FEMA Updates Its Flood Insurance Rating Methodology to Deliver More Equitable Pricing

FEMA is updating the National Flood Insurance Program‘s (NFIP) risk rating methodology through the implementation of a new pricing methodology called Risk Rating 2.0. The methodology leverages industry best practices and cutting-edge technology to enable FEMA to deliver rates that are actuarily sound, equitable, easier to understand and better reflect a property’s flood risk. (Read the press release: FEMA Updates Its Flood Insurance Rating Methodology to Deliver More Equitable Pricing)

FEMA is conscious of the far-reaching economic impacts COVID-19 has had on the nation and existing policyholders and is taking a phased approach to rolling out the new rates.

Beginning Aug. 1, current National Flood Insurance Program policyholders can contact their insurance company or insurance agent to learn more about what Risk Rating 2.0-Equity in Action means to them.

Phase I

New policies beginning Oct. 1, 2021, will be subject to the new rating methodology. Also beginning Oct. 1, existing policyholders eligible for renewal will be able to take advantage of immediate decreases in their premiums.

Phase II

All remaining policies renewing on or after April 1, 2022, will be subject to the new rating methodology.

Graphic displaying Risk Rating 2.0 National Rate

In addition to FEMA’s new methodology, discounts to policyholders in communities who participate in the Community Rating System (CRS) will continue. Communities will continue to earn National Flood Insurance Program rate discounts of 5% – 45% based on the Community Rating System classification. However, since Risk Rating 2.0 does not use flood zones to determine flood risk, the discount will be uniformly applied to all policies throughout the participating community, regardless of whether the structure is inside or outside of the Special Flood Hazard Area.

In Duck, the CRS score has been improved, resulting in a 20% discount for flood insurance policies effective October 1, 2021. We encourage you to check with your insurance agent to confirm that you are receiving the appropriate discount. If you do not have flood insurance, don’t risk it – insure it. It’s the smart choice.