Congress Has Just Two Days To Reauthorize The National Flood Program

What is NFIP Risk Rating 2.0? Here’s Everything You Need to Know

Earlier this year, David Maurstad, Chief Executive of the National Flood Insurance Program (NFIP), announced a new, easier to understand rating structure for the NFIP called Risk Rating 2.0 to make it simpler to purchase flood insurance and improve the policyholder experience. According to FEMA, Risk Rating 2.0 will help make this a reality by, “leveraging industry best practices and current technology to deliver rates that are fair, easy to understand, and better reflect a property’s unique flood risk.”

Maurstad is calling the new system a “game-changing initiative for the NFIP.” But what is NFIP Risk Rating 2.0? How will it help you and other homeowners like you ensure your home is protected if the worst happens? Fema recently released the following information to help you understand what’s changing:

What's Changing?

Risk Rating 2.0 will fundamentally change the way FEMA rates a property’s flood risk and prices insurance. The current rating methodology has not changed since it was first developed in the 1970s. But since then, technology has evolved and so has FEMA’s understanding of flood risk. Additionally, the current rating methodology is heavily dependent on the 1-percent-annual-chance-event, while Risk Rating 2.0 will incorporate a broader range of flood frequencies. FEMA will be pairing state-of-the-art industry technology with the NFIP’s mapping data to establish a new risk-informed rating plan. Catastrophe models, in combination with the ability to leverage the NFIP’s mapping data, will provide a better and more comprehensive understanding of risk at both the national and local level. FEMA is building a new rating engine to help agents easily price and sell policies. It will also allow policyholders to better understand their property’s flood risk and how it is reflected in their cost of insurance.

New rates for all single-family homes will go into effect nationwide on October 1, 2020.

Risk Rating 2.0 will comply with existing statutory caps on premium increases. This will help transition policyholders who may face otherwise substantial rate increases.

What are the benefits of Risk Rating 2.0?

The NFIP is developing Risk Rating 2.0 to deliver the following key benefits to policyholders, communities, and the flood insurance industry:

  • Creates an individualized picture of a property’s risk Provides rates that are easier to understand for agents and policyholders
  • Reflects more types of flood risk in rates
  • Uses the latest actuarial practices to set risk-based rates
  • Reduces complexity for agents to generate a quote

What are the new rating characteristics?

The new risk rating plan will use easy-to-understand rating characteristics for each property, such as:

  • Distance to the coast or another flooding source
  • Different types of flood risk
  • The cost to rebuild a home

By reflecting the cost to rebuild, the new rating plan will also aim to deliver fairer rates for owners of lower-value homes.

Where can you learn more?

To learn more about Risk Rating 2.0 and to get the most up-to-date information, please visit

To download FEMA’s “Risk Rating 2.0 Overview” in its original form, please click here.

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