Implementation of Risk Rating 2.0 is Officially Underway

CAP is a member of and stays current with the work being done by the Coalition for Sustainable Flood Insurance (CSFI). CSFI’s mission is to ensure that flood insurance offered through the National Flood Insurance Program (NFIP) is both affordable and sustainable. CSFI relays to members the latest updates from FEMA regarding the implementation of Risk Rating 2.0. Risk Rating 2.0 is a nationwide initiative to update the pricing methodology for the NFIP, the first major overhaul of premiums and rates since the 1970’s.

Risk Rating 2.0 was implemented for new policyholders beginning on October 1st, 2021. The full implementation of this new rating methodology went into effect on April 1st, 2022 for all existing policy holders. CSFI reports on their Risk Rating 2.0 webpage that FEMA’s national rate analysis shows 77% of policyholder premiums will increase under the implementation of this new rating methodology. Premiums may also change annually.

In an early April 2022 stakeholder meeting, CSFI shared some of their current concerns to be means-tested affordability, meaning the ability for policyholders to experience caps in their premiums relative to their income. Additionally CSFI expressed concern for data reliability and receiving clarity on formulas used for weighing risk factors and calculating mitigation credits.

FEMA was asked to respond to several questions CSFI still had regarding Risk Rating 2.0 in March 2022. Please see the document linked HERE to read their responses.

CSFI is continuing to collect real-world examples to explore the effects of Risk Rating 2.0. Individuals across the nation can submit examples of normal and abnormal rates under Risk Rating 2.0. In addition, CSFI has begun to facilitate biweekly calls with stakeholders and coalition members. CAP will have a seat at the table to receive the latest updates as it relates to the implementation of Risk Rating 2.0.

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