Volume 9 Issue 3  February 6, 2015

Take action today to prevent grief later


Please review the following agent action items related to the upcoming April 1, 2015 NFIP changes to: 

  • Save yourself hours of grief--take action now!
  • Save thousands of dollars in LOST renewal commissions
  • Don't be overwhelmed by all the phone calls; instead be trained to respond
  • Spend your time selling New Business


The latest step in NFIP flood reform is underway and will have a profound effect on almost all policies in the NFIP.  Please review the following three agent action items, as well as the talking points below to be informed and respond appropriately to modify policies and communicate with your affected insureds. 


All the details of the upcoming April 1,2015 NFIP Changes are presented here for review  Wright Flood Summary of the April 1 NFIP Changes, For consumersHow April 2015 NFIP Program Changes will Affect Flood Insurance Premiums


Agent Action Items on April 1 NFIP Changes:



Agent Action Item # 1.    Verify Primary Residence status prior to renewal 

-using the listing of policies on the Primary Residence Tab on the front page of the website no later than 60 days prior to renewal date.
  • Policyholders will receive Notices to Residential Policyholders and Wright Flood Cover letter with Percentage of Residency Verification Form 90 days prior to renewal including a request to verify their percentage of residency.


Why:  The new HFIAA Surcharge is being implemented as of April 1, 2015 at $250 for all policies but verified primary resident policies can receive a reduction to $25.

  • All residential policies, not previously identified as primary residences, will be set to non-primary status and charged a $250 HFIAA policy surcharge. 
  • If primary residence status is selected and verified by the upload of documents by the agent, the HFIAA Surcharge can be reduced to $25 for primary residents.


Where:   A listing of affected policies is found on the Primary Residence tab throughout the upcoming renewal year, located on the front page of the agent portal.

  • Policies are added to the Primary Residence tab 90 days before expiration of the current term
  • Policies drop off the listing once the % of residence and file upload has been set or 30 days after the renewal is paid without verification.
  • Ideal time to set percentage of residence is between 90-60 days prior to renewal so the renewal billing will reflect the corrected percentage of residency and the correct amount.


When:  Ongoing all year as policies renew with the HFIAA Surcharge and insureds receive the Notice to Residential Policyholders sent 90 days prior to renewal.   


See below for a sample screenshot of the Primary Residence Tab with the File Upload link designed by Wright Flood to assist you to complete the Primary Residence Verification transaction quickly and efficiently.

Action Item #2:  Recommend new high deductible option -but use with caution:


  • New $10,000 optional deductible available for residential properties only
  • Single Family and 2-4 Family Residential Properties
  • If chosen it must be selected for building and also for contents separately 

Why with Caution:

  • Insureds need to be informed:
    • In the event of a covered loss, the insured is out-of-pocket for losses to the extent of the deductible selected, which would mean $20,000 of the losses would not be reimbursed if it was chosen for building and for contents. 
  • Agents should use a high deductible waiver to document that insureds were informed.
  • Verify with the lender prior to selection for lender acceptance of the higher deductible.



  • Consider $10,000 high deductible option to lower premiums but with caution. 


Agent Action Item #3: New Sales:  Write new eligible policies as Newly Mapped into High Risk SFHA


What:  As of April 1, 2015, NFIP will offer an addition rating procedure called: 

"Newly Mapped into High Risk Zones (SFHA)"
  • Eligibility to enroll:
    • When map change moves flood zone from low risk to high risk
    • Policy purchase within the first year after map change effective date
  • With additional eligibility extended to:
    • Map change effective dates between 10/1/2008 and March 31, 2015
    • Purchase between April 1, 2015 and April 1, 2016
  • Renewal premium rates:  After the initial year will increase annually, subject to the HFIAA premium cap, until the full risk rates are reached.
  • Benefits:
    • Low PRP premium rates but with different fees:  15% reserve fund  $45 federal policy fee. 
    • No EC required-to enroll
    • Glide path up to full risk rates in future renewal years


  • When map changes occur in your sales target communities-be aware that Newly Mapped into SFHA may apply.
  • Be aware of past map changes to offer final year to join this program through April 1, 2016
  • Be informed of Newly Mapped into High Risk SFHA procedure
  • Take note:  Wright Flood quoting tools identify when eligible for PRP Extension and Newly Mapped into SFHA-use this advantage.


