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FEMA: Expect 'Huge' Changes And Increases To Insurance

By Lisa Broadt, The Chronicle, Centralia, Wash.
McClatchy-Tribune Information Services

Jan. 21--If you have insurance through FEMA's National Flood Insurance Program, expect to pay a higher premium. And if you live in a special flood hazard zone and currently receive a discount, expect to pay a much higher premium.

"It's huge," FEMA Region X Insurance Program Specialist Deborah Farmer said about the changes.

Speaking to the Chehalis River Basin Flood Authority meeting on Thursday, Farmer said much is still uncertain.

Exactly how much the changes will cost is still to be determined. FEMA has not finalized its rules for implementing the changes and its long-promised maps have yet to arrive.

According to FEMA, floods have caused more than $25 billion in losses over the last 10 years, and responding to those disasters has put the agency more than $18 billion in the hole.

To repair the financial damage, the U.S. Congress in 2012 passed a bill requiring FEMA to raise rates and close any loopholes that allowed resource-draining discounts.

Congress required all policies to be brought up to what's known as the full risk rate, or the rate that reflects the risk assumed by FEMA -- as determined by the average claims payment -- and all administrative expenses.

It's not known exactly when the new maps will be published, but preliminary versions indicate that Lewis County's floodplain and floodway will be expanded significantly.

Under FEMA's plan, grandfathered properties will automatically go to the full risk rate when a community adopts an updated map.

Currently, the National Flood Insurance Program allows property owners to hold on to historic rates as determined by previous flood maps, as long as he or she owned insurance prior to the map change and maintained continuous coverage.

Farmer on Thursday said debate about the changes to the grandfathering policy has been heated, with national lawmakers avowing change and local leaders declaring that families will lose their homes.

FEMA has not backed down, but does not yet have a firm implementation date.

Subsidies already are being phased out for structures in the special flood hazard areas built before the first FEMA map was drawn.

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In October, FEMA implemented an immediate increase to the full risk rates for all new and lapsed policies on all currently subsidized policies.

Immediate increases also occur upon the sale/purchase of a property; full risk rates must be charged to the next owner of the policy.

Subsidies also are being phased out for non-primary residences, businesses, and some severe repetitive loss properties.

Premiums for these properties will increase by 25 percent per year until they reach the full risk rate, as determined by the maps in current use.

Subsidies are not being phased out for existing policies covering primary residences, but that may change when communities are remapped, according to FEMA.

Of Lewis County's 6,000 policies, approximately 60 percent are subsidized, and those that are subsidized currently have a rate about 40 percent lower than full risk.

The most important factor in determining full risk rate is the elevation of the structure in relation to the base flood elevation. Generally, the higher the elevation above the base flood elevation, the lower the flood risk.

"Everything is very dependent on the individual structure," Farmer said. "It might be a matter of adding three vents, or it might be a matter of -- there's just nothing we can do."

Grays Harbor County Commissioner Wes Cormier at Thursday's meeting wanted to know if a community can opt out of the National Flood Insurance Program.

"Yes, but the federal dollars are going to dry up during an emergency," Farmer said. "My best advice for now, don't let your policy lapse."


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