FEMA modernizing flood rules

Coastal homeowners in Jamestown could see their insurance rates drop based on a new pricing methodology created for the National Flood Insurance Program.

Changes to the program, which is administered by the Federal Emergency Management Agency, will go into effect in October. The federal agency said the goal is to offer more equitable and risk-informed rates.

“The NFIP’s new rating methodology is long overdue since it hasn’t been updated in more than 40 years,” said David Maurstad, senior executive of the National Flood Insurance Program. “Now is the right time to modernize how risk is identified, priced and communicated. By doing so, we empower policyholders to make informed decisions to protect their homes and businesses from life-changing flooding events that will strike in the months and years ahead due to climate change.”

The new premiums, according to Maurstad, are the result of the amended methodology to deliver rates that are actuarially sound, equitable, easier to understand and better reflect a property’s flood risk. New policies will be sold using the new methodology, and some existing policyholders may be eligible for immediate premium decreases when their policy renews.

To date, FEMA has provided more than 2.8 million quotes and trained 20,792 agents. Potential and existing policyholders can learn their specific rates with a call to their insurance company or agent.

Also known as Risk Rating 2.0, the methodology uses increased technological and mapping capabilities to determine and communicate a property’s full flood risk. In addition, the new rating methodology has exposed inequities in pricing that had resulted in some policyholders unjustly subsidizing other policyholders.

Under the legacy pricing system, every policyholder would have seen rate increases now and into the future. Beginning Oct. 1, about 23 percent of policyholders, which equates to more than 1 million households, will see a decrease in their premium at the time of their renewal.