  • Lower PRP policy rates for an additional year after remapping into high risk zone
  • Renewal glide path up to full risk rates per the HFIAA 18% total cost
  • Sell Last time offer:  Property owners remapped from Oct 1, 2008 - April 1, 2016 can enroll.  This offer expires April 1, 2016.


Q.  How can I determine the best way to rate insureds policies, given the various rating procedures available in the NFIP?


A.  Wright Flood online rating tools have built in underwriting to determine the most beneficial rate for the insured based on the information submitted:

    • Pre-FIRM and Post-FIRM properties that have provided us with an elevation certificate
    • Pre-FIRM regular rates using the SFHA zone at the time the policy was issued
    • Post-FIRM regular rates using the standard X zone (Grandfathered for built in compliance)

Q.  Does an Elevation Certificate always lower premiums on a flood policy?


A.  No, an Elevation Certificate does not always lower premiums.  Comparing the full risk rate, which is only known through use of an Elevation Certificate, to any subsidized premium rating, allows the best (lowest) renewal premium rate, available for that specific property, to be offered at renewal each year.  Wright Flood accepts the elevation certificate for a property and annually performs this analysis to offer the most beneficial premium renewal to our policyholders.  


Agent Talking Points about April 1 Changes


               See Wright Flood Letter to Policyholders about Increased Premiums


You may note an increase in the Total Amount Due on your flood policy renewal.

The National Flood Insurance Program (NFIP) is in the process of implementing Congressionally-mandated reforms required by the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA), that repeals certain sections of the Biggert Waters Flood Insurance Reform Act of 2012. As a result beginning on April 1, 2015 Flood Insurance Rates, Surcharges and Fees will affect the total amount all policyholders pay for a flood insurance policy. 

Changes taking place in April include "Rate Increases" for most policies, the implementation of an "Annual Surcharge" on all new and renewed policies, an increase in the "Policy Fee" and an increase in "Reserve Fund Assessment".

  1. NFIP annual policy rate increases, with some exceptions*, will be between 5% and 15% with individual policy premiums to be capped at 18% before applying the Annual Surcharge and Federal Policy Fee; which may increase the Total Amount Due on your flood policy, even if your rates went down.
  2. The NFIP Reserve Fund is now being applied to Preferred Risk Policies at 10% and has been increased to 15% on all other policies. (The Reserve Fund is calculated into the 18% HFIAA annual per policy premium cap.)
  3. Federal Policy fees are increased slightly this year. (The Policy Fee is not included in the calculation of the 18% HFIAA annual per policy premium increase cap.)
  4. The new HFIAA Surcharge is federally mandated and has been newly initiated at $250 for all policies unless it is your verified primary residence*. Primary residences verified through your agent are eligible for a $25 HFIAA Surcharge. (The surcharge is not included in calculation of the 18% HFIAA annual per policy premium cap.) 
There is also an additional deductible option being introduced that may lower the premium you pay.
  1. A new deductible of $10,000 for both building and contents is now available for 1-4 residential policyholders. The deductible is selected separately to reduce claim payments for both building and contents separately.  If flood insurance was required by your lender, please check if they will accept the higher deductible.  If you are interested in this higher deductible, be aware that high deductible amounts reduce the amount of any claim payment at time of loss.


In conclusion, NFIP Flood Reform Implementation continues:

  • April 1, 2015 annual premium increases move the NFIP one step closer to full risk rates
    • Generally, highest increases on high risk policies, non-primary with subsidized rates (No EC applied)
    • Encourage subsidized policyholders to get EC to determine actual risk
  • Primary residences see less impact-
    • Complete the Percentage of residency transaction prior to 60 days before renewal billing is mailed to avoid unnecessary sticker shock.
  • Assessment, Fees and Surcharges are applied and are increasing
    • Reserve Fund  (included in 18% premium cap)
    • Federal Policy Fees (not included in premium cap)
    • New HFIAA Surcharges   (not subject to premium cap)
  • Prepare for policyholder questions
    • Get staff up to date on steps to retain policies.
    • Review policies for primary residence, raise deductible, lower coverage but don't lapse.

Wright Flood will continue to develop tools and resources to help agents and policyholders understand and manage their flood policies.  Please keep in touch through Flood Communications, Live webinars and On demand videos as flood reforms progress.  In addition, your Regional Sales Manager (RSM) is always available to assist agents and policyholders on flood reform issues.  Please contact Marketing or your RSM at 866-373-5663.

Update your Email