[Federal Register Volume 60, Number 50 (Wednesday, March 15, 1995)]
[Proposed Rules]
[Pages 13945-13947]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-6361]
=======================================================================
-----------------------------------------------------------------------
FEDERAL EMERGENCY MANAGEMENT AGENCY
44 CFR Parts 61 and 206
RIN 3067-AC35
National Flood Insurance Program; Group Flood Insurance Policy
for Individual and Family Grant Program
AGENCY: Federal Emergency Management Agency (FEMA).
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This proposed rule would establish a Group Flood Insurance
Policy (GFIP) and the criteria for its implementation by the National
Flood Insurance Program (NFIP) when Federal disaster assistance is
provided under the Individual and Family Grant Program after the
President makes a disaster declaration.
EFFECTIVE DATE: We invite your comments which will be accepted until
May 1, 1995.
ADDRESSES: Please send 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, (202)
646-3422, (facsimile) (202) 646-3445; or Laurence W. Zensinger in
FEMA's Response and Recovery Directorate, (202) 646-3642, (facsimile)
(202) 646-2730.
.SUPPLEMENTARY INFORMATION: Section 411, Individual and Family Grant
(IFG) Programs the Stafford Act (42 U.S.C. Sec. 5178) authorizes the
President to make grants to States for the purpose of making grants to
individuals or families adversely affected by a major disaster. This
disaster assistance is provided to eligible individuals or families who
are unable to meet disaster-related necessary expenses or serious needs
through insurance or other means of assistance. The maximum grant
amount provided under the State-administered IFG program is $12,600 in
Fiscal Year 1995, and is adjusted annually as the Consumer Price Index
for All Urban Consumers changes.
In past presidentially declared major disasters, IFG recipients
were required to purchase and maintain ``adequate flood insurance'' if
they had flood damage and were in a special flood hazard area of a
community in which the sale of flood insurance was available under the
NFIP. According to the regulations published to carry out the purposes
of Sec. 411(a), ``adequate flood insurance'' is defined as a flood
insurance policy that provides coverage at least for the grant award,
for which the maximum in Fiscal Year 1995 is $12,600. A homeowner is
able to apply that amount to building or contents damage, or to both
kinds of damage, whereas a renter can apply up to $12,600 solely for
damage to contents.
Our experience has shown that many IFG recipients historically have
not used the part of the grant award that was provided to them to
purchase the required flood insurance for that intended purpose. These
individuals [[Page 13946]] frequently have been unable to obtain
adequate assistance from other means and have endured hardship as a
result of the disaster. Often they have such low incomes that they
cannot afford to repay a loan, even if the interest rate is as low as
four percent and the repayment schedule is spread over a number of
years. Therefore, FEMA developed an NFIP Group Flood Insurance Policy
(GFIP) for IFG homeowners or renters who experience flood damage, in an
effort to assist these individuals to protect themselves from future
flood losses and to comply with the purchase and maintenance
requirements of the IFG program. By using the GFIP concept, FEMA can
achieve significant administrative savings and can offer a premium rate
for the 3-year GFIP that is approximately $50 more than the 1-year
premium for a conventional Standard Flood Insurance Policy for a
property with the insurance-rating characteristics that most of the
properties that are anticipated to be covered under the GFIP have.
On September 23, 1994, while FEMA was in the process of preparing
regulations to implement the GFIP, the President signed Public Law 103-
325, the Riegle Community Development and Regulatory Improvement Act of
1994. Title V of Pub. L. 103-325 reformed major portions of the
National Flood Insurance Act of 1968, and is cited as the National
Flood Insurance Reform Act of 1994 (NFIRA). Section 582 of Pub. L. 103-
325 states:
``No Federal disaster relief assistance made available in a flood
disaster area may be used to make a payment * * * to a person for
repair, replacement, or restoration for damage to any personal,
residential, or commercial property if that person at any time has
received flood disaster assistance that was conditional on the person
first having obtained flood insurance under applicable Federal law and
subsequently having failed to obtain and maintain flood insurance as
required under applicable Federal law on such property.''
We interpret this section as a requirement in flood disasters for
each grantee who receives Federal disaster assistance for flood damage
to property located in a special flood hazard area and who is required
to purchase flood insurance (or had insurance purchased for them) to
maintain at least a minimum amount of flood insurance on the property
forever, or until they move to another address. If flood insurance is
not maintained, then no Stafford Act assistance may be provided for IFG
under sec. 411(a) for real or personal property in any subsequent flood
disasters. This maintenance provision also applies to individuals who
bought, or otherwise had transferred to them, any real estate for which
the flood insurance maintenance requirement was previously levied.
To enable States to provide affordable policies to IFG recipients,
FEMA proposes to limit IFG assistance to individuals and families with
$200 or more of real or personal property damage or loss. Assisting
individuals with damage of less than $200 is not cost-effective.
For individuals who qualify for IFG assistance, FEMA proposes that
a fixed premium amount, initially in the amount of $200, will be added
to the IFG awards (subject to the current grant maximum) to cover the
cost of the grantee's flood insurance coverage for the first 3 years.
If the grantee has disaster needs that meet or exceed the maximum grant
amount, this fixed premium amount shall be withheld from the grant and
provided to the NFIP to pay the premium, thus ensuring the grantee is
provided with a policy. The policy coverage will be equivalent to the
maximum IFG grant amount each fiscal year. This amount is $12,600 in
Fiscal Year 1995 as mentioned earlier.
The State IFG program staff would provide the NFIP with records of
the individuals to be insured. The records, which the State would
provide NFIP on a weekly basis, would be accompanied by payments to
cover the premium amounts for each grantee/policyholder for the 3-year
policy term. The NFIP would then issue a Certificate of Flood Insurance
to each insured. During the 3-year term of the coverage, the amount(s)
of coverage listed in the Certificate of Flood Insurance would be
adjusted annually on October 1 to reflect changes in the Consumer Price
Index for All Urban Consumers.
Approximately 60 days before the end of the 3-year term of the
GFIP, the NFIP would notify the IFG grantee/policy- holder of the
procedures to follow for applying for a new flood insurance policy and
of the amount of coverage that the IFG grantee/policyholder must obtain
in order to comply with the flood insurance maintenance requirements
established under the NFIRA. For purposes of complying with the
maintenance requirement, a ``minimal amount of flood insurance'' means
an amount equal to the IFG program's maximum grant amount in effect at
the time the new policy is obtained. Further, at the time of each
subsequent renewal, the notification concerning the amount of coverage
that must be maintained would be revised to reflect the IFG program's
maximum grant amount then in effect.
NFIP's Standard Flood Insurance Policy (which would be made
available to grantees upon request) specifies a number of restrictions
and limitations. While most exclusions pertain only to certain items in
the building, some of the exclusions mean that there is no coverage at
all for the building or the contents in the building. The coverage
exclusions would be specified in the Addendum that would accompany the
Certificate of Flood Insurance, which the NFIP would send to each IFG
grantee/policyholder. If a Certificate of Flood Insurance is issued for
a grantee whose property is ineligible for GFIP coverage, the NFIP,
upon discovery of such ineligibility, would notify the grantee that the
Certificate is rescinded and then refund the full premium costs to the
President's Fund. The State's 25% share would then be forwarded to the
State. The State would then return the $200 only to those grantees who
received maximum grant awards and had their premium costs deducted from
those awards.
NFIRA requires a 30-day waiting period, with two specific
exceptions, before flood insurance coverage becomes effective under the
Standard Flood Insurance Policy. Neither exception applies to the GFIP.
Therefore, to comply with the NFIRA, GFIP coverage would become
effective on the 30th day following the date that the records and
premium payment are received by the NFIP from the State.
National Environmental Policy Act
This 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 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 rule has not been reviewed by the Office of Management
and Budget under E.O. 12866.
Paperwork Reduction Act
FEMA requests that commenters address their concerns about any
additional paperwork or recordkeeping reporting burden this proposed
rule may place upon them. Comments on paperwork or recordkeeping issues
including burden estimates (i.e., the time it would take a State to
research [[Page 13947]] and compile the information and send premium
payments to the NFIP) may be addressed to the points of contact
identified in the ``For Further Information Contact'' section of this
proposed rule, and to Donald Arbuckle, Office of Management and Budget,
Office of Information and Regulatory Affairs, 3255 New Executive Office
Building, Washington, DC 20503.
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 Parts 61 and 206
Flood insurance; Disaster assistance.
