Flood Insurance Rates Seen Rising in Flood-Prone Areas
FEMA expects to roll out a plan in the coming weeks to change the way risk is calculated under the National Flood Insurance Program (NFIP), and there are concerns that flood insurance premiums could rise and property values could fall in the most flood-prone areas. Rather than simply focusing on whether a home is inside or outside of the 100-year flood plain, the Federal Emergency Management Agency (FEMA) could use private-sector data to calculate the real flood threat for each home and set costs based on that data.
David Maurstad, deputy associate administrator for Insurance and Mitigation at FEMA, said the new system “will help customers better understand their flood risk and provide them with more accurate rates based on their unique risk.” Under the Risk Rating 2.0 initiative, FEMA plans to pair its existing mapping data with “commercial catastrophe models” and the “geographic and structural characteristics” of the home, according to a briefing document presented by FEMA to private flood insurance representatives in October and obtained by Bloomberg. The goal, according to that document, is more transparent and understandable costs, which will in turn spur more people to get flood protection. New rates would begin to take effect in 2020.
To learn more about NFIP flood insurance premiums and/or alternative private market flood insurance policies, please call The Russell Agency 203.255.2877.