![]() ![]() It also uses multiple elevation reference points, including elevation relative to flooding sources (like coastal or riverine risks) and elevation relative to surrounding elevations.įEMA is also considering leveraging additional data on levees, and we will continue to update this FAQ with additional information as it becomes available. Unlike the legacy methodology, it is “geospatially aware,” meaning that it accounts for a property’s distance to flooding sources. RR 2.0 considers a much larger set of inputs than the legacy rating methodology. Army Corps of Engineers (USACE), and elevation data provided by the U.S. It is also using coastal data provided by the National Oceanic and Atmospheric Administration (NOAA), levee data provided by the U.S. Q3: What data sources is FEMA using in its RR 2.0 system?Ī3: FEMA has mapping data, the Great Lakes Analysis, catastrophe models, a geolocation tool, a first-floor height tool, and a replacement cost value (RCV) tool. Your WYO may ask you, the agent, to provide these details about the properties you write NFIP coverage for, even for properties you have covered for years, because the RR 2.0 rating engine may not be able to generate a RR 2.0 quote for that property if it lacks the data to do so. Distance to Flooding Source & Flood Type. ![]() RR 2.0 will consider these variables instead: Structural Elevation (Special Flood Hazard Area Only).The legacy system considers the following variables: Q2: How is it different from the way NFIP policies are priced now?Ī2: RR 2.0 will consider several rating factors that are not part of the legacy rating system. More robust competition will result in more options for consumers and better incentives for innovation across the industry. If NFIP premiums remained widely subsidized, the private market would never be able to compete at scale. Increased involvement in flood insurance by the private market will lower prices across the board and provide consumers with a wider selection of flood insurance products, but the private market will remain at a disadvantage as long as the NFIP is not subject to risk-based pricing. Restructuring the NFIP’s premium rates so that they more closely align with those of the private market will help consumers. The program has no hope of paying down its remaining debt or achieving or maintaining financial solvency without large-scale changes like those imposed by Risk Rating 2.0 (RR 2.0). ![]() The NFIP currently carries a $20.5 billion debt, even though the Trump administration forgave $16 billion in NFIP debt in 2017. For the past 16 years, the program has carried an enormous debt to the Treasury Department and has had to borrow from Treasury repeatedly to pay for severe flood losses. The NFIP’s financial stability has been uncertain since 2005, when Hurricane Katrina losses depleted the NFIP’s reserves and then some. With better information, policyholders may be newly encouraged to engage in mitigation efforts. The implementation of RR 2.0 will move the NFIP toward solvency while also giving policyholders more information about their property’s true flood risk. Risk Rating 2.0 will assign premium rates to properties using substantially more granular data, aligning rates more closely to the property’s actual level of flood risk. ![]() If you have immediate questions, please contact your Write-Your-Own (WYO) carrier(s) for the most relevant, up-to-date information.Ī1: The Federal Emergency Management Agency (FEMA) administers the NFIP, and, over the past few years, FEMA has been preparing to update the NFIP’s risk rating process using a methodology known as Risk Rating 2.0. As always, we will provide PIA members with new information as it becomes available. FEMA is continuing to release additional guidance documents, and the material provided here may be overruled by subsequent FEMA guidance, bulletins, or other information. Please note: The information contained herein is current as of the date posted. When Risk Rating 2.0 (RR 2.0) went into effect for new (and some renewing) NFIP policies, we created this series of Frequently Asked Questions (and answers!) that we hope will help to inform and guide your decision making as you familiarize yourself with RR 2.0. ![]()
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