Accordingly, 44 CFR Parts 61 and 206 are 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. Section 61.17 is added to read as follows:
Sec. 61.17 Group Flood Insurance Policy
(a) A Group Flood Insurance Policy (GFIP) is a policy covering all
individuals named by a State as recipients under Sec. 411 of the
Stafford Act (42 U.S.C. 5178) of an Individual and Family Grant program
award for flood damage as a result of a Presidential disaster
declaration. The premium for the GFIP, initially, is a flat fee of $200
per policyholder. The amount of coverage would be equivalent to the
maximum grant amount established under Sec. 411. Coverage under the
GFIP would become effective on the 30th day following the date the NFIP
receives the records and premium payments from the State.
(b) The GFIP is the Standard Flood Insurance Policy Dwelling Form
(a copy of which is included in Appendix A(1) of this part), except
that:
(1) The GFIP provides coverage for losses caused by land
subsidence, sewer backup, or seepage of water without regard to the
requirement in paragraph B.3. of Article 3 that the structure be
insured to 80 percent of its replacement cost or the maximum amount of
insurance available under the National Flood Insurance Program.
(2) Article 7--Deductibles does not apply to the GFIP. The
deductible is $200 (applicable separately to any building loss and any
contents loss) for insured flood damage losses sustained by the insured
property in the course of any subsequent flooding event during the
policy term. No deductible shall apply to Article 3 B.3.
(3) Article 9 E., Cancellation of Policy By You, does not apply to
the GFIP.
(4) Article 9 G., Policy Renewal, does not apply to the GFIP.
PART 206--FEDERAL DISASTER ASSISTANCE FOR DISASTERS DECLARED ON OR
AFTER NOVEMBER 23, 1988
3. The authority citation for Part 206 is amended to read as
follows:
Authority: The Robert T. Stafford Disaster Relief and Emergency
Assistance Act, 42 U.S.C. 5121 et seq.; 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.
Subpart E--Individual and Family Grant Programs
4. Section 206.131(d)(1)(iii)(C)(2) is revised to read as follows:
Sec. 206.131 Individual and Family Grant Programs.
* * * * *
(d) * * *
(1) * * *
(iii) * * *
(C) * * *
(2) The National Flood Insurance Program (NFIP) regulations, at 44
CFR 61.17, establish the Group Flood Insurance Policy (GFIP), which is
a policy that covers eligible individuals named by a State as
recipients under section 411 of the Stafford Act of an IFG program
award for flood damage as a result of a Presidential disaster
declaration.
(i) IFG assistance will be provided to individuals or families with
residential or personal property damage or losses of $200 or more.
Individuals with damage of $199 or less will not be eligible for IFG
assistance.
(ii) The premium for the GFIP is a necessary expense within the
meaning of this section. The State shall withhold this portion of the
IFG award and provide it to the NFIP on behalf of individuals and
families who are eligible for coverage. The coverage shall be
equivalent to the maximum grant amount established under Sec. 411(f) of
the Stafford Act.
(iii) The State IFG program staff would provide the NFIP with
records of individuals who received an IFG award and are, therefore, to
be insured. Grantees would not be covered if they are determined to be
ineligible for coverage based on a number of exclusions established by
the NFIP. Records of IFG grantees to be insured shall be accompanied by
payments to cover the premium amounts for each grantee for the 3-year
policy term. The NFIP will then issue a Certificate of Flood Insurance
to each grantee.
(iv) Once the grantee/policyholder receives the Certificate of
Flood Insurance, the grantee should review the list of the types of
buildings that are ineligible for coverage. If the damaged building and
its contents are ineligible, the grantee must notify the NFIP in
writing. The NFIP will then reimburse the State IFG program for the
premium, so the IFG program can issue a check for the premium amount to
the grantee when a premium amount was withheld from a maximum grant
award. (If the grantee wishes to refer to or review a Standard Flood
Insurance Policy, it will be made available by the NFIP upon request.)
(Catalog of Federal Domestic Assistance No. 83.100, ``Flood
Insurance''; No. 83.516, ``Disaster Assistance'').
Dated: February 24, 1995.
Elaine A. McReynolds,
Administrator, Federal Insurance Administration.
Richard W. Krimm,
Associate Director, Response and Recovery.
[FR Doc. 95-6361 Filed 3-14-95; 8:45 am]
BILLING CODE 6718-02-P