A number of changes that took effect April 1 will impact the overall cost of many flood policies in the U.S.

As FEMA continues to implement portions of the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA), here’s what to keep an eye on when serving your flood insurance clients.

1) April 1 HFIAA changes. Expect to receive calls about the April 1 changes associated with HFIAA. “There’s going be some sticker shock for some folks when they see these new premiums,” says Bruce Bender, specialist in outreach and risk communication services and a national consultant for FEMA’s FloodSmart marketing campaign and FEMA’s Risk MAP effort. “Agents need to make sure they’re up to date on the latest changes because they have to be able to explain why these premiums are going up.”

That means understanding the increase in Reserve Fund, the implementation of surcharges and the new $10,000 deductible, says Cassie Masone, vice president of flood operations at Selective Insurance Company of America. “In regards to the new deductible option, they will want talk to their clients about the pros and cons,” she notes.

In particular, agents need to make sure their clients understand that separate deductibles apply to the building coverage and the contents coverage—so a client could be looking at a $20,000 deductible if they have a claim, Masone warns.

“Also, if their client has a mortgage, they should make sure the higher deductible will be acceptable to their lender,” she adds. “This may be a great way for some people to reduce their premium, but they need to understand the risks and make an informed decision.”

2) Remapping. “There’s a lot of remapping going on right now across the country,” says Amanda Ruppel, personal lines manager at Burns & Wilcox, Corp Headquarters. “Zone remapping understandably takes time to survey and implement—this has been going on for years and will continue. In addition to HFIAA changes, remapping and rates associated with these zones may also surprise consumers.”

For properties newly mapped into a high-risk area, the NFIP will allow a low-cost preferred risk rate for the first 12 months after the new map takes effect, Bender says. “So instead of going straight to using a Zone A rate, they can continue to use the Zone X preferred risk rate, and then it will increase 18% annually until it reaches the property’s equivalent full-risk rate,” he explains.

Although FEMA already established a similar solution called a “Preferred Risk Policy Eligibility Extension,” Congress has now formalized it into an official procedure and process, Bender says. “This newly mapped procedure financially helps those who are newly identified as being in high-risk areas,” he explains.

3) Community Rating System (CRS) credits. As premiums continue to increase in many parts of the country, CRS credits have become an increasingly popular route for keeping costs at bay. “Many towns, municipalities and different jurisdictions provide a credit for taking preventive measures beyond what you’re required to do,” explains J. Fletcher Willey, Jr., president of The Willey Agency, who has testified before committees of Congress several times about flood insurance.

Willey says in Nags Head, North Carolina, community members have a very active zoning officer and policyholders enjoy a 10% discount thanks to CRS activities. A 14-member committee staffed by realtors, emergency management people, community association members and more is working on increasing the discount to 20% through a variety of initiatives, including airing 20-minute instructional videos on a local TV station about how property owners can reduce their flood insurance exposures and costs. Topics will include knowing your flood hazards, map information and proper precautions to take before, during and after a flood.

In addition, local municipal building inspectors meet with repetitive loss property owners and help them with initiatives like installing flood vents in enclosures. “I had a client who was paying $2,014 a year, and by putting in vents at the ground floor enclosure, his new premium is $290,” Willey says. “Any time you have a ground floor enclosure in an AE zone, you need to look into the value of venting that area.”

4) Private market stagnation. While Congress has gently pushed FEMA toward helping the private market become more involved in the flood insurance program, “we have not seen an increase in the availability of private market products at this point in time,” Masone observes.

What might be slowing down private flood insurance market development? “There are some companies that have tried to carve out a niche based upon the reform legislation, but after HFIAA came out, one of those programs had to quickly change their rating structure,” Bender explains.

For example, “one of the programs came out with really competitive rates compared to how the pre-FIRM subsidies were really rocketing off after Biggert-Waters,” Bender says. “But when HFIAA came along and slowed that path down dramatically, suddenly those rates weren’t that cheap anymore. What it will really come down to is as long as the risks are not fully actuarial or full-risk rates, you’re not going to find the major players jumping in.”

5) Cross-sell opportunities. According to Bender, more than 90% of homes in the U.S. are located in moderate low-risk areas that could qualify for a cheaper flood policy.

“On the marketing and sales side, there’s a fabulous opportunity out there,” Bender says. “Even with a small surcharge of $25, a Preferred Risk Policy still is a bargain. I would strongly recommend agents look at what I call the low-hanging fruit. A lot of them have existing homeowners and BOP clients they could cross-sell easily.”

And agents should take care to secure coverage prior to high loss season in spring, when snow melt, hurricanes and droughts start to wreak havoc on property. “If the agent already has access to the account, this is a great way to round it out and avoid losing the account down the road to another agent,” Ruppel says, noting that offering excess flood is particularly valuable for high-value clientele, who are already more susceptible to other agents trying to move the account. “And if they don’t have access to the account, this could also be a good way to lead into getting all the other lines.”

“This is where the independent agent can really make a difference and add value to the coverage provided to their clients,” Masone agrees. “Our best advice for agents to become more successful in flood insurance in 2015 is to make sure they are offering flood on every account. For those clients that are not interested in purchasing flood insurance, the use of a basic rejection form will help cover the agent’s E&O.”

Jacquelyn Connelly is IA senior editor.