[Federal Register Volume 62, Number 194 (Tuesday, October 7, 1997)]
[Proposed Rules]
[Pages 52304-52305]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-26527]
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FEDERAL EMERGENCY MANAGEMENT AGENCY
44 CFR Part 61
RIN 3067-AC73
National Flood Insurance Program (NFIP); Standard Flood Insurance
Policy
AGENCY: Federal Emergency Management Agency (FEMA).
ACTION: Proposed rule.
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SUMMARY: This proposed rule would increase the amount of the deductible
under the Standard Flood Insurance Policy--from $750 to $1,000--for
structures with subsidized coverage.
DATES: All comments received on or before November 7, 1997 will be
considered before final action is taken on the proposed rule.
ADDRESSES: Please submit any written comments to the Rules Docket
Clerk, Office of General Counsel, Federal Emergency Management Agency,
500 C Street, S.W., room 840, Washington, DC 20472, (facsimile) 202-
646-4536.
FOR FURTHER INFORMATION CONTACT:
Charles M. Plaxico, Jr., Federal Emergency Management Agency, Federal
Insurance Administration, (202) 646-3422, (facsimile) (202) 646-4327.
SUPPLEMENTARY INFORMATION: This proposal is the result of an ongoing
review and reappraisal of the National Flood Insurance Program (NFIP)
to achieve greater administrative and fiscal effectiveness in the
NFIP's operations. The proposed amendment is also intended to help the
NFIP increase its capability to build reserves for catastrophic loss
years. This can be handled either by rate increases, or by other means
such as imposing coverage limitations or increasing deductibles, or by
both.
Section 1308(b)(2) of the National Flood Insurance Act of 1968, as
amended, charges the Director of FEMA with the responsibility of
establishing ``chargeable premium rates'' which are `` * * * adequate,
on the basis of accepted actuarial principles, to provide reserves for
anticipated losses, or if less than such amount, consistent with the
objective of making flood insurance available where necessary at
reasonable rates so as to encourage prospective insureds to purchase
such insurance * * * ''.
Since there have been three premium increases in the last three
years--two in the subsidized premium rates and a premium surcharge
mandated by Sec. 555 of the National Flood Insurance Reform Act of
1994, for the addition of increased cost of compliance coverage, FEMA
believes that the better approach to enhancing fiscal soundness would
be by adjustment to the deductible provisions for policies which are
issued using subsidized rates. Therefore, this proposed rule would
increase the standard deductible for structures covered by insurance at
subsidized premium rates from $750 to $1,000. Concurrent with this
proposed change, insureds would be provided the option to pay a higher
premium at full-risk rates to ``buy back'' a reduced deductible under
their Standard Flood Insurance Policy (SFIP).
[[Page 52305]]
New or renewed flood insurance policies issued on and after May 1,
1998, for buildings and contents in Emergency Program communities as
well as those policies issued for buildings and/or contents in Regular
Program communities in Zones A, AO, AH, A1-A30, AE, VO, V1-V30, VE, or
V, which are rated using subsidized rates, would be subject to the
higher deductible of $1,000. These are buildings which, because they
were built before the degree of flood risk had been ascertained and
depicted on a Flood Insurance Rate Map (FIRM), are subject to a greater
exposure to flood loss.
This proposed change to the deductibles would provide a greater
flexibility to the Program and to the goal of designing the Program
with an eye toward ``* * * minimizing costs and distributing burdens
equitably among those who will be protected by flood insurance and the
general public'' (Section 1302(d) of the 1968 Act).
In summary, this proposal is intended to balance the need for
providing reasonable rates to the public for flood insurance as an
incentive to purchase insurance against the requirement that the NFIP
be flexible, minimize costs, and distribute burdens among those who
will be protected by flood insurance and the general public. Loss cost
savings, in a year equivalent to the historical average, are projected
to be $6.3 million as a result of implementing this proposed rule.
National Environmental Policy Act
Pursuant to section 102(2)(C) of the National Environmental Policy
Act of 1969, 42 U.S.C. 4371 et seq., and the implementing regulations
of the Council on Environmental Quality, 40 CFR parts 1500-1508, FEMA
is conducting an environmental assessment of this proposed rule. If the
assessment concludes that there will be a significant impact on the
human environment as a result of the issuance of the proposed rule,
then an Environmental Impact Statement will be prepared. Copies of the
environmental assessment, when developed, will be available for
inspection through the Rules Docket Clerk, Federal Emergency Management
Agency, room 840, 500 C St. SW., Washington, DC 20472.
