On October 2, 2015, FEMA announced changes that the NFIP will implement effective April 1, 2016. These changes are the result of continued implementation of the Homeowner Flood Insurance Affordability Act of 2014 and the Biggert-Waters Flood Insurance Reform Act of 2012. Highlights of the changes include the following and apply to new insurance policies and renewals effective on or after April 1, 2016:

Premium Increases and Surcharges:
- Pre-FIRM Subsidized Policies (AE and VE Zones)
  - Primary Residences: Total increase of 5%
  - Non-Primary Residences: Total increase of 21%

V Zones (coastal high-velocity zones)
- Post-FIRM V Zones: Total increase of 9%

A Zones (non-velocity zones, primarily riverine zones)
- Post-FIRM A1-A-30 and AE Zones: Total increase 8%
- AO, AH, AOB, and AHB Zones (shallow flooding zones): Total increase 4%
- Unnumbered A Zones (remote A Zones where elevations have not been determined): Total increase 12%
- A99 and AR Zones: Total increase 4%

X Zones (zones outside the Special Flood Hazard Area)
- Standard-Rate Policies: Total increase 3%
- Preferred Risk Policies (policies on buildings currently mapped outside of the SFHA): Total increase 4%
- Policies for Properties Newly Mapped into a SFHA: Total increase 4%

Federal Policy Fees:
- The federal policy fee is increasing from $22 to $25 for Preferred Risk Policies and from $45 to $50 for standard-rated policies.
- Condominium building federal policy fees schedule: 1 unit - $50; 2-4 units - $150 per policy; 5-10 units - $400 per policy; 11-20 units - $800 per policy; 21 or more units - $2,000 per policy

Rate Increase for Non-residential Business Properties of 25 Percent
- Rate increase of 25% effective April 1, 2016.
- Properties within the broader category of non-residential must be identified as business properties effective November 1, 2015.

New Rating Methodology for Both Preferred Risk Policies and Property Newly Mapped in a SFHA
- New tables for these two classes of policies will now display a base premium, which will be the combined building and contents premium exclusive of other fees.

Elimination of Subsidy for Certain Pre-FIRM Policies that Lapse and are Reinstated
- Effective April 1, 2016 and pursuant to HFIAA, FEMA will prohibit the use of Pre-FIRM subsidized rates for policies reinstating coverage for Pre-FIRM buildings that were previously insured by the NFIP where the NFIP coverage is reinstated by means of a payment received more than 90 days after expiration or cancellation of the policy.

Clear Communication Standards
- HFIAA Section 28 requires that FEMA clearly communicate full flood risk determinations to individual property owners, regardless of whether their premium rates are full-risk rates. FEMA will be implementing ongoing changes to improve an understanding of the risk of flood damage and how flood insurance premiums do or do not correlate with that risk.

Reformation of Coverage
- Reformation of coverage upon discovery of a misrating applies only when a misrating is the result of the incorrect determination of the flood zone.
- When a misrating is discovered after a loss, the prior policy term does not require reformation. Only the current policy term requires reformation, effective to the beginning of the policy term.
- When there is no loss in the current policy term, and the discovery of a misrating occurs within 60 days prior to prospective renewal, the correction will be made effective the date of the prospective renewal.

Declaration Page Requirements
- FEMA requires an insurance company’s National Association of Insurance Commissioners identification number and the Transaction Record Reporting and Processing plan reported number to be clearly labeled on the insurance policy declaration page.

The changes being implemented could result in premium increases for policyholders while directly impacting insurance producers when processing NFIP policies. Please refer to more detailed information pertaining to these changes by clicking on FEMA Memorandum W-15046.

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