The annual meeting of the Massachusetts Coastal Coalition is your chance to learn the latest about Recent Changes in Flood Insurance, including Risk Rating 2.0, coastal flood mitigation efforts in your community, and pending flood legislation. You’ll hear from top speakers on a variety of topics and have the opportunity to ask questions of the experts!
You’ll also have the opportunity to purchase from the many fine beverage offerings of our host, Stellwagen Beer Company.
There is no cost for attendance.
MCC Establishes Risk Rating 2.0 Webpage
Risk Rating 2.0, the National Flood Insurance Program’s (NFIP) rating methodology transformation, went live for all new flood insurance policies on October 1st. As part of Risk Rating 2.0, FEMA released state and zip code level premium change data, a revised flood insurance manual, and more. To consolidate all the most recent information, the MCC developed a Risk Rating 2.0 webpage on its website. This webpage can be found below, and is updated periodically as new Risk Rating 2.0 information becomes available. This page is a members only benefit.
October 3rd – 9th Proclaimed Flood Awareness Week in Massachusetts
The Governor, along with members of the Massachusetts Legislature, proclaimed the week of October 3rd – 9th, 2021 as Flood Awareness Week in Massachusetts.
The week kicked off with a press conference and announcement of events with elected and state officials and others at the Harbor Terrace of the New England Aquarium in Boston, which is itself the site of repetitive flooding in recent years. Thanks to collaborations with the Office of Representative Patrick Kearney (Scituate-D), state nonprofits, state agencies, and others, there were dozens of educational events and webinars for the entire week.
A list and recording of several of the events, and a home page for Flood Awareness Week in Massachusetts, can be found at www.floodawareness.org.
To be involved in planning of next years event, reach out to the MCC at info@floodawareness.org
Have you listened to our Podcast recently? The MCC produces a podcast called the Know Flood Newscast. We take relevant topics in the news and from our newsletter and discuss them with national and local experts. Here are some recent podcasts:
-Know Flood Newscast Episode 14 – Rod Scott: With the release of Risk Rating 2.0, it’s clear that home elevation will become the key to successful mitigation and flood insurance premium reduction. No expert in the country advocates as hard as Rod Scott to ensure mitigation strategies are implemented and funded nationwide. Rod is the co-founder of the Flood Mitigation Industry Association (FMIA), and overall advocate for the mitigation and elevation of flood prone buildings. Rod talks to us about his extensive experience in the field of flood mitigation, and how he has taken the lessons learned from his hometown in Mandeville, Louisiana, (where 85% of the buildings are elevated) and worked to apply them nationally. Listen as Tim and Joe talk to Rod about how we can educate our local officials, and Congress, to fund home elevation projects in our communities.
In August, FEMA released rates for the highly anticipated National Flood Insurance Program (NFIP) rating redesign Risk Rating 2.0, also called “Equity in Action”. Equity in Action’s more nuanced approach will no longer be based on flood zones or base flood elevation and instead employ a “graduated” rating system, evaluating factors such as distance to water, types of flood exposure, replacement cost, and other advanced elements. As FEMA launches the new rates, the highly anticipated roll-out pulls back the curtain on Equity In Action’s real world implications. For insureds, the new pricing methodology will result in premium increases for some, while others will see their premiums decrease. Considering the wide range of impacts resulting from the rating methodology change, FEMA, floodplain managers, agents and politicians must deliver clear and carefully crafted messaging to stakeholders so that Equity In Action’s promise of equity and fairness can be realized for everyone.
In a recent sample of about fifty residential locations in New England, the average premium decrease under Equity In Action was about 28% against the “legacy” premiums, equaling about $887. These decreases take place immediately for the insured. Premium gainers saw an average increase of 47% over their legacy rates, or about $1,851. Increases are phased in over time. The Equity In Action messaging campaign needs to broadly educate policyholders and stakeholders alike, not just those whose premiums will increase. While few would complain about a lower policy cost, neighbors will inevitably compare notes. A property owner might ask a community official why a premium is going up (or down) for a certain building or type of building. Coordinated messaging around premium changes will educate insureds on the science-based pricing methodology used for the first time to determine their property’s unique and true flood risk.
