repetitive loss properties (SRL)
• Reserve fund assessment increases are going from 15 to 18 percent
• Additional documentation may be required for some primary residences
• An updated methodology will be used to determine the flood proofing rating credit for a non-residential building
• The V-risk zone rating factor form is being discontinued

So, what does all of this mean for your clients? What are the flood insurance options that might work for them, whether an NFIP or private flood insurance policy? 

I hope thinking about these changes and these questions will spur a dialog around how you can best help your clients address their flood risk. To learn more, visit us at aonedge.com.