99-6466. National Flood Insurance Program (NFIP); Insurance Coverage and Rates  

  • [Federal Register Volume 64, Number 51 (Wednesday, March 17, 1999)]
    [Rules and Regulations]
    [Pages 13115-13116]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 99-6466]
    
    
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    FEDERAL EMERGENCY MANAGEMENT AGENCY
    
    44 CFR Part 61
    
    RIN 3067-AC96
    
    
    National Flood Insurance Program (NFIP); Insurance Coverage and 
    Rates
    
    AGENCY: Federal Emergency Management Agency (FEMA).
    
    ACTION: Final rule.
    
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    SUMMARY: We (the Federal Insurance Administration) are increasing the 
    amount of premium you (the flood insurance policyholder) pay for flood 
    insurance coverage for ``pre-FIRM'' buildings in coastal areas subject 
    to high velocity waters, such as storm surges, and wind-driven waves 
    (``V'' zones). (``Pre-FIRM'' buildings are those whose construction was 
    started before January 1, 1975, or the effective date of a community's 
    Flood Insurance Rate Map (FIRM), whichever is later. Pre-FIRM buildings 
    and their contents are eligible for subsidized rates.) We are 
    increasing rates for pre-FIRM, V-zone properties to recognize the 
    inherently greater flood risk of these properties.
    
    EFFECTIVE DATE: This rule is effective on May 1, 1999.
    
    FOR FURTHER INFORMATION CONTACT: Charles M. Plaxico, Jr., Federal 
    Emergency Management Agency, Federal Insurance Administration, 500 C 
    Street, SW., room 840, Washington, DC 20472, 202-646-3422, (facsimile) 
    202-646-4327, or (email) charles.plaxico@fema.gov. 202-646-4536, or 
    (email) rule@fema.gov.
    
    SUPPLEMENTARY INFORMATION: We proposed a rule at 64 FR 3909, January 
    26, 1999, that would increase the premium rates that we charge under 
    the National Flood Insurance Program for pre-FIRM, V-zone properties. 
    We received comments from: the Association of State Floodplain 
    Managers, Inc., the Amite River Basin Drainage and Water Conservation 
    District, and the Coast Alliance.
        The Association of State Floodplain Managers, Inc. raised three 
    issues. The first issue deals with the subsidy. The Association said 
    that ``we believe that any rate increase, however justified, needs to 
    be made in the context established by Congress--that owners of 
    buildings constructed before the communities joined the NFIP are 
    intended to be subsidized.'' This rule does not eliminate the subsidy 
    for pre-FIRM, V-zone structures. It only reduces the subsidy. The 
    change in rates for the pre-FIRM, V-zone policyholders, currently 
    paying an average annual premium of $440, will result in an average 
    increase of about seven percent. The rule remains consistent with the 
    National Flood Insurance Program's enabling legislation and the 
    discretionary authority granted to FEMA to administer the program.
        The second issue the Association raised is that the National Flood 
    Insurance Reform Act of 1994 requires FEMA to conduct a study ``of the 
    impact of reducing the subsidy of pre-FIRM policies.'' The Association 
    pointed out correctly that FEMA has not yet finished that study. 
    However, the Association's comment incorrectly characterizes the nature 
    of the study, which involves examining economic impacts of eliminating 
    the subsidy by charging full actuarial premiums to pre-FIRM structures. 
    Our current regulatory action calls for a modest rate increase for pre-
    FIRM, V-zone properties and does not need to await completion of the 
    study.
        The Association's third issue is that ``any rate increase must be 
    part of an overall effort to evaluate all measures to reduce flood 
    losses, and such measures must not be based solely on increasing income 
    by increasing the cost of insurance, but needs to focus on mitigation 
    measures to reduce claims against the NFIP.'' We have not forsaken nor 
    do we intend to forsake mitigation efforts in favor of merely raising 
    premiums for a small group of policyholders. Experience shows us that 
    we can make small improvements to the program without jeopardizing or 
    delaying larger initiatives such as the agency's repetitive for dealing 
    with properties with multiple flood losses.
        The Amite River Basin Drainage and Water Conservation District 
    agreed with our overall objective of minimizing losses, but disagreed 
    with the rule as proposed saying that ``we do not agree on the proposed 
    rules to increase the subsidized rates for pre-FIRM properties in A and 
    V zones.'' The District went on to say that any ``increase in 
    subsidized insurance rates should be considered in the context of an 
    overall strategy and program to reduce flood losses at this time, which 
    FEMA has not done. The overall strategy and program should include a 
    very critical and important `phase-out' program that will lead us from 
    a `high loss' status to a `low loss' status. This will require time 
    (years) and funding at the federal, state, and local level.''
        There are several misunderstandings by the District. First, the 
    rule does not affect pre-FIRM, A-zone properties. The rule affects only 
    the rates for pre-FIRM, V-zone properties. The affected properties 
    currently constitute a little more than one percent of the National 
    Flood Insurance Program's policies in force. Second, our action 
    complements rather than stands apart from other initiatives that FEMA 
    has undertaken or is currently developing, particularly with regard to 
    structures with multiple flood losses. The agency is currently looking 
    at permanent solutions, including funding, technical assistance, and 
    insurance approaches, to the recurring problems of multiple-flood-loss 
    structures. Taking this action now in no way diminishes any of those 
    other initiatives. Third, we have phased in rate increases for pre-FIRM 
    properties over time. The last time we increased subsidized premium 
    rates was in 1996. So we believe we are consistent with the District's 
    recommendation for a phased-in approach.
        The Coast Alliance agreed with the proposed rule saying, ``We 
    support the Federal Emergency Management Agency's proposed rule to 
    increase the amount of premium paid by the policyholder for flood 
    insurance for `pre-FRM' buildings in coastal areas subject to high 
    velocity waters and wind-driven waves (`V' zones).'' The Coast 
    Alliance, however, expressed concern about any availability of 
    subsidized or non-actuarial premium rates in coastal areas and 
    recommended that ``FEMA must take the next logical step to deny new 
    flood policies in high risk areas.'' We believe that this 
    recommendation should be dealt with legislatively, as were the two 
    precedents for denying flood insurance coverage in certain geographical 
    areas at 42 U.S.C.
    
