FEMA flood-insurance overhaul goes easy on homeowners

Premiums will be lowered or remain stable for most

National /
Apr.April 02, 2021 12:30 PM
FEMA overhauled the National Flood Insurance Program, which will result in savings or stable premiums for most homeowners. (iStock)

FEMA overhauled the National Flood Insurance Program, which will result in savings or stable premiums for most homeowners. (iStock)

The National Flood Insurance Program finally took a leap into the 21st century.

For the first time in more than five decades, the Federal Emergency Management Agency is making major changes to the program, which covers nearly 5 million homes. For most homeowners, that’s translating into reduced or stable premiums, according to Bloomberg News.

There will be increases of at least $10 a month on roughly 11 percent of homes in the program, primarily higher-value properties. Those premiums may increase until they hit a $12,000 annual cap.

Previously, newer properties had some of the lowest fees, while some of the oldest homes in the program were charged the most.

“There was an inequity in the program that built up over time that needed to be addressed,” David Maurstad, senior executive of the NFIP, told the publication.

FEMA has adopted catastrophe models used by the private insurance industry to help determine premiums — a significant change from its circa-1970s model, which rated properties based on whether they were in severe flood zones and what their elevation was.

The new program’s rollout will be gradual, and increased premiums won’t kick in until April 2022. In turn, FEMA’s revenue will drop by nearly $500 million during the program’s first year, down from the $4.5 billion it currently collects in premiums. It will eventually even out in a process that could take as long as 15 years.

Premiums in the NFIP have been rising for years, but the program is more than $20 billion debt because of sea level rise and increased storms.

[Bloomberg] — Danielle Balbi





    Related Articles

    arrow_forward_ios
    Almost half of NYC buildings received either a D or F grade (Getty)
    48% of NYC buildings fail on energy efficiency
    48% of NYC buildings fail on energy efficiency
    (Getty)
    Weekly home listings hit record low
    Weekly home listings hit record low
    The year-over-year rise in home prices was just below the 19.8 percent annual rise in August. (iStock)
    Home prices up 20%, but buyers, take heart
    Home prices up 20%, but buyers, take heart
    Building 301 on Governors Island and Trust for Governors Island CEO Clare Newman (Gov Island)
    Real estate partnership chosen for Governors Island climate hub
    Real estate partnership chosen for Governors Island climate hub
    The report shows the small uptick among single-family homes, townhomes, condominiums and co-ops. (iStock)
    After rebound, existing home sales growth slows in October
    After rebound, existing home sales growth slows in October
    (iStock)
    Manufactured home construction projected to hit 15-year high
    Manufactured home construction projected to hit 15-year high
    So much for that lull: bubble worries return for Canadian property
    So much for that lull: bubble worries return for Canadian property
    So much for that lull: bubble worries return for Canadian property
    (L-R) Four Seasons Sotheby’s International Realty's Gary DiMauro, Redfin's New York market manager Matthew Frary; Four Seasons Sotheby’s International Realty President Laurie Mecier-Brochu and CEO Alan DiStasio are expanding their Hudson Valley footprint (Redfin, Four Seasons Sotheby’s International Realty)
    Battle for Hudson Valley heats up as Sotheby’s, Redfin seek to cash in
    Battle for Hudson Valley heats up as Sotheby’s, Redfin seek to cash in
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...