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What is Risk Rating 2.0?

Risk Rating 2.0 is a new pricing methodology from FEMA for flood risk. It is designed to better reflect a property’s unique flood risk while also providing rates that are easier for agents and policyholders to understand. It will use the latest actuarial practices to set risk-based rates, allowing consumers to make more informed decisions about flood insurance and reducing the complexity for insurance agents to generate quotes. Some customers may experience a change in premium. To make the changes more equitable, FEMA will look at detailed flood risk variables such as distance to a water source, flood frequency, flood types, and property characteristics like the cost to rebuild and elevation.

Click here to view the Frequently Asked Questions for Risk Rating 2.0

Customer Impact

According to FEMA, flood policyholders see an average premium increase of $8 per month under the current rating methodology. Risk Rating 2.0 accounts for several additional risk factors, which allows for premiums that are better aligned with the unique needs of the customer.

FEMA estimates that approximately 66% of policyholders will see a $0-$10 per month increase in premium, with approximately 23% of policyholders seeing a decrease of $86 per month, on average. 7% of customers may see an increase of $10 – $20 per month more and around 4% of premiums could go up by $20 or more.

Agent Impact

With less complexity and a clearer picture of a customer’s unique flood needs, Risk Rating 2.0 will help insurance agents quote and sell flood policies more easily. Additionally, the new methodology will provide transparency on premium calculation, so agents can help their customers understand their flood risk and how the premium was determined.

Transforming Flood Risk Assessment

Agents can review changes to policy forms or for more information about Risk Rating 2.0, please refer to FEMA Bulletin W-21004. 

Frequently Asked Questions about Risk Rating 2.0

What is Risk Rating 2.0?

When will Risk Rating 2.0 be implemented?

Why is the Risk Rating 2.0 premium higher?

Can a policyholder do anything to reduce their premium?

Why should policyholders renew their NFIP Flood policy?

Has Risk Rating 2.0 impacted the NFIP payment guidelines?

What are the new RR 2.0 rating elements and how will they be captured for new and existing business?

Will existing Preferred Risk Policies (PRP) be eligible to coverage changes?

What policies will be eligible for grandfathering?

Will policies still have a payment grace period?

Will the agents have access to the geospatial information? What happens if the address does not come up when entered?

How will new owners know if the property that they just purchased had a prior claim when purchasing flood insurance?

Will there be a credit applied to the premium for having flood vents? What information must be provided as part of the application to satisfy FEMAs flood vent requirements?

How will zone changes be handled in the new program?

What do I need to do to have my existing policies with Selective rated under RR 2.0?

A Recent Map Change moved my insured’s property from a V Zone to an X Zone. What guidance should I provide to my customer about flood insurance?

Will elevation certificates be required for rating?

What can I do if I don’t agree with the values provide by FEMA’s tools?

Where can I view the new rates?

Are maximum coverage limits changing?

What happens if a renewal is paid between 10/1/2021 and 3/31/2022 under the Legacy rating and the insured wants to take advantage of RR2.0 rating?

Are there any changes to the process in how we will quote and bind excess and private flood?