Risk Rating 2.0 Updates

Have you been following the latest updates regarding Risk Rating 2.0? FEMA has updated the National Flood Insurance Program’s risk rating methodology and it is designed to deliver policyholders more equitable and easy to understand rates. October 1st marked the official date of implementation for new policy holders. Any remaining policies that are renewing on or after April 1st, 2022 will be subject to the new rating methodology.

Coastal Alabama Partnership has worked to stay involved in the efforts of the Coalition for Sustainable Flood Insurance (CSFI) to understand the effects that may result from risk rating 2.0 under its current design. Ahead of its implementation on October 1st, CSFI released a memo that listed some of their top priorities and concerns for this new methodology. That memo can be found HERE. Additionally, on September 13th, the NFIP Extension Act of 2021, authored by Senators Bill Cassidy, (R-LA), John Kennedy (R-LA), Cindy Hyde-Smith (R-MS), and Bob Menendez (D-NJ), was introduced, asking to extend the program for one full year. Unfortunately, this legislation did not pass and implementation of Risk Rating 2.0 move forward on the scheduled date of October 1st.

The CSFI hosted several calls in the month of October with stakeholders from around the country. From CSFI’s perspective, there are gray areas with Risk Rating 2.0 in its implementation that have raised enough inconsistencies for there to be concern. Overall, CSFI and stakeholders have listed concerns ranging from lack of transparency, lack of public input, and a significant lack of education provided to agents serving on the front line of this implementation. Additionally, there have been more significant rate changes for policy holders in ‘X’ zones vs. ‘AE’ zones, more clarity needed on the use of elevation certificates, and additional information needed on how factors are weighed into policy holder rates.

While 56% of policy holders under Risk Rating 2.0 are seeing rate increases of $8-$10, some policy holders are seeing their rates skyrocket by more than 225%. For example, a property in Picayune, Mississippi that was slated to pay $900 under Risk Rating 1.0, is now showing a rate of $4,823.

As Risk Rating 2.0 is in the beginning of its implementation, CSFI is digging into the impacts by asking policy holders to share any significant premium changes with them as well as members of their congressional delegations. If you have experienced a significant premium change under Risk Rating 2.0, please consider inputting your information HERE to aid CSFI in their future efforts.

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