When FEMA announced the transformation of the National Flood Insurance Program (NFIP) with updated and modernized rating dubbed Risk Rating 2.0, questions and concerns were raised from various industries such as insurance agents and real estate professionals.  As FEMA begins to release details around Risk Rating 2.0, it’s clear that the NFIP transformation will not just impact insurance rating, it will impact the entire flood industry.  From private flood insurance companies to floodplain managers, each stakeholder will be influenced by Risk Rating 2.0’s implementation. FEMA has branded Risk Rating 2.0 as “Equity in Action” since the coming changes will make the NFIP rates more fair and easier to understand.  Equity in Action replaces the current binary “in versus out” of a high-risk flood zone pricing methodology.  Rather, it uses “graduated” rating, which is a pricing methodology based on factors such as distance to water, types of flood exposure, and other advanced elements.  Equity in Action will also bring more equity to NFIP policyholders by basing rates off of the building’s replacement cost.  The higher the building’s replacement cost, the more expensive the premium, and vice versa.  In April, FEMA issued a press release on Equity in Action and state fact […]

Breaking updates on Risk Rating 2.0 On April 1st, the Federal Emergency Management Agency (FEMA) released its first official communication on the long-awaited overhaul of the National Flood Insurance Program (NFIP)’s rating system. The new pricing methodology, known as Risk Rating 2.0, uses new modeling and updated data to assess more accurately flood risk of individual properties nationwide. Phase 1 of the new program begins on October 1, 2021. In its announcement, FEMA shared a state-by-state breakdown of Risk Rating 2.0’s impact on flood insurance premiums  The MCC has posted the Massachusetts data HERE. Data for other states can be found HERE. The Data According to FEMA, Massachusetts NFIP flood insurance policy holders can expect the following changes:–39% will see an immediate decrease in flood insurance premiums–49% will see, on average, $0-$10 per month increase–6%will see, on average, $10-$20 per month increase–6% will see, on average, greater than $20 per month increase   The FEMA bulletin, found HERE, outlines the coming timeline for changes as follows: –April-September 2021: FEMA collaborates with and continues to periodically share draft guidance documents with NFIP insurers regarding RR 2.0 program changes.  –August 1, 2021: NFIP insurers may begin quoting for policies with effective dates on or after October 1, 2021.  –September 1, 2021:FEMA releases final guidance documents for […]