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FEMA Unveils ‘Risk Rating 2.0’


FEMA announced changes to the way the National Flood Insurance Program (NFIP) will charge homeowners for flood risks. The change—dubbed “Risk Rating 2.0”—could have a significant impact on flood insurance bills for millions of homeowners.

Risk Rating 2.0 aims to  improve the policyholder experience by leveraging industry best practices and current technology to deliver rates that are transparent and better reflect a property’s unique flood risk.

The new risk rating system will fundamentally change the way FEMA rates a property’s flood risk and prices insurance. With Risk Rating 2.0, FEMA is pairing state-of-the-art industry technology with the NFIP’s mapping data to establish a more comprehensive understanding of risk at both the community and individual level.

Risk Rating 2.0 will help customers better understand their flood risk and provide them with more accurate rates based on their unique risk. This will include determining a customer’s flood risk by incorporating multiple, logical rating characteristics–like different types of flood, the distance a building is from the coast or another flooding source, or the cost to rebuild a home. 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. Risk Rating 2.0 will comply with existing statutory caps on premium increases to help transition policyholders who may face otherwise substantial rate increases.

Read more from FEMA about Risk Rating 2.0 on the official announcement.

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