MCC Appoints Nationally Recognized Advisory Council
Introducing the MCC Advisory Council
The Massachusetts Costal Coalition, in accordance with our bylaws, has appointed our Advisory Council with nationally recognized experts from across the country. The purpose of the Advisory Council is to provide expertise and professional knowledge to the activities of the Board of Directors, while helping to give direction of the Board of Directors.
The Council has no duties, voting privileges or obligation of attendance to the Board. The MCC has appointed five members to the Advisory Council for 2020. They are:
Kathleen Dufraine– FDPA and Tax Wholesale Controll, Wells Fargo Patty Templeton-Jones– President, Wright National Flood Insurance Hank Hodde– Sustainability and Resiliency Officer, Pinellas County, FL Edward Thomas– Former President, Natural Hazard Mitigation Association Clay Barclay– President, BAC Adjusting
Each of these individuals brings a unique national perspective in one part of the flood industry. We look forward to working with the Advisory Council in 2020, and getting the expert knowledge they have to do more for you.
Coastal Connection
Flood Insurance in 2020: Where Are We Going, What Are We Doing?
Many leaders in the insurance industry anticipated that 2019, much like 2018, would be a tumultuous year for flood insurance with large catastrophic events, legislative impasse, administrative uncertainty and rate increases. For the National Flood Insurance Program (NFIP) and private flood insurance, all were true and most likely will continue into 2020. Unlike other insurance programs, the NFIP is authorized by Congress. And while private flood insurance is not controlled by a Federal body, Congress’s actions (or inactions) influence the industry. More recently, the NFIP has been suffering from a lack of a long term reauthorization by Congress. The program, which saw its major authorizations expire two years ago, has been propped up by short term extensions and proposed reform measures that have received mixed reactions from all industries. To add to the uncertainty, FEMA’s new rating system, Risk Rating 2.0 which has seen immense pressure by Congress to be halted, has now been postponed into 2021. And uncertainty in the marketplace for flood insurance remains as participation is low and losses mount with climate related events. What’s ahead in 2020? Its important to review 2019 to see where 2020 takes us.
The National Flood Insurance Program was started in 1968 by Congress after major hurricanes and other flooding events caused vast uninsured losses. The National Flood Insurance Act of 1968 started the NFIP and requires periodic reauthorizations by Congress. The most recent long term reauthorization was the Biggert-Waters Act of 2012. BW-12, among other things, asked FEMA to increase artificially low rates in the program by 25% a year, establish higher penalties for lenders who do not enforce mandatory purchase, and define what “private flood insurance” is. But it also extended the NFIP for five years. BW-12 caused an uproar with policyholders and stakeholders due to severe rate increases, but it did give certainty that there would be no expiration of authority for the NFIP. An expiration of authority means no new NFIP policies can be issued or renewed. BW-12 authorized the NFIP for five years, which expired on September 30th, 2017.
Sue Sullivan is a top producing realtor for 15 years with Coldwell Banker in Scituate and is ranked as the top 15% of Coldwell Banker professionals worldwide for production and exceptional service. Susan became part of the MCC Board of Directors in 2016 to bring her expertise in real estate.
Sue’s Flood Real Estate Tips Hire Hire Someone With Experience
Buyer beware… I recently had a client looking to purchase a home in the Sand Hills area of Scituate. Most of this neighborhood is located in the high risk flood zone.
When I asked for details on the existing flood policy I was told it was a transferable policy that cost approximately $5,000 annually. The additional cost of $410 a month was beyond my young couple’s budget. They were crushed but forced to move on. Before they walked away I decided to have the policy looked at to see if it was possible to reduce the cost. I know the neighborhood well and the policy seemed expensive for that particular location. Murphy/Carty insurance in Scituate discovered the property was not listed as the primary residence for the present owners. A “primary residence” flood policy providing the same coverage was less than $2,000 annually!! My clients were able to absorb the lower cost. They are the proud new owners!!
Hire a Real Estate professional with experience and knowledge regarding flood insurance and always get a second opinion on the policy from an insurance agency with flood expertise. Please realize when you buy a second home you will pay 2 to 3 times more for the flood policy if the structure is older.
NFIP Extended to December 20th
On November 21st, the U.S. Senate passed government funding legislation that extends the National Flood Insurance Program (NFIP) through December 20th, 2019. The President is expected to sign it into law. Earlier this year, the House Financial Services Committee passed legislation to reauthorize the NFIP for five years by a unanimous vote of 59-0. However, on Tuesday July 16th, the Senate, unhappy with the House bill, released the NFIPre bill. The NFIPre bill includes some similar provisions to the House bill, but is different as it includes legislation that includes several controversial items that would cap Write Your Own (WYO) compensation and does not include legislation thought to allow for bigger growth of the private flood market. With a continuation of short term extensions, there appears to be a stalemate with no clear path forward. Currently, there is expected to be short term extensions until after the 2020 elections.
