Next month, the National Flood Insurance Program (NFIP) will enact changes that include a range of premium increases – and agents need to be ready.
The changes, effective as of April 1, are mostly tied to rate increases, which vary between different flood zones and different types of properties, Cynthia DiVincenti, vice president of government affairs and business quality assurance,
Aon National Flood Services, told Insurance Business.
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Overall, premiums will go up an average of 6.3%, with primary residence premiums increasing by an average of 5% and non-primary residence premiums increasing an average of 24%.
Aon NFS has released a guide for agents ahead of the move – ‘Making Sense of April 2017 NFIP Changes’ – which is available online.
DiVincenti said that primarily, agents need to understand the premium increases, “so when their customers actually receive a renewal bill and they see that the premium is higher than it was last year and they call their agent, they have that awareness.”
Another key point for agents is what won’t be changing – which includes deductible factors, federal policy fee and HFIAA surcharges, among others.
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“This impacts agents pretty heavily because they’re not paid commission on those fees, assessments or surcharges, and the last couple of years those have been pretty substantial – so that’s been kind of a hit to them to not get any commission on that,” DiVincenti explained.
Beyond the April changes, the program’s pending reauthorization is a key focus for the industry.
“Obviously the industry is looking for Congress to act sometime before September 30 to pass legislation for a long term, and what we hope would be a timely reauthorization,” DiVincenti said.
After the market was “totally disrupted” by the many lapses and extensions to the program between 2008 and 2012, the industry is hoping that Congress won’t allow that to happen again.
The program is looking for a minimum reauthorization of five years, which DiVincenti says would create good market stability, and is accepting of some potential reform.
“If the reform encourages or facilitates growth in the private flood insurance market, we think that’s good for the program.”
Find out more about the flood insurance landscape at the Flood Risk 2017 masterclass in Houston, Texas on May 11, where national and regional experts will unite to explore key issues surrounding flood risk and insurance, and best-practices for mitigation.
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