Write-Your-Own insurance companies will be helping the FederalEmergency Management Agency provide refunds to National FloodInsurance Program customers whose rate hikes were reversed orreduced under March legislation rolling back the 2012Biggert-Waters Act.

The Biggerts-Waters Act had imposed actuarial rates on all NFIPpremiums. 

WYO companies will be doing so even though the March legislationmandated that FEMA deal directly with the issue, according to DonGriffin, vice president of personal lines at the Property CasualtyInsurers Association of America and chairman of the WYO Coalition,which represents insurers who help administer the NFIP. More thanhalf of WYO companies are PCI members. 

"FEMA was supposed to deal with this under the bill, but,practically, the WYO companies will be issuing the refunds onceFEMA gives them the information," Griffin says.

"Companies have to know what they will be refunding, using therates and the process FEMA wants used to do this, but WYO companiesare cooperating," Griffin says.

He notes there are "a lot of problems and details with thisissue," adding, "WYOs will be working with FEMA closely, asmandated by the legislation."

Griffin's comments came in response to a memo to WYO companiesissued May 29 by David L. Miller, FEMA associate administrator. Thememo was needed to ensure WYO companies make the number of changesmandated by the March legislation.

Griffin says WYO companies have had to revise their softwarethree times to deal with the revisions to the 2012 law,including:

• Reinstating subsidies provided to NFIP customers prior toBiggert-Waters.
• Putting the revised rates in place according to the memo
• Processing the refunds.

Griffin says the bills for the rates that will beeffective Oct. 1and will start to go out Aug.1.

The March legislation reduced the cap on rate increases from theprior 20% to 5%-to-15% on a "class" basis. However, no individual'spremiums can rise more than 18% annually under the new law.

Griffin says the March law did not change the 25% increaseimposed by the 2012 law on second homes, businesses, severerepetitive properties or on properties where cumulative losses haveexceeded the market value of the home.

He says the May 29 memo gives WYO companies "about six weeks toget these things tested so they work right."

The May 29 memo does not address refunds. Griffin says anotherbulletin to be issued by July 1 will do so. "Thegoal is to have repayments in the hands of customers by the end ofthe year," says Griffin.

He says WYO insurers will not be reimbursed for making therefunds to customers, but they will be allowed to keep some of thefees they have already been paid, fees based on the higherrates.

However, Griffin notes, "These additional fees will not mitigatethe substantial costs WYO companies will be absorbing by having torewrite the software so soon after rewriting the software to complywith the original 2012 bill."