On July 6, President Obama signed the Biggert-Waters Flood Insurance Reform Act of 2012 into law, extending the National Flood Insurance Program’s (NFIP) authority through Sept. 30, 2017.
The NFIP had been operating under a series of short-term extensions, which resulted in the program lapsing three times in 2010. The five-year extension of the NFIP was part of a larger surface transportation bill (H.R. 4348).
In addition to the NFIP reauthorization, the legislation called for a number of flood insurance reform measures, including:
► Increasing the civil penalties for lenders that fail to require flood insurance in violation of the mandatory flood insurance purchase requirements (increased from $350 to $2,000 per violation);
► Permitting lenders to accept a private primary flood insurance policy in lieu of an NFIP flood policy to satisfy the mandatory purchase requirements;
► Requiring the escrow of flood insurance premiums and fees for institutions with $1 billion or more in assets;
► Requiring a notice of flood insurance availability under the NFIP on the Good Faith Estimate (Real Estate Settlement Procedures Act);
► Waiving the 30-day waiting period on flood insurance for properties affected by flooding on federal land resulting from wild fires;
► Requiring lenders to terminate force-placed flood insurance when homeowners have purchased coverage, and issue refunds for any period of overlap;
► Phasing out subsidized insurance rates for properties that experience repeated losses and claims;
► Raising the cap on annual flood insurance premium increases;
► Allowing multifamily properties to purchase NFIP policies;
► Imposing minimum deductibles for flood claims; and
► Establishing a technical mapping advisory council to deal with map modernization issues.
Other provisions are aimed at ensuring the survival of the program, such as requiring the NFIP administrator to develop a plan to repay the debt incurred from Hurricane Katrina.
Several provisions will require implementing regulations. The NFIP will issue guidance on these changes, which will be available at floodsmart.gov. Information also will be available on CUNA’s e-Guide to Federal Laws and Regulations at cuna.org (select“regulations & compliance”).