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FEMA Outlines Changes to Flood Risk Rating

by Kim Shindle on

The National Association of Realtors® continues to advocate for reauthorization of the National Flood Insurance Program, which is set to expire Nov. 21.

David Maurstad, deputy associate administrator for the Federal Emergency Management Agency, spoke to Realtors® about the NFIP during NAR’s convention in San Francisco.

Maurstad said the agency is working to transform the NFIP, which currently issues 5 million policies in 22,000 communities. “We’re working to build a culture of preparedness, reduce disaster suffering and reform rating system for flood risk.

Risk Rating 2.0 would deliver fair rates that better reflect a property’s unique flood risk,” he added. The current rating system has not changed since the 1970s.

The new system will use state-of-the-art industry technology with the NFIP’s mapping data to establish a new risk-informed rating plan to provide better and more comprehensive understanding of risk at the national and local levels. The new risk rating plan will use easy to understand rating characteristics for each property such as: distance to the coast or another flooding source, different types of flood risk and cost to rebuild a home. By reflecting the cost to rebuild, the new rating plan is expected to give fairer rates for owners of lower-value homes.

FEMA sees Risk Rating 2.0 as beneficial to policyholders, communities and the insurance industry.  It will reduce the complexity for agents to generate a quote and provide rates that are easier to understand. New rates for all single-family homes will go into effect nationwide on Oct. 1, 2020.

Maurstad said communities with levy systems are more challenging to implement the new rating and changes to multifamily building rates are expected to take effect Oct. 1, 2021.

“It’s important for FEMA to get this right,” Maurstad added. “Risk Rating 2.0 will drive better decisions about when to insure properties.”


FEMA National Flood Insurance Program NFIP
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Arch Autenreith

Thanks for the article, Kim. I’m about to list 3 properties for a local municipal township that are in a flood zone so this is helpful.
The site now has this note:
‘While the agency initially announced that new rates for all single-family homes would go into effect nationwide on October 1, 2020, some additional time is required to conduct a comprehensive analysis of the proposed rating structure so as to protect policyholders and minimize any unintentional negative effects of the transition. Therefore, FEMA decided to defer the implementation of Risk Rating 2.0 by one year to October 1, 2021.‘
Thanks again for bringing this to our attention.
Arch Autenreith