Flood Insurance Risk Rating 2.0

  1. FEMA is replacing an inaccurate rating system that has not been updated in half a century and is not sustainable for homeowners or taxpayers as it’s based on 50-year-old technologies and only two pieces of information about a property—in this case, flood zone and base elevation certificate. If FEMA did not make these changes, NFIP rates would continue to climb 18% to 25% per year until reaching the current top rate of $63,000 for a $250,000 home.
  2. Risk Rating 2.0 will reduce the top rate in the program from $63,000 to $12,000 per year. One million homeowners will see a significant rate decrease while the majority of other homeowners will pay a slight increase. Each home will be priced individually using modern industry technologies, a dozen flood risk variables, and property-specific characteristics including elevation, distance to water, and cost to rebuild. Low-value properties will no longer subsidize high-value properties, and elevation certificates are not required for an accurate rating.
  3. Because each property is now rated individually, only a licensed insurance agent will be able to tell your client whether their rate is going up or down under the new system.

What Isn’t Changing Under Risk Rating 2.0

  1. Risk Rating 2.0 applies only to risk-based NFIP rates and will not affect flood mapping or insurance requirements, which will continue to be enforced by Congress, local communities and lenders.
  2. Grandfathered rates, including for newly mapped or pre-Flood Insurance Rate Map (FIRM) subsidized properties, will continue. By law, increases will not be more than 18% per year.
  3. Policyholders will still be able to transfer their grandfathered rates and other discounts to a buyer/new owner by assigning their flood insurance policy at the time of the sale of the property.


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