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NFIP Procedure Changes

The following changes to NFIP procedures are effective October 1, 2007. All of the changes are documented in the October revisions to the NFIP Flood Insurance Manual, posted on the FEMA website.


Stakeholder Resources

The list of NFIP stakeholder information resources in the Flood Insurance Manual Reference section (see page REF 4) has been expanded to include web addresses for the FEMA Information Resource Library, the NFIP Watermark and eWatermark newsletters, and the NFIP Training Station for flood insurance agents. Also, the mail and email addresses for flood map specialists at the FEMA Map Assistance Center have been added.


Tenant Coverage

Information has been clarified in the manual about the improvements and betterments to a leased building a tenant can make and how a tenant may purchase additional coverage for improvements and betterments. These clarifications appear in the General Rules (GR 12) and Definitions (DEF 5) sections.


Agent Contracts

New text has been added on pages GR 13 and DEF 2-3 of the manual to explain the contract agent rule, under which terms of the contract between a Write Your Own (WYO) Company and a producer govern the producer's authority to accept risks on behalf of the company and, for accepted risks, the policy waiting period and effective date of coverage.


Reauthorized Certificate

The Residential Basement Floodproofing Certificate (FEMA Form 81-78) has been reauthorized. This certificate may be used in approved communities through June 2010. The certificate and instructions for its use are in the Special Certifications section (pages CERT 3-8) of the manual.


Canceling and Rewriting Policies

Reason Codes 22 and 24 in the Cancellation/Nullification section of the manual now specify that a canceled and rewritten policy must be rewritten with the same WYO Company.


Nonrenewal and Cancellation

When an NFIP policy approaches its expiration date, WYO Companies and the NFIP Servicing Agent mail a Renewal Notice to the policyholder, the agent, and any mortgagee listed on the policy. However, there are exceptions to this procedure:
  • Building in the course of construction
  • Tentatively rated policy
  • Suspended community
  • Provisional rating
  • Group Flood Insurance Policy
  • Preferred Risk Policy ineligibility
  • Section 1316 property
Since policies in those categories are either ineligible for renewal or, if eligible, require additional underwriting information, Renewal Notices are not generated for them. The problem has been that mortgagees had no way of knowing when flood insurance on a property securing a loan was going to expire.

The Mortgage Clause of the Standard Flood Insurance Policy (SFIP) states, "If we decide to cancel or not renew this policy, it will continue in effect for the benefit of the mortgagee only for 30 days after we notify the mortgagee of the cancellation or nonrenewal." At the request of lender organizations, language has been added to the Policy Renewals section (REN 1) of the manual stating that within 5 days of the nonrenewal (or cancellation) of a policy, an appropriately worded expiration notice must be sent to any mortgagee listed on the policy, with copies to the agent and the policyholder.


Acceptable Documentation for Multi-Property LOMRs or LOMAs

Sometimes, a Letter of Map Amendment (LOMA) or Letter of Map Revision (LOMR) is issued for a group of properties removed from a Special Flood Hazard Area (SFHA) without listing the properties' street addresses, or listing only lot numbers, boundaries, intersections, or rural addresses. What documentation is required for canceling or endorsing a flood insurance policy affected by a multi-property LOMA or LOMR?

On May 31, 2007, in response to requests from WYO Companies and the NFIP Servicing Agent, FEMA clarified the documentation requirements in WYO Clearinghouse Bulletin W-07035. The bulletin stated the Agency continues to require all documentation listed in the Cancellation/Nullification section of the Flood Insurance Manual, or the Endorsement section, when the carrier retains a policy formerly in an SFHA and re-rates it as a Preferred Risk Policy or a standard-rated policy in Zone B, C, or X. For policies affected by a multi-property LOMA or LOMR, the bulletin listed the additional documentation required to prove a property is part of a particular LOMA or LOMR.



Finding Your LOMC

Did you know that most Letters of Map Change (LOMC) are posted on the FEMA Map Service Center (MSC) website? To look up LOMAs and LOMRs, visit the MSC, and under "More Information," click on "How do I find a LOMC?"


The list of additional documentation is now included in Reason Code 19 in the Cancellation/Nullification section of the manual. The revised text specifies that a copy of the LOMA or LOMR plus any of the following are required for a property when the specific building, street address, lot number, or rural address is not identified in the LOMA or LOMR.
  • A letter an insured received from their community official stating their structure was removed from the SFHA by a multi-property LOMR or LOMA.
  • A letter from the applicable community official, written on official letterhead, stating the building was included in the area removed from the SFHA by the multi-property LOMR or LOMA, which listed only boundaries/intersections of streets, lot numbers, or rural addresses.
  • In cases, and only in cases, where (1) a community official could not or would not provide a letter, or (2) the structure has a rural address, the following set of two documents may be submitted:
    • A copy of a legal notice, such as a real estate assessment notice or a water/sewer notice, which shows the lot number, street or rural address, or other legal designation of the location of the structure, and
    • A letter from the mortgage lender that (1) shows the lot number, street or rural address, or other legal designation of the location of the structure, and (2) states the structure was within the boundaries of the area removed from the SFHA by the LOMR or LOMA.
Letters from community officials must match the street address and lot number with a specific multi-property LOMR or LOMA, stating the individual building street address, lot number, or rural address (e.g., RR, Box #, Hwy) was included in the area covered by the LOMR or LOMA. The documentation listed above must be submitted with all other required documentation listed in the Flood Insurance Manual.

The NFIP Servicing Agent and the WYO Companies may accept zone determinations in lieu of the documentation cited above.

CRS Community List Update

The Community Rating System (CRS) rewards community floodplain management activities that exceed the minimum NFIP requirements by discounting flood insurance premiums in those communities to reflect the reduced flood risk. As communities engage in more activities that earn CRS credit, they improve their class standing and earn residents greater discounts on NFIP premiums. Between October 1, 2006, and September 30, 2007, 29 communities joined the CRS and 48 communities already participating improved their class ratings.

The list of eligible communities has been updated in the CRS section of the manual.

Distribution of New Communities
Class Insurance
Premium Discount		 New Communities
9 5% 6
8 10% 20
7 15% 3


Of the 48 CRS communities that improved their class ratings, 16 communities moved from Class 9 to Class 8 (a 10-percent premium discount); 20 communities moved from Class 8 to Class 7 (a 15-percent premium discount); 6 communities moved from Class 7 to Class 6 (a 20-percent premium discount); and 4 communities moved from a Class 6 to a Class 5 (a 25-percent premium discount). King County, Washington, moved from Class 3 to Class 2, earning residents a 40-percent discount on their annual flood insurance premiums.

Sometimes communities engage in so many new creditable CRS activities that they jump more than one class. The City of Anna Maria, Florida, jumped from Class 7 to Class 5. This class improvement earned residents a new premium discount of 25-percent.

For more information about the Community Rating System, visit the CRS Resource Center.


Building Replacement Cost Value and Number of Units

Separate explanations of replacement cost provisions and coinsurance provisions have been made on page CONDO 7 of the Condominiums section of the Flood Insurance Manual.

On April 18, a related change was announced in WYO Clearinghouse Bulletin W-07027 in response to requests from members of the lending community and their Federal regulators to help them better assess the adequacy of residential condominium insurance limits purchased by borrowers. No later than October 1, 2007, the Declarations page of each Residential Condominium Building Association Policy issued or renewed must state the building replacement cost value and the number of units within that building.
 Last updated on October 1, 2007