FEMA Risk Rate 2.0
FEMA is updating the
Nation Flood Insurance Program's (NFIP) risk rating methodology through the implementation of a new pricing methodology called Risk Rating 2.0.
For more info. direct from FEMA:
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.
All remaining policies renewing on or after April 1, 2022, will be subject to the new rating methodology.
Some changes and why:
Why the changes?
The rating system has not been updated or changed since the 1970s.
FEMA has developed a more actuarially sound way of rating to reflect each structure’s individual risks, rather than grouping risk types.
Technology and actuarial information have evolved to allow for better understanding of a structure’s risk.
Zones and Base Flood Elevations
FEMA will not use Zones or BFEs to determine rates.
You can still use an Elevation Certificate but is not required. FEMA will determine the first-floor height which we would normally get from the Elevation Certificate.
The first-floor height will be compared to the ground/LAG (lowest adjacent
grade) instead of BFE (base flood elevation.)
Zones still exist and still determine if a lender will require flood insurance (B,C,
X-lender will not be required to carry flood by a lender.)
Glide paths
Factors Influencing the New Rate:
Replacement costs
FEMA will determine the replacement cost of the dwelling.
Distance to shoreline and flooding type
-Near river
-Coastal flooding (storm surge)
-Great lakes flooding
-Dam or levee failure
Prior claims
-Severe repetitive loss
-Prior flood losses will show on declarations page
-If there is a flood claim AFTER the new risk rating 2.0 is implemented you will see a claim variable occur on your policy