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President signs NFIP bill, but is that the end of the debate?

Sat Mar 29th, 2014 on     Insurance Law,    

President Barack Obama has signed the Homeowner Flood Insurance Affordability Act of 2013 into law. While both parties supported the measure — the “Menendez-Grimm” law, for short — no sooner was the ink dry on the act than lawmakers began to plan “real” reform. The Tampa Bay News Weekly, for example, reported this week that Florida Congressman David Jolly has introduced a bill that would extend some of the flood insurance reforms in Menendez-Grimm to commercial properties and second homes.

That is another post for another day, though. We wanted to go through a few last details about Menendez-Grimm, the law offering National Flood Insurance Program reform for policyholders’ primary dwellings.

In our last post, we talked about the grandfather clauses that should, fingers crossed, keep premiums relatively low for buyers purchasing homes in higher-risk areas. We also discussed the affordability goal that will identify policyholders paying premiums of 1 percent or more of their total coverage. What kind of relief those policyholders can look forward to is not quite clear.

The bill does end the lie of appealing flood map determinations. The enormous premium increases, of course, were the result of redrawn flood maps. In the past, a policyholder was welcome to appeal the determination; if the appeal were successful, the Federal Emergency Management Agency would roll back the premium — going forward. Any excess premium paid during the appeal was simply lost to the homeowner.

Menendez-Grimm includes an appropriation to cover reimbursement of policyholders successful in their appeals. The idea, lawmakers explained, was to offer FEMA an incentive to get the maps and rating right the first time.

We’ll discuss one last item in our next post.

Source: Carrier Management, “Senate OKs Bill to Curb Flood Insurance Hikes,” Andrew Simpson, March 14, 2014

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