Executive Order 12866, Regulatory Planning and Review
This proposed rule is not a significant regulatory action within
the meaning of Sec. 2(f) of E.O. 12866 of September 30, 1993, 58 FR
51735, but attempts to adhere to the regulatory principles set forth in
E.O. 12866. The final rule has been reviewed by the Office of
Management and Budget under E.O. 1266.
Paperwork Reduction Act
This proposed rule does not contain a collection of information and
therefore is not subject to the provisions of the Paperwork Reduction
Act of 1995.
Executive Order 12612, Federalism
This proposed rule involves no policies that have federalism
implications under E.O. 12612, Federalism, dated October 26, 1987.
Executive Order 12778, Civil Justice Reform
This proposed rule meets the applicable standards of Sec. 2(b)(2)
of E.O. 12778.
List of Subjects in 44 CFR Part 61
Flood insurance.
Accordingly, 44 CFR Part 61 is proposed to be amended as follows:
PART 61--INSURANCE COVERAGE AND RATES
1. The authority citation for Part 61 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. Paragraph C. of Article 7 of Appendix A (l) is proposed to be
revised follows:
* * * * *
C. For any flood insurance policy issued or renewed for property
located in an Emergency Program community or for any property located
in a Regular Program community in Zones A, AO, AH, A1-A30, AE, VO, V1-
V30, VE, or V where the rates available for buildings built before the
effective date of the initial Flood insurance Rate Map or December 31,
1994, whichever is later, are used to compute the premium, the amount
of the deductible for each loss occurrence is determined as follows: We
shall be liable only when such loss exceeds $1,000, or the amount of
any other deductible which you selected when you applied for this
policy or subsequently by endorsement.
* * * * *
2. Paragraph C. of Article 7 of Appendix A (2) is proposed to be
revised as follows:
* * * * *
C. For any flood insurance policy issued or renewed for a property
located in an Emergency Program community or for any property located
in a Regular Program community in Zones A, AO, AH, A1-A30, AE, VO, V1-
V30, VE, or V where the rates available for buildings built before the
effective date of the initial Flood Insurance Rate Map or December 31,
1994, whichever is later, are used to compute the premium, the amount
of the deductible for each loss occurrence is determined as follows: We
shall be liable only when such loss exceeds $1,000, or the amount of
any other deductible which you selected when you applied for this
policy or subsequently by endorsement.
* * * * *
2. Paragraph C. of Article 7 of Appendix A(2) is proposed to be
revised as follows:
* * * * *
C. For any flood insurance policy issued or renewed for a property
located in an Emergency Program community or for any property located
in a Regular Program community in Zones A, AO, AH, A1-A30, AE, VO, V1-
V30, VE, or V where the rates available for buildings built before the
effective date of the initial Flood Insurance Rate Map or December 31,
1994, whichever is later, are used to compute the premium, the amount
of the deductible for each loss occurrence is determined as follows:
The Insurer shall be liable only when such loss exceeds $1,000, or the
amount of any other deductible which the Insured selected when it
applied for this policy or subsequently by endorsement.
* * * * *
2. Paragraph C. of Article 7 of Appendix A (3) is proposed to be
revised as follows:
* * * * *
C. For any flood insurance policy issued or renewed for any
property located in Zones A, AO, AH, A1-A30, AE, VO, V1-V30, VE, or V
where the rates available for buildings built before the effective date
of the initial Flood Insurance Rate Map or December 31, 1994, whichever
is later, are used to compute the premium, the amount of the deductible
for each loss occurrence is determined as follows: The Insurer shall be
liable only when such loss exceeds $1,000, or the amount of any other
deductible which the Insured selected when it applied for this policy
or subsequently by endorsement.
* * * * *
(Catalog of Federal Domestic Assistance No. 83.100, ``Flood
Insurance''; No. 83.516, ``Disaster Assistance'')
Dated: September 26, 1997.
Edward T. Pasterick,
Acting Executive Administrator, Federal Insurance Administration.
[FR Doc. 97-26527 Filed 10-6-97; 8:45 am]
BILLING CODE 6718-03-M
