FEMA (the Federal Emergency Management Agency)
has been working on the Risk Rating 2.0 project which originally was to
be implemented in October, 2020. FEMA has decided to hold off on
putting the program into effect until October 1, 2021.
Risk
Rating 2.0 is the reconstruction of the National Flood Insurance
Program’s (NFIP) risk rating system. FEMA’s National Insurance Program
wants “to transform the way it rates it policies.”
The announcement explains that FEMA needs additional time to “conduct a comprehensive analysis of the proposed rating structure so as to protect policyholders and minimize any unintentional negative effects of the transition.”
The data sources for FEMA are a combination of multiple sources. They are using a combination of CAT models (catastrophe) and NFIP mapping data to come up with the system of rates. These include sources from FEMA such as mapping data, NFIP policy and claims data, U.S. Geological Survey (USGS), National Oceanic and Atmospheric Administration (NOAA), Sea, Lake, and Overhead Surges from Hurricanes (SLOSH), U.S. Army Corps of Engineers (USACE) and third party sources.
According to fema.gov, they have been “redesigning its risk rating system by leveraging industry best practices and current technology to deliver rates that are fairer, easier to understand, and better reflect a property’s unique flood risk.”
FEMA understands that purchasing flood insurance for homeowners can be confusing, time-consuming and expensive. Under the new rating system the policyholder’s experience will be more of a positive one. The new system will study each property individually and determine that property’s risk, the rates will be easier to understand for both the agents and the policyholders, there will be more types of flood risk rates, it will use the “latest actuarial practices to set risk-based rates” and will make it easier and less time consuming for agents to create a consumer quote.
The hold will work in the home owner’s favor as the rates for the new NFIP policies for single-family homes, multi-unit and commercial properties will change over at one time instead of the previous phases of the original proposal. Homeowners will have a better understanding of their policy, fairer rates and mitigation credits for any work they complete to reduce risk of future flood events with the new system. More homeowners will be able to keep their home instead of selling because they are not able to afford flood insurance.
Click Here For the Source of the Information.
Risk
Rating 2.0 is the reconstruction of the National Flood Insurance
Program’s (NFIP) risk rating system. FEMA’s National Insurance Program
wants “to transform the way it rates it policies.”The announcement explains that FEMA needs additional time to “conduct a comprehensive analysis of the proposed rating structure so as to protect policyholders and minimize any unintentional negative effects of the transition.”
The data sources for FEMA are a combination of multiple sources. They are using a combination of CAT models (catastrophe) and NFIP mapping data to come up with the system of rates. These include sources from FEMA such as mapping data, NFIP policy and claims data, U.S. Geological Survey (USGS), National Oceanic and Atmospheric Administration (NOAA), Sea, Lake, and Overhead Surges from Hurricanes (SLOSH), U.S. Army Corps of Engineers (USACE) and third party sources.
According to fema.gov, they have been “redesigning its risk rating system by leveraging industry best practices and current technology to deliver rates that are fairer, easier to understand, and better reflect a property’s unique flood risk.”
FEMA understands that purchasing flood insurance for homeowners can be confusing, time-consuming and expensive. Under the new rating system the policyholder’s experience will be more of a positive one. The new system will study each property individually and determine that property’s risk, the rates will be easier to understand for both the agents and the policyholders, there will be more types of flood risk rates, it will use the “latest actuarial practices to set risk-based rates” and will make it easier and less time consuming for agents to create a consumer quote.
The hold will work in the home owner’s favor as the rates for the new NFIP policies for single-family homes, multi-unit and commercial properties will change over at one time instead of the previous phases of the original proposal. Homeowners will have a better understanding of their policy, fairer rates and mitigation credits for any work they complete to reduce risk of future flood events with the new system. More homeowners will be able to keep their home instead of selling because they are not able to afford flood insurance.
Click Here For the Source of the Information.
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