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Flood Insurance – FEMA's Risk Rating 2.0

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New Price Rating Structure – Equity in Action

FEMA is updating the NFIP’s Risk Rating through a new rating platform call Risk Rating 2.0. 

WHAT IS THE GOAL of the new platform?  

  • FEMA’s goal is to deliver rates that are equitable and better reflect a property’s flood risk.
  • Currently, policyholders with lower-valued homes may be paying more than their share of the risk, while policyholders with higher-valued homes could be paying less than their share. Risk Rating 2.0 will help to equitably distribute premiums across all policyholders based on home value and a property’s unique flood risk.

WHAT to expect with Risk Rating 2.0? 

  • All policies renewing on or after 4/1/22 will be subject to the new rating platform.
  • The insurance rates will now be calculated using multiple data points such as replacement cost, foundation type, square footage, and how close you live to the coastline or a body of water.
  • Some premiums will increase while others will decrease.
  • Expected premium changes by state can be found here on FEMA’s interactive map.
  • For those that will increase, the policies will be transitioned using statutory limits on increases capped at 18% annually until the full risk rate has been reached.

WHAT action do policyholders need to take? 

  • Your insurance agent should be verifying property details and ensuring accurate rating information prior to your renewal and relaying that information to the flood insurance carrier. If these details are not provided or are inaccurate, FEMA may apply defaults that represent the worst-case scenario.
  • If you receive your flood renewal notice and there is an increase, please contact your agent to verify accuracy and speak to them about alternative solutions to include options available through the private flood market.
  • The experts at Avery Insurance are available to help answer your questions and help you navigate Risk Rating 2.0.

Source: Avery Insurance: Reach out at 800-759-7579
or for more information.

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