Implementation of Risk Rating 2.0 Delayed
FEMA recently postponed Risk Rating 2.0, which was supposed to be introduced with new rates in April 2020, and implement the rates in October of 2020. On November 1st, a letter was sent by a coalition of legislators (read HERE) to House leadership asking them to press FEMA to consider the consequences of perceived rate increases associated with Risk Rating 2.0’s implementation. On November 7th, FEMA announced a postponement of Risk Rating 2.0. FEMA now plans a full implementation of all occupancies on October 1st, 2021.
On October 1st each year, FEMA releases the following year’s premium increases (Effective April 1st). Overall, premiums will increase an average of 11.3 percent. The total amount billed the policyholder will increase from $993 to $1,092. SRL Premium: FEMA will increase the Severe Repetitive Loss (SRL) Premium for all SRL policies from 5% to 10% Reserve Fund Assessment: FEMA will increase the reserve fund assessment from 15% to 18% starting April 1st 2020.
Tim Carty owns MurphyCarty Insurance Agency, located in Scituate Harbor. His objective is to support policy holders, minimize their risk, and help navigate them through the flood program. Tim has an MBA from Boston University and an undergraduate from Babson College.
Tim’s Flood Savings Tips Risk Rating 2.0- Here next year, now gone to the next
As we near 2020, politicians and stakeholders have turned their attention to an issue bigger than legislative reform: Risk Rating 2.0. Risk Rating 2.0 is a redesign of FEMA’s rating structures. FEMA recently postponed Risk Rating 2.0, where new rates were to be released in April, 2020, and implementation of those rates was to occur in October, 2020. · On November 1st, a letter was sent by a coalition of legislators to House leadership requesting to press FEMA to first consider the consequences of perceived rate increases associated with Risk Rating 2.0’s implementation. · On November 7th, FEMA announced a postponement of Risk Rating 2.0. FEMA now plans a full implementation of all occupancies on October 1st, 2021. · In the November 7th press release, FEMA states, “some additional time is required to conduct a comprehensive analysis of the proposed rating structure so as to protect policyholders and minimize any unintentional negative effects of the transition.” · Additionally, the November 7th letter raises additional concerns with Risk Rating 2.0: “Since FEMA is designing a system to reflect individual property’s unique flood risk, we remain concerned that the 15 percent cap on rate classes and grandfathered properties protections are irrelevant… We know the negative consequences of hiking premiums after the Biggert-Waters Act of 2012 caused costs to skyrocket… with Risk Rating 2.0 on the horizon, we encourage you to do everything possible to prevent premium spikes for our constituents.”
The possibility that Risk Rating 2.0 will become “Biggert-Waters 2.0“ has been raised as a primary concern. What Risk Rating 2.0 will actually provide is, communication of true risk through new technology. Rates will be modeled in advance in order to prevent the severe rating consequences that was seen in 2012. Questions remain about how Risk Rating 2.0 will affect premiums and how discounts such as grandfathering will be handled. The rating structure is not finalized, but FEMA must stay within the current legislative framework for the flood program, which caps increases and provides other financial safeguards to policy holders.
There is still disconnect between Congress and FEMA, with concern that there has not been adequate communication on what exactly Risk Rating 2.0 will look like or how FEMA plans implement it. With Risk Rating 2.0 postponement, open questions bring forward doubts that the new rating structure will ever make it to full implementation. There will be more to come on Risk Rating 2.0 in 2020: speculation will grow, but more information should be released on how the new rating scheme could look to address public deliberation.
Note from the Chair
Your 2019 Slate of Officers
As we head into 2020, uncertainty remains in the world of flood insurance, but certainty remains in the goals of the Coalition. At our 2019 Annual Meeting, we laid out our vision for the MCC in 2020, as well as looked back at what we have accomplished in 2019. In 2019, the MCC accomplishments are long, and include: -Adding a new face to our Board of Directors (Tim van der Veen) -Appointed the Advisory Council -Signed a Memorandum of Understanding with Blue Ocean Analytics and Elevated Studio in order to establish the Hazard Elimination and Loss Prevention (HELP) program -Established our Podcast, the Know Flood Newscast -Pilot project to increase Marshfield CRS rating -Created a membership program
In 2020, the MCC will continue to build on 2019 success. We plan to build on our membership program with a goal of 600 new members each year. We hope to hold more pubic outreaches, and establish two CRS user groups on the North and South Shore. The MCC will also focus on fundraising in hopes of supporting our continued mission to help you!
Joe Rossi Chair and Executive Director Massachusetts Coastal Coalition
