New Federal Flood Insurance Rating Plan to Start October 1
The National Flood Insurance Program (NFIP) and significant changes are coming. According to NFIP, the changes mark the first update to FEMA's pricing methods in 50 years and are based on updated technology and FEMA's evolving knowledge of flood risk.
The following are some of the key points you should know:
- The NFIP is moving to a transformational new way of measuring and rating flood risk, called Risk Rating 2.0 or Equity in Action.
- There will be significant rate changes, both up and down, but rate increases will be capped at 18% per year.
- Rates will be more accurate, more equitable, and more property-specific.
- Published rate tables will cease to exist. An algorithm will determine all rates on the FEMA computer system.
- All NFIP new business flood policies with an effective date on or after October 1, 2021, will be issued with the new rates and use the new rating process.
- Also, beginning October 1, existing policyholders eligible for renewal will renew under the new pricing methodology if beneficial.
- Agents will be able to begin quoting the new rates on September 1, 2021.
- All policies renewing on or after April 1, 2022, will be issued using the new rates.
The changes in the new NFIP rating methodology will impact the entire insurance industry.
For example, once Risk Rating 2.0 takes effect, private flood insurers may find expanded or changed opportunities to sell policies to close the insurance gap. Overall, FEMA wants to make the NFIP part of a rapidly evolving and competitive flood insurance environment where insureds ask to see a quote from multiple carriers, one of them being the National Flood Insurance Program.
Risk Rating 2.0
Selective has the info you need to get up-to-date on FEMA's introduction of the new National Flood Insurance Program (NFIP) Risk Rating 2.0 for new business on October 1, 2021.
Visit the Risk Rating 2.0 section on Selective's website for an overview of available resources, including upcoming free training sessions.
Please click here for a complete recording of the FEMA-led Risk Rating 2.0 Equity in Action training session, and learn about this tool designed to:
- Reflect a property's unique flood risk
- Provide rates that are easier for agents and customers to understand
- Use the latest actuarial practices to set risk-based rates
- Reduce the complexity for agents to generate quotes
You can also check out Selective's new Training Dashboard in the Selective agent portal to make it easy to access system and NFIP training, essential resources, and videos.