Guest Story: Wright Flood Expands to Massachusetts with admitted private flood insurance product.
Product Underwritten by Zurich Insurance now available
Wright National Flood Insurance Services LLC and Zurich Insurance have launched an admitted, residential flood proprietary product – Zurich Residential Private Flood Insurance – in Massachusetts.
The first-of-a-kind, stand-alone product opened Sept. 21, 2021. It has previously been launched in Florida, New Jersey, South Carolina, Virginia and California, with anticipated plans to expand to additional states.
Zurich Residential Private Flood Insurance can be purchased to help protect homes against the risk of Massachusetts flooding since most property policies don’t cover the peril of flood. It will be sold exclusively by Wright’s partner agents, and it is one of the first flood products that is filed and approved by the Massachusetts Department of Insurance that also has the financial security of Zurich’s AM Best A+ (Superior) XV rating.
Thanks to its use of advanced technology, risk selection and model-based rating methods, the Zurich Residential Private Flood Insurance Program can pinpoint risk locations house by house and thereby deliver a uniquely flexible coverage offering down to each individual address. Other key features of this stand-alone flood insurance product include:
Admitted and approved by the state’s Department of Insurance
Quoted in less than 2 minutes, bound in less than 5.
No waiting period
No elevation certificate required
Higher dwelling limits (up to $1 million)
Single deductible
Automatic replacement cost on both dwelling and personal property
Loss of Use, Other Structures, and Building Ordinance coverage
Optional Resiliency coverage (rebuilding with flood-resistant materials to decrease the impact of future floods)
“Our mission is focused on expanding the flood insurance marketplace with the addition of innovative private flood offerings that are as unique as the homes they were created to cover,” said James R. Watje, senior vice president of private flood at Wright National Flood Insurance Services. “We are happy to provide Massachusetts property owners with the flexibility to customize their flood insurance policy to their specific coverage needs.
“Our Residential Private Flood Insurance product is designed with the flexibility to customize flood protection to the individual needs of each Massachusetts property owner,” Watje said. “Many homeowners policies don’t cover flooding. Considering that 98 percent of counties in the US have been impacted by flooding events, it’s vitally important to be prepared.”
Greg Massey, Zurich North America’s head of programs, points out that this program provides multiple choices for homeowners and is simple to understand.
“With changing weather patterns and growing storm intensity across the country, the vast majority of homes are potentially at risk and most property owners need to consider the protection provided by flood insurance,” Massey said. “This innovative product offering expands coverage choices and helps bring simplicity to this area of the flood insurance marketplace.”
To learn more about private flood insurance, find a Wright agent, or to become a Wright partner agency, please visit www.wrightflood.com.
Sue’s Flood Real Estate Tips
The right policy for the right situation
I have a client that lives in the Satuit Trail neighborhood, off route 3A in Scituate. She has owned the home for 28yrs, mortgage is paid off. She has an equity set up in order to be a cash buyer when she downsizes. This allows her to write an aggressive offer with no home sale contingency. She can buy the smaller house and sell her existing home after. As long as she does not access her equity line she has no payment. The money just sits collecting interest.
She was recently informed that she must obtain flood insurance. The quote from her insurer is $1,500-$1,800 annually. For any reduction to the cost of the policy she would need to obtain an elevation certificate, $1,000-$1,500. If she wants a LOMA filed on her behalf, it will be an additional cost of $1,000.
The lot is over an acre of land with a portion of it abutting Tack Factory Pond. The pond is truly quite a distance from the house. At its highest point, with excessive rainfall, the pond dose not rise to a level that floods the lot. Even with the water table abutting a portion of the lot, they have never even experienced water in the basement. This property should not be in the flood plain. If that house is overrun with water from the “pond” we are all in trouble!
This is a very frustrating situation, especially for a person entering retirement. Thousands of dollars must suddenly be spent for a problem that does not exist. This is flood failure. This is the real frustration homeowners experience daily. A reason many homeowners are turning to private policies or opting for no coverage once the mortgage is paid off.
Thankfully she reached out to me! I referred her to a local flood expert that recommended a small private policy to satisfy the bank at an annual cost of $500. No elevation cert, no LOMA, just common sense.”
