[Federal Register Volume 61, Number 95 (Wednesday, May 15, 1996)]
[Rules and Regulations]
[Pages 24461-24464]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-12019]
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FEDERAL EMERGENCY MANAGEMENT AGENCY
44 CFR Part 62
RIN 3067-AC47
National Flood Insurance Program; Allocated Loss Adjustment
Expense
AGENCY: Federal Insurance Administration (FEMA).
ACTION: Interim Final Rule.
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SUMMARY: This interim final rule modifies the existing allocated loss
adjustment expense fee schedule of the National Flood Insurance Program
(NFIP) 1994 Write Your Own (WYO) Program under the Financial
Assistance/Subsidy Arrangement (the Arrangement). The rule changes the
fee schedule to add new, refined loss ranges and to revise the fees for
adjusting higher ranges of covered losses under the NFIP.
DATES: This interim final rule is effective on May 15, 1996. Please
submit any comments in writing by July 1, 1996.
ADDRESSES: We request comments on this interim final rule. Please
submit any comments to the Rules Docket Clerk, Office of the General
Counsel, Federal Emergency Management Agency, 500 C Street SW., room
840, Washington, DC 20472, (facsimile) (202)646-4536.
FOR FURTHER INFORMATION CONTACT: Charles M. Plaxico, Jr., Federal
Emergency Management Agency, Federal Insurance Administration, 500 C
Street SW., Washington, DC 20472, (202) 646-3422.
SUPPLEMENTARY INFORMATION: The Financial Assistance/Subsidy Arrangement
(``the Arrangement'') between the Federal Insurance Administrator and
licensed property/casualty insurers participating in the WYO program
was last modified effective October 1, 1994. The Arrangement specifies
allowable costs and fees to be reimbursed to member WYO companies for
adjusting losses under this segment of the National Flood Insurance
Program (NFIP). For allocated loss adjustments, participating WYO
companies are reimbursed pursuant to a fee schedule, which is
Attachment A to Appendix A of the Arrangement. The current fee schedule
provides for allowable fees for ranges of losses, the last range being
``$200,000 to limits.''
Since the publication of the Arrangement, however, the limits of
flood insurance coverage available under the National Flood Insurance
Program (NFIP) increased significantly under the National Flood
Insurance Reform Act of 1994 (P.L. 103-325). The higher limits of
coverage and correspondingly higher amounts of recovery for insured
property owners became effective March 1, 1995. Also, a new condominium
policy, effective October 1, 1994, has resulted in much higher limits
of coverage for condominiums.
Recent analysis of loss experience during the last year, especially
in connection with Hurricane Opal (October 1995), shows that there have
been significantly more losses at higher damage thresholds,
particularly for condominiums. The current fee schedule, which has not
been revised for nearly five years, needs to be adjusted to reflect
these factors as well as the increased workload to adjust claims for
condominium losses and the increased costs of labor, overhead,
materials, and transportation since the last fee schedule change.
In light of these factors and in anticipation of this year's
hurricane season, there is an urgent need to revise the current
adjuster fee schedule and make it effective upon publication of this
interim final rule. FEMA finds that there is a compelling need and good
cause to waive the 30-day effective date requirements of the
Administrative Procedure Act, 5 U.S.C. 553(d). This interim final rule
is effective on the date of publication in the Federal Register.
Currently, the fee schedule under the Arrangement is as follows:
Exhibit A.--Fee Schedule
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Range (by covered loss) Fee
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Erroneous Assignment....................................... $40.00
Closed Without Payment..................................... 125.00
Minimum for Upton-Jones Claims............................. 800.00
$0.01 to $600.00........................................... 150.00
$600.01 to $1,000.00....................................... 175.00
$1,000.01 to $2,000.00..................................... 225.00
$2,000.01 to $3,500.00..................................... 275.00
$3,500.01 to $5,000.00..................................... 350.00
$5,000.01 to $7,000.00..................................... 425.00
$7,000.01 to $10,000.00.................................... 500.00
$10,000.01 to $15,000.00................................... 550.00
$15,000.01 to $25,000.00................................... 600.00
$25,000.01 to $35,000.00................................... 675.00
$35,000.01 to $50,000.00................................... 750.00
$50,000.01 to $100,000.00.................................. 1,000.00
$100,000.01 to $150,000.00................................. 1,300.00
$150,000.01 to $200,000.00................................. 1,600.00
$200,000.01 to limits...................................... 2,000.00
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[Note: Allocated fee schedule entry value is covered loss under the
policy asked on the standard deductibles ($500 and $500) and limited
to the amount of insurance purchased.]
This interim final rule revises the adjuster fee schedule as
follows to reflect the higher limits of coverage available for
condominiums and the amount of technical effort required to adjust
losses for condominiums:
[[Page 24463]]
Exhibit A.--Fee Schedule
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Range (by covered loss) Fee
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Erroneous Assignment................................... $40.00.
Closed Without Payment................................. 125.00.
Minimum for Upton-Jones Claims......................... 800.00.
$0.01 to $600.00....................................... 150.00.
$600.01 to $1,000.00................................... 175.00.
