Flood insurance overhaul means millions will pay higher premiums

The biggest changes to the National Flood Insurance Program since the 1970s will mean nearly 4 million policyholders could pay a higher premium for federal flood insurance.

The rollout of Risk Rating 2.0 started October 1 for new NFIP policies and will take effect for all existing policies by April 2022.

The Federal Emergency Management Agency said that under the previous premiums lower-valued properties paid more than their fair share, while policyholders with higher-valued properties paid less than their share of the risk.

The new rating methodology under Risk Rating 2.0 takes into account flood frequency, flood types, distance to a water, and the cost to rebuild.

"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.

Despite the wide-ranging overhaul of the program, some policyholders will actually get good news out of Risk Rating 2.0 in the form of reduced premiums.

The program’s revamp will lead to about 1.2 million policyholders seeing a reduction in their monthly rate. Data shows that

-1.2 million policies (23.2%) will see a decrease
-3.3 million policies (66.3%) will see a $0 to $10 monthly increase
-330,600 policies (6.6%) will see a $10 to $20 monthly increase
-191,900 policies (3.8%) will see an increase of more than $20 per month


Jake Holehouse, president of HH Insurance in St. Petersburg, Florida, says that Sunshine State residents will be hit hard by the rate adjustments.

"We’re seeing dramatic rate increases, