![]() “Since 77% of NFIP policies will be increasing due to Risk Rating 2.0, agents should quote private flood at the same time now and in the future." Communication About Risk Simplified 1, 2021, and April 1, 2022, agents should expect a high volume of policyholders requesting a quote to see their new rate," says Jim Albert, chairman and co-founder of Neptune Flood Insurance. “With the NFIP splitting the initiation of new rating between Oct. Now, flood insurance is a mainstream conversation. Real estate agents are asking for tools to understand flood risk and having discussions with their clients about the flood risk of properties. Insureds are calling agents everywhere, asking what could happen to their house if flooded and if they should buy a flood insurance policy. 60% of Pre-Flood Insurance Rate Map structures will see a premium reduction when the new rates become effective.īut within all of these discussions lies a bigger story: For the first time, those who never heard of or cared about flood risk began to talk about the topic.23% of NFIP policyholders will see a premium decrease.63% of policyholders will see premium increases of $0 to $100 a year.11% of NFIP policyholders will see a premium increase of over $120 per year.Conversations and a media storm followed the release of that report.Ī month later, FEMA's press release on Equity in Action and state fact sheets showing accurate rate changes were widely circulated: ![]() The higher the replacement cost, the more expensive the premium could be, and vice versa.īefore FEMA released details of Equity in Action, there were numerous reports that rates could increase by thousands of dollars a year for NFIP policyholders, such as the First Street Foundation's estimation that the rates could be 4.5 times higher than they are today. Equity in Action replaces the binary “in versus out" of flood zone pricing methodology and replaces it with “graduated" rating, which determines premiums based on factors such as distance to water types of flood exposure, such as coastal erosion, riverine and ocean and other advanced elements.Įquity in Action will also bring more equity to policyholders within the NFIP by partly basing rates on a building's replacement cost. Equity in Action will revolutionize the way the NFIP rates are structured, making the process fairer and easier to understand for those looking to purchase federal flood insurance. ![]() Surge in InterestįEMA has branded Risk Rating 2.0 as “Equity in Action"-and it's easy to see why. With better risk communication, different strategies around insurance rating, and solutions to past legislative concerns, the NFIP will be better positioned to close the massive flood insurance gap. Homeowners and real estate professionals raised concerns about premiums and flood insurance requirements.Īs FEMA begins to release details around Risk Rating 2.0 in 2021, it's clear that the NFIP transformation will not just impact insurance rating-it will impact the entire flood industry.įrom private flood insurance companies to floodplain managers, each stakeholder will be influenced by Risk Rating 2.0's implementation. Floodplain managers questioned how rating and mitigation would be linked. Insurance agents were concerned with the potential impact on their books of business. When FEMA announced the transformation of the National Flood Insurance Program (NFIP) with the updated and modernized rating program dubbed “Risk Rating 2.0," questions and concerns were raised from various industries.
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