W6/W28 – The NFIP Flood Insurance Manual: All the Right Notes
Presenters:
Facilitator:
Joycelyn Collins and Joe Cecil from FEMA
Rita Hollada from FIPNC
Corise Morrison from IBHS
W6: Monday, May 2, 2011
W28: Tuesday, May 3, 2011
1
Presenter: Joycelyn Collins
2
Overview
• Introduction
• Timeline and Process
• Drivers
• Workgroup
• Comments
• Access
• General Changes
3
Behind the Scenes
• Timeline
• May and October each year
• 6-month advance notice
• Process
• Complex coordination
• Work – “toil and effort, with pain and fatigue, over
an extended period of time”
• Teamwork
4
Behind the Scenes
Drivers
• Legislation
• Congressional inquiries
• Lawsuits
• The constraints of the CFR or
OMB processes
• Questions and suggestions from
NFIP stakeholders
5
Behind the Scenes
Jazz
“American music developed esp. from
ragtime and blues and characterized
by propulsive syncopated rhythms,
polyphonic ensemble playing, varying
degrees of improvisation, and often
deliberate distortions of pitch and
timbre.”
(sounds like the Flood Insurance Manual)
6
Behind the Scenes
The FIM Jazz Ensemble
• FEMA staff
• NFIP Bureau staff
• CRS contractor
• NFIP Direct
• You
7
Behind the Scenes
Comments on May 2011 Edition
•Solicitation
•Bulletin W-10088, by September 30, 2010
•IBHS and FIPNC, Limited Review, Dec-Jan
•Summary
•Resolution
•Ongoing – send comments to:
iServiceUnderwriting@ostglobal.com
8
Behind the Scenes
Access
•Online
http://www.fema.gov/business/nfip/
manual.shtm
•Subscription
•Hardcopy - $35
•CD - $25
9
General Changes Throughout the Manual
Format
• Reformatted using different software
• Improved format consistency and
spacing in text and tables
• Capitalization of official form titles vs.
lower case generic forms
• Less reliance on cross-references
• Most cross-references by section and/or
subsection, rather than page number
10
General Changes Throughout the Manual
Language
• Performed universal grammar review
• Removed obsolete references
• Used “insurer” and “Agent/Producer”
• Clearly stated requirements, using words like
“required” or “must”
• Clarified effective date rules
• Distinguished “standard-rated policy” from
“Standard Flood Insurance Policy (SFIP)”
• Removed all references to “estimated” BFE
11
Significant Changes
12
Presenter: Joe Cecil
13
Introductory Sections
• Cover
– New Photograph and Layout
• Table of Contents – Page numbers have
changed
• Reference – Updated names and contact
information
14
General Rules
•
Building over water (originally built on land)
• Building Occupancy definitions
• Reformatted Effective Date Subsection
• Policy reformation at the time of loss
• Buildings in more than one zone or BFE
15
Application
• Step-by-Step
Instructions
• Identifying the Correct Community
• Building Occupancy definitions
• Walled and Roofed versus Under Construction
• Breakaway Wall Certification requirement in V
Zones
• Underpayment handling clarified
16
Rating
•
Added the tentative rate tables
• Clarified footnotes
• Clarified the application of the Replacement
Cost Ratio when maximum coverage is less than
75% of the RCV
• Clarified grandfathering rule application to D
zone properties newly designated in SFHA after
the 2-year PRP eligibility extension expires.
17
Condominiums
•
Updated underwriting guideline tables
• Added clarifying language regarding building
ownership
• Addressed policy reformation
• Added language from the SFIP Dwelling Form
indicating that loss assessment coverage under
the Dwelling Form cannot be used to satisfy the
deductibles or co-insurance under the RCBAP
18
Lowest Floor Guide
•
Attached garage next to non-elevated singlefamily building excluded from rating
• Attached garage next to elevated building is an
enclosure
• Correction to LFG 41/42 regarding vented
crawlspaces under Pre-FIRM elevated buildings.
• Many change bars reflect that references are
to actual Rate Tables, rather than rating
methodology
19
Certifications
•
The original EC is no longer required
• Use the most current EC (unless
grandfathering)
• Floodproofing photograph requirement
• Non-residential floodproofing: shields or other
methods must be visible
20
Preferred Risk Policy
•
Clarification that the PRP is an SFIP
• 2-year PRP eligibility extension rules added
October 2010
• Clarification that loss history is determined by
separate events (not separate payments for the
same event)
• Clarified conversion of standard-rated policy to
PRP under the extension at renewal
• Added step-by-step instructions to the PRP
Application form
21
Mortgage Portfolio Protection Program
Minor changes to be consistent with the rest of
the Manual
22
Endorsements
•
Retroactive conversion of standard-rated policy
to a PRP discovered to have been eligible for the
extension follows rules for misrating
• No change for conversion of standard-rated
policy to PRP for other reasons
• Throughout the Manual, we use the term
“General Change Endorsement Form” only
where actually required
23
Policy Renewals
•
Guidance for transfers
 Note that all underwriting information is
required
 The previous Declarations may be used for
the LFE and BFE, but you may need
additional information
• Forms are updated
24
Cancellation/Nullification
Clarified that each unit owners’ mortgagee, or
the unit owner when there is no mortgagee, must
sign the release for an RCBAP for RC 9 or 19
•
• Clarified which Reason Codes do not require
the policyholder’s signature
25
Claims
• Rearranged
the section for flow
• No significant or substantial change
26
Policy
• Page
numbers may have shifted due to
formatting
• No change to language
27
Flood Maps
• Updated
forms and web site information
• New example on MAP 7
28
Provisional Rating
• Clarified
instructions for completing the form
• Corrected the rating example
29
Coastal Barrier Resources System
• Updated
tables
• Expect procedural changes in future editions
30
Community Rating System Discount
• Certification
language for subgrade
crawlspaces
• Updated tables
31
Severe Repetitive Loss Properties
• No
significant change
• In October, new sample letters
• Beginning October 1, 2011, underwriting files
must be sent to the SDF
32
Guidance for Leased Federal Properties
• No
significant change
• Clarifications regarding when to apply the
tentative rate procedure
33
Definitions
• BFE
reworded to make easier to copy
• Grandfathering definition clarifies distinction
between statutory grandfathering and
administrative grandfathering
• Building Occupancy definitions are consistent
with GR, APP, and PRP
• The definitions of the Policy Forms are
enhanced
34
Index
• Call
Steve Van Dyke if you ever have a tedious
task requiring attention to detail
35
October 1, 2011
• Rate Increases
• EC requirement for Post-FIRM Unnumbered A, AO
and AH zones
• Conversion of PRP to standard-rated policy
procedure
• CBRS documentation requirements
• SRL procedure
• New obstruction codes for elevators
• Clarifications for obstruction codes 70 and 80
• Cancellation Reason Codes 12 and 18 (TRRP 52)
36
Presenter: Rita Hollada
37
NFIP MANUAL CHANGES
Introduction
• Issues I will discuss ……..
– The Application Process
– Mailing and Payment Requirements
– Reduction and Reformation of Coverage
due to insufficient payment
– Transfer and Assignment of Existing Policies
– Acceptable Evidence of Coverage
38
NFIP MANUAL CHANGES
The Application Process
• The National Flood Insurance Program (NFIP) Flood Insurance
Application form, or a similar form for Write Your Own (WYO)
Companies, must be used for all flood insurance policies
except the Preferred Risk Policy
• Section APP has been expanded and illustrated to clarify the
requirements for completion of the application
• PART 1 – the Agent/Producer must sign and date and is
responsible for the completeness and accuracy of the
information
39
NFIP MANUAL CHANGES
The Application Process
• The application has been incorporated within the text, with
definitions and explanations to aid in obtaining accurate
information
• EXAMPLE:
Check YES if the building is an elevated building; otherwise, check NO. An
elevated building is a building that has no basement and that has its lowest
elevated floor raised above ground level by foundation walls, shear walls,
posts, piers, pilings, or columns.
40
NFIP MANUAL CHANGES
The Application Process
• OCTOBER 2010
•
•
To complete Part 2 of the Application,
the producer must: Obtain all necessary
information from the applicant.
The applicant or the applicant's
representative must complete all
numbered sections of the form, check all
appropriate boxes, provide all
information, and respond to all YES/NO
questions that are applicable to the
building.
• NEW REQUIREMENT
• COMPLETING PART 2 OF THE
FLOOD INSURANCE
APPLICATION FORM
• After completing Part 1 of the Flood
Insurance Application, the
agent/producer must complete all
relevant items in Section 1 of Part 2
for all buildings.
• There is no signature required on
Part 2
41
NFIP MANUAL CHANGES
The Application Process
• Part 2 – Section I may require a site inspection by the
agent/producer or reference to an elevation certificate if
available
42
NFIP MANUAL CHANGES
The Application Process
• Part 2 – Section II is required for all Elevated Buildings
– Breakaway walls other than lattice or screening must
include certification
43
NFIP MANUAL CHANGES
The Application Process
• Part 2 – Section III is required for all Manufactured Homes
44
NFIP MANUAL CHANGES
Mailing and Payment
• Full payment must accompany the application
– If the premium received is not enough to buy the kind and
amount of coverage requested, the policy will be issued for
only the kind and amount of coverage that can be
purchased for the premium payment received.
• Application and payment must be received within 10 days or
mailed by certified mail within 4 days of the date of
application
– Certified Mail includes certain third party delivery services such as
Fed Ex and UPS
Page GR 8
45
NFIP MANUAL CHANGES
Mailing and Payment
• Presentment of premium for Loan Closing
– For a loan closing, premium payment from the escrow account
(lender’s check), title company, or settlement attorney is considered
made at closing, if the premium is received by the writing company
within 30 days of the closing date.
– If the premium payment is not part of the closing, the closing date is
the effective date only if the application date is on or before the
closing and the application and premium payment are received by the
writing company within 10 days of the closing date.
Page GR 8
46
NFIP MANUAL CHANGES
Reduction or Reformation
• If premium payment not sufficient, the policy will provide
only such insurance as can be purchased for the amount of
premium received with two exceptions if discovered after a
loss
– The reduction will be effective the date of discovery
– Policyholders will have the originally requested limits and
then 30 days to pay the additional premium to restore the
limits for the rest of the policy term
• The policy must be issued using the correct policy
form for these exceptions to apply
Page GR 12
47
NFIP MANUAL CHANGES
Transfer of Business/Assignment
• A building owner’s policy may be assigned to a purchaser
with the written consent of the seller
• The new insurer must collect all required underwriting
information
– May use the elevation information on the Declarations
only when the BFE and LFE provided
– Photos will be required on an individual policy
• A PRP requires documentation of eligibility and verification of
zone (historic map information)
• An RCBAP requires all information including photos and RCV
Page GR 15 48
NFIP MANUAL CHANGES
Evidence of Insurance
• The NFIP does not recognize binders
– A copy of the application and premium payment sufficient for proof of
purchase for new policies
• A copy of the declarations page is sufficient proof of coverage
– The NFIP recognizes the Certificate of Property Insurance or the
Evidence of Insurance for Renewal Policies
• Certain information must be provided, including current flood zone and rated
flood zone (if grandfathered or the PRP eligibility extension)
– ACCORD 29 is the newly approved Evidence of Flood Insurance
Page GR 14
49
50
Thank You
51