$1,000.01 to $2,000.00................................. 225.00.
$2,000.01 to $3,500.00................................. 275.00.
$3,500.01 to $5,000.00................................. 350.00.
$5,000.01 to $7,000.00................................. 425.00.
$7,000.01 to $10,000.00................................ 500.00.
$10,000.01 to $15,000.00............................... 550.00.
$15,000.01 to $25,000.00............................... 600.00.
$25,000.01 to $35,000.00............................... 675.00.
$35,000.01 to $50,000.00............................... 750.00.
$50,000.01 to $100,000.00.............................. 3.0%.
$100,000.01 to $250,000.00............................. 2.3% but not less than $3,000.
$250,000.01 and up..................................... 2.1% but not less than $5,750.
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Note: Based on Gross Loss.
(1) ``Gross loss'' shall mean the agreed cost to repair or replace before application of depreciation,
deductible, or other limiting clauses or condition.
(2) For the purpose of this schedule, should the loss exceed the available coverage, ``gross loss'' shall mean
the total amount of coverage.
(3) If the claim involves a salvage ``buy-back,'' ``gross loss'' shall mean the amount of the claim before the
salvage value is deducted.
(4) If the insured qualifies for replacement cost coverage, ``gross loss'' is determined on the basis of the
entire replacement cost claim (including depreciation holdback).
National Environmental Policy Act
This interim final rule is categorically excluded from the
requirements of 44 CFR Part 10, Environmental Consideration. No
environmental impact assessment has been prepared.
Executive Order 12866, Regulatory Planning and Review
This interim final rule is not a significant regulatory action as
defined under Executive Order 12866 of September 30, 1993, Regulatory
Planning and Review, 58 FR 51735, October 4, 1993. To the extent
possible, this interim final rule adheres to the principles of
regulation set forth in Executive Order 12866. This interim final rule
has not been reviewed by the Office of Management and Budget under the
provisions of Executive Order 12866.
Paperwork Reduction Act
This interim final rule does not contain a collection of
information and is therefore not subject to the provisions of the
Paperwork Reduction Act of 1995.
Executive Order 12612, Federalism
This interim final rule involves no policies that have federalism
implications under Executive Order 12612, Federalism, dated October 26,
1987.
Executive Order 12778, Civil Justice Reform
This interim final rule meets the applicable standards of section
2(b)(2) of Executive Order 12778.
List of Subjects in 44 CFR Part 62
Claims, Flood Insurance.
Accordingly, 44 CFR part 62, Exhibit A, is amended as follows:
PART 62--SALE OF INSURANCE AND ADJUSTMENT OF CLAIMS
1. The authority citation for Part 62 continues to read as follows:
Authority: 42 U.S.C. 4001 et seq.; Reorganization Plan No. 3 of
1978, 43 FR 41943, 3 CFR 1978 Comp., p. 329; E.O. 12127 of Mar. 31,
1979, 44 FR 19367, 3 CFR, 1979 Comp., p. 376.
2. Exhibit A of Appendix A to part 62 is revised to read as
follows:
Appendix A to Part 62--Federal Emergency Management Agency, Federal
Insurance Administration, Financial Assistance/Subsidy Arrangement
* * * * *
Exhibit A.--Fee Schedule
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Range (by covered loss) Fee
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Erroneous Assignment................................... $40.00.
Closed Without Payment................................. 125.00.
Minimum for Upton-Jones Claims......................... 800.00.
$0.01 to $600.00....................................... 150.00.
$600.01 to $1,000.00................................... 175.00.
$1,000.01 to $2,000.00................................. 225.00.
$2,000.01 to $3,500.00................................. 275.00.
$3,500.01 to $5,000.00................................. 350.00.
$5,000.01 to $7,000.00................................. 425.00.
$7,000.01 to $10,000.00................................ 500.00.
$10,000.01 to $15,000.00............................... 550.00.
$15,000.01 to $25,000.00............................... 600.00.
$25,000.01 to $35,000.00............................... 675.00.
$35,000.01 to $50,000.00............................... 750.00.
$50,000.01 to $100,000.00.............................. 3.0%.
$100,000.01 to $250,000.00............................. 2.3% but not less than $3,000.
[[Page 24464]]
$250,000.01 and up..................................... 2.1% but not less than $5,750.
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Note: Based on Gross Loss.
(1) ``Gross loss'' shall mean the agreed cost to repair or replace before application of depreciation,
deductible, or other limiting clauses or condition.
(2) For the purpose of this schedule, should the loss exceed the available coverage, ``gross loss'' shall mean
the total amount of coverage.
(3) If the claim involves a salvage ``buy-back,'' ``gross loss'' shall mean the amount of the claim before the
salvage value is deducted.
(4) If the insured qualifies for replacement cost coverage, ``gross loss'' is determined on the basis of the
entire replacement cost claim (including depreciation holdback).
(Catalog of Federal Domestic Assistance No. 83.100, ``Flood
Insurance'')
Dated: May 8, 1996.
Elaine A. McReynolds,
Administrator.
[FR Doc. 96-12019 Filed 5-14-96; 8:45 am]
BILLING CODE 6718-03-P