FEMA begins implementation of Risk Rating 2.0
Risk Rating 2.0 has begun implementation as of October 1st this year for all newly written NFIP flood insurance policies only.
Insurance agents can now compare your flood insurance rate from what it is currently, to what it will be in Risk Rating 2.0. Based on the premium, the following scenarios are possible:
Existing policies renewing with effective dates between October 1, 2021 and March 31, 2022 can renew under the “legacy” rating plan or renew their policy under RR 2.0, whichever is more beneficial
All existing policies with renewal dates on or after April 1, 2022 will be renewed under RR 2.0. If your premium is not beneficial under Risk Rating 2.0, then you will increase each year to the new rate, from your existing rate (no steep premium increases)
All new business policies effective on or after October 1st 2021 must be issued under RR 2.0.
NOTE: All renewal notices sent to insureds between October 1st and March 31st will be based on “legacy” rates. With the new rating system, your insurance agent is your best resource because all rates are unique to your structures specific characteristics. To find out what your Risk Rating 2.0 rate will be, contact your agent.
Concerns, Comments, And Observations
The MCC has been spending a lot of time working to understand trends, benefits and concerns in Risk Rating 2.0. We have found the following:
For agents, for the most part the new process to quote a policy is easier
FEMA determines your first floor elevation for each quote. The MCC is finding that more often than not, an elevation certificate is more accurate and helps your rate.
There are rating anomalies, such as significant premium swings in both directions, that the MCC cant explain.
More premiums appear to be going down vs up
The MCC will continue to monitor Risk Rating 2.0 which begins full implementation for new and renewal business April 1st 2022. Please read this editions Coastal Connection article and visit the MCC Risk Rating 2.0 webpage HERE to see all the latest information.
FEMA Releases RR 2.0 Quick Start Guide for Agents
This Simple Guide gives agents easy access to Risk Rating 2.0: Equity in Action information needed when completing an NFIP flood insurance application, ensuring the process is easy and accurate. It was designed to help make the flood sale complete and as exact as possible.
The Simple Guide includes rating variable portions of the application, with high-level information and references to locate each section in the NFIP Flood Insurance Manual (FIM).
TB 9, Design and Construction Guidance for Breakaway Walls, is the eighth Technical Bulletin update since 2018 and adds guidance to improve building safety in coastal high hazard areas. The Technical Bulletins serve as flood hazard-resistant construction guides to ensure building safety during flood events and minimize the impact of damage.
Technical Bulletin 9 provides guidance on NFIP requirements for the design and construction of breakaway walls that are used to create enclosures below the lowest floor of elevated structures in Coastal High Hazard Areas.
The major updates in Technical Bulletin 9 include:
Updated prescriptive, simplified and performance-based design methods for breakaway walls.
Updated terminology (ultimate load versus allowable load) to align with the current state-of-the-practice in wind design based on American Society of Civil Engineers 7, Minimum Design Loads for Buildings and Other Structures, while still maintaining consistency with 44 CFR 60.3(e)(5).
Expanded guidance on partial height breakaway walls.
Technical Bulletin 9 also discusses NFIP regulations and how, in addition to complying with NFIP requirements, all new construction, substantial improvements, and repair of substantial damage must comply with applicable building codes and standards that states and communities have adopted.
In August, FEMA released Risk Rating 2.0. Our Coastal Connection in this newsletter gives a really good first take on what we are seeing so far. What you may not see in the article is how hard the MCC has worked to address some of the issues that have come up in the first few months of Risk Rating 2.0 implementation. From complicated underwriting scenarios to administrative challenges, Risk Rating 2.0 has consumed the MCC in a good way. We want to make sure you are constantly served by our advocacy. But in doing that, our resources were stretched thin. Additionally, there was a lot of information for us to consume in a short amount of time. That is why we combined the newsletter from Q3 and Q4, along with some other end of year changes. We appreciate our members and are always trying to deliver relevant and important information to our membership. We also work hard to make sure your voice is heard on issue that affect you. We look forward to opening 2022 with updated information about our future, and more information about Risk Rating 2.0.
Joe Rossi
Chair and Executive Director
Massachusetts Coastal Coalition
