What is Severe Repetitive Loss (SRL)?
In this article, we are going to be talking about Severe Repetitive Loss (SRL) properties. If you have made it here, chances are that your property is in the SRL program, or your client is, and for that, we are sorry as this journey is not for the faint of heart.
We will start by explaining what a SRL is. By the terms of the National Flood Insurance Program (NFIP
) the definition of SRL is:
The SRL group consists of any NFIP-insured residential property that has met at least 1 of the following paid flood loss criteria since 1978, regardless of ownership:
- 4 or more separate claim payments of more than $5,000 each (including building and contents payments); or
- 2 or more separate claim payments (building payments only) where the total of the payments exceeds the current value of the property.
In both situations listed above, 2 of the claim payments had to have been within 10 years of each other beginning in the year 1978 and forward. Once a property experiences either of the scenarios listed above, its policy will renew into the Servicing Agent’s Special Direct Facility (SDF) so that it can be monitored by the NFIP who will make any mitigation decisions accordingly. Note that this program can result in a higher premium, not to mention that the SDF isn’t quite as easy to navigate as other flood insurance solutions.
Do you believe that your (or your customer’s) property doesn’t belong in the SRL program? There is a way to dispute it with the NFIP. If you have proof that a property has not sustained the losses reported, you may present it in writing to the NFIP Bureau. For guidance on the dispute resolution procedure, please refer back to the NFIP
It is also worth mentioning that there is a SRL Grant program which makes funds available for a variety of flood mitigation activities. These funds can help pay for the following:
- Acquisition or relocation of at-risk structures and conversion of the property to open space;
- Elevation of existing structures; or
- Dry floodproofing of historic properties
These grants are offered through state and local governments, if you are interested in learning more about these grants in your area, your local government is a good place to start. Something important to note, is that while these grants are voluntary, if a SRL policyholder refuses an offer of mitigation they will be subject to an increase in their flood insurance premium rate equal to 150% of the chargeable rate for the property at the time the offer was made.
This information is intended only as a summary. For more information on the SRL program, please refer to the NFIP as they hold the keys to this sometimes complicated lock.