When the Federal Emergency Management Agency (FEMA) launched the National Flood Insurance Program’s (NFIP), Risk Rating 2.0 program, it promised that more people will sign up for flood insurance.
FEMA did — however — admit that those signing up will pay more for the product.
Now a report picked up by The Associated Press via the Freedom of Information Act, said that FEMA is predicting at least one million fewer people will be buying flood insurance by the end of the decade.
That’s a big chunk of people.
What’s driving them away — and putting them at huge financial risk — is pricing that is risk-based. Risk-based rates are going to be higher than what the rates have been in the past.
For some, higher means significantly higher.
Risk Rating 2.0 uses distance to water and rebuilding costs to set rates. In the past elevation of a property and whether it was in a designated flood zone was the criteria used.
Here’s the bottom-line. Most policyholders are seeing their rates rise. And FEMA wasn’t — in the estimate of some in Congress — entirely truthful about the new pricing.
And that pricing has critics of Risk Rating 2.0 like New Jersey Democrat, Sen. Bob Menendez, seething. He said FEMA didn’t tell the truth about the impact of the estimated higher costs.
“This report makes it crystal clear that FEMA failed to be transparent with policyholders, Congress, and ultimately the American public,” Menendez said in a statement to the AP.
Source link: Associated Press — https://bit.ly/3cBjZnz
Source link: Insurance Business America — https://bit.ly/3zdfwzn
FEMA’s Risk Rating 2.0 — Chasing People from the Flood Market
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