    [[Page 13116]]
    
    4028-4029. As required by the National Flood Insurance Reform Act of 
    1994, we are evaluating the impact of erosion hazards on the NFIP. Part 
    of that study will explore the economic impact of denying insurance in 
    areas subject to coastal erosion. It is premature for us to comment on 
    the Alliance's recommendation before we complete that study and report 
    to Congress.
        In summary, we believe that targeting a particularly risky class of 
    properties with higher premium rates supports FEMA's overall program of 
    loss reduction. It more accurately reflects the loss exposure of pre-
    FIRM, V-zone properties, which are at a greater exposure to flood loss 
    than pre-FIRM, A-zone properties. Also, it helps make policyholders 
    aware of the danger of their V-zone properties.
    
    National Environmental Policy Act
    
        Under 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, we conducted 
    an environmental assessment of this rule. The assessment concludes that 
    there will be no significant impact on the human environment as a 
    result of the issuance of this final rule, and no Environmental Impact 
    Statement will be prepared. Copies of the environmental assessment are 
    on file for inspection through the Rules Docket Clerk, Federal 
    Emergency Management Agency, room 840, 500 C Street SW., Washington, DC 
    20472.
    
    Executive Order 12866, Regulatory Planning and Review
    
        This 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 rule has not been reviewed by the Office of Management and 
    Budget under E.O. 12866.
    
    Paperwork Reduction Act
    
        This 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 rule involves no policies that have federalism implications 
    under E.O. 12612, Federalism, dated October 26, 1987.
    
    Executive Order 12778, Civil Justice Reform
    
        This 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, we amend 44 CFR Part 61 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. We are revising Section 61.9 to read as follows:
    
    
    Sec. 61.9  Establishment of chargeable rates.
    
        (a) Under section 1308 of the Act, we are establishing annual 
    chargeable rates for each $100 of flood insurance coverage as follows 
    for pre-FIRM, A zone properties, pre-FIRM, V zone properties, and 
    emergency program properties.
    
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                                                       A zone rates\1\ per year per    V zone rates \2\ per year per
                                                             $100 coverage on:               $100 coverage on:
                    Type of structure                ---------------------------------------------------------------
                                                         Structure       Contents        Structure       Contents
    ----------------------------------------------------------------------------------------------------------------
    1. Residential:
        No Basement or Enclosure....................             .68             .79             .82             .95
        With Basement or Enclosure..................             .73             .79             .88             .95
    2. All other including hotels and motels with
     normal occupancy of less than 6 months
     duration:
        No Basement or Enclosure....................             .79            1.58             .95            1.90
        With Basement or Enclosure..................             .84            1.58            1.01            1.90
    ----------------------------------------------------------------------------------------------------------------
    1 A zones are zones A1-A30, AE, AO, AH, and unnumbered A zones.
    2 V zones are zones V1-V30, VE, and unnumbered V zones.
    
        (b) We will charge rates for contents in pre-FIRM buildings 
    according to the use of the building.
        (c) A-zone rates for buildings without basements or enclosures 
    apply uniformly to all buildings throughout emergency program 
    communities.
    
    (Catalog of Federal Domestic Assistance No. 83.100, ``Flood 
    Insurance''; No. 83.516, ``Disaster Assistance'')
    
        Dated: March 11, 1999.
    
    Jo Ann Howard
    Administrator,
    Federal Insurance Administration.
    [FR Doc. 99-6466 Filed 3-16-99; 8:45 am]
    BILLING CODE 6718-03-P
    
    
    

Document Information

Effective Date:
5/1/1999
Published:
03/17/1999
Department:
Federal Emergency Management Agency
Entry Type:
Rule
Action:
Final rule.
Document Number:
99-6466
Dates:
This rule is effective on May 1, 1999.
Pages:
13115-13116 (2 pages)
RINs:
3067-AC96
PDF File:
99-6466.pdf
CFR: (1)
44 CFR 61.9