Flood Insurance

BBECA Member Meeting 12/4/21

FIRM Presentation

Talking points for Risk Rating 2.0

FEMA implemented Risk Rating 2.0 "Equity in Action" beginning on October 1, 2021 for new policies. Existing flood insurance policies will be switched to the new system beginning April 1, 2022.

FIRM estimates homeowners throughout Monroe County could see flood insurance rate increases ranging from $100 to $9,000 annually—with an average increase of $3,200 — under FEMA's proposed Risk Rating

2.0.

LACK OF TRANSPARENCY

  • The new rating system will no longer use flood maps and zones to determine a homeowner's premium rate. It will use a series of models that will fundamentally change a property's individual flood risk assessment and therefore its insurance premium. Data such as first floor elevation, replacement cost value, construction type, foundation type and more are determined by FEMA's undisclosed "internal data sets" rather than elevation certificates, or agent input. FEMA has not shared their modeling with anyone, including Members of Congress who have asked for more transparency.
  • It is imperative that homeowners have an elevation certificate to obtain an accurate first floor height. While not a guarantee, over 90% of the properties that FIRM analyzed, had a lower premium with an elevation certificate than without.
  • Members of the construction industry have not been given guidelines in order to build or rebuild to FEMA's standards.

X ZONE VS AE ZONE

  • There will no longer be Preferred Risk Policies—those for properties in the so-called X zone—but existing X zone properties with insurance policies will be grandfathered in until they reach the full actuarial rate. FEMA estimates that 50% of policies will be at their full risk rate after five years and after 10 years, 90% of policies will be at their full risk rate.
  • In some cases current X zone properties are being rated with higher premiums than current AE zone properties, speaking to the lack of disclosure as to how FEMA's rating factors are weighed.
  • The grace period for paying and retaining grandfathered coverage moves from 90 days to 30 days. Based on FIRM's data analysis, there is no reasonable insurance rate payback for home elevation.

FIRM'S DATA ANALYSIS

  • An analysis conducted by FIRM since the September 1 st software release show that rate increases are thousands of dollars higher than FEMA's projected increases and contradicts them sharply. FIRM is working with other organizations and reaching out to other communities in Florida and in Louisiana, Texas, New Jersey and other states with a large number of flood insurance policies.
  • FIRM has an on-line dashboard that shows the results of the analysis and is updated in real time as more properties are added. You can see the dashboard by visiting the FIRM website at firmkeys.org and click on "Take me to the dashboard" under the Risk Rating 2.0 section of our home page.
  • If property owners would like to help us build the database, please have your insurance agent submit the form on the dashboard page to get a link to the survey for. Or they can call FIRM at 305-294-3476 or email [email protected]

NATIONAL FLOOD INSURANCE PROGRAM REAUTHORIZATION

  • The National Flood Insurance Program was extended to December 3, 2021.
  • Bi-partisan legislation has been introduced in the House and the Senate for long-term reauthorization with reforms including:
  • Provide policyholders relief from the shock of Risk Rating 2.0 by capping premium increases at

9%. Currently increases for residential properties are capped at 18%

  • Put the NFIP on track for fiscal sustainability by freezing interest payments on NFIP debt and reinvesting the savings toward mitigation.
  • Increase investment in cost-saving mitigation efforts
  • Improve funding for better mapping in order to generate better data for flood risk

Windstorm Insurance News

Legislation passed earlier this year removed the Citizens Rate cap of 10% to increase 1% each year until it reaches a cap of 15%. FIRM has hired lobbying firm, The Southern Group, to establish a carve-out exempting Monroe from the increases since Citizens is truly an insurer of last resort for Monroe County policyholders. The lobbyists are cautiously optimistic that they will be successful.

Florida Keys Day will be held in February after skipping a year due to Covid. The format which included day long structured meetings has been changed allowing attendees to set up their own meetings. We believe this will work in our favor giving us the opportunity to speak with specific legislators and Cabinet members.

FIRM | 713 Caroline st., Ste. C I Key west, FL 33040 305-294-FIRM (3476)1 [email protected] I firmkeys.org

A COPY OF THE OFFICIAL REGISTRATIONS (CH43051 & CH35195) AND FINANCIAL INFORMATION MAY BE OBTAINED FROM THE DIVISION OF CONSUMER SERVICES BY CALLING TOLL-FREE (800-435-7352) WITHIN THE STATE OR BY VISITING WWW.FloridaConsumerHelp.com.

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