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Wednesday, June 19, 2024


FEMA to Change Rates for Single-family Homes


By Vince Conti

WASHINGTON – While the National Flood Insurance Program (NFIP) continues to wait for Congress to grapple with the overhaul of the program, FEMA (Federal Emergency Management Agency) appears ready to act administratively on the underwriting and rate setting for single-family homes.
The FEMA website carries an announcement of something the agency is calling Risk Rating 2.0, a plan to transform the way FEMA sets rates for single-family homes that the website says will go into effect nationwide Oct. 1, 2020.
The general area underwriting rules being used would give way under this new plan to rate setting that is much more specifically based on a property’s location and structural attributes. Factors to be given weight in the scheme would include “different types of flood, the distance a building is from the coast or another water source, and the cost to rebuild a home.”
Critics of the current rate structure have argued that FEMA missed the mark in pricing flood risk. FEMA hopes that a pricing mechanism based on the characteristics of a specific property will help keep more ratepayers in the program by delivering “more equitable rates for owners of lower-value homes.”
The new rate plan would probably mean an increase in rates for high-value property owners.
FEMA argues that the “new rating plan will also aim to ensure customers will no longer face dramatic rate increases during map changes or at the edge of flood zones.”
FEMA data undated as of March 2019 show the NFIP with over 5 million policyholders and $1.3 trillion of insurance in force. The Insurance Information Institute lists the NFIP as paying over 95,000 claims in 2017 with losses totaling $8.7 trillion. The program took in $3.6 billion in premiums that year.
To contact Vince Conti, email

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