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FEMA Restructures Flood Insurance Program

The Federal Emergency Management Agency has revised the federal flood insurance program to better reflect flood risks, according to POLITICO Pro stories here (subscription) and here .

The big difference: Premiums in the restructured program, which is being called Risk Rating 2.0, will be based on a more accurate analysis of flood risk. This revision was designed to discourage development in flood zones by making flood insurance in those areas more expensive.

The result: “Almost 4 million policyholders will see increased rates under the move by FEMA’s National Flood Insurance Program, which sells most U.S. flood coverage. About 200,000 of them will face sharp increases, while the other 3.6 million will see moderate increases. The adjustments will happen as policyholders renew their coverage.”

FEMA support: “FEMA has described Risk Rating 2.0 as ‘equity in action’ because the premium increases generally will affect owners of higher-value properties. Owners of lower-value properties typically will see their insurance rates decline.”

Congressional concern: Lawmakers from coastal states on both sides of the aisle have expressed concern that the restructured program may make flood insurance too expensive for their constituents.

  • However, efforts to block the changes in Congress were stalled by a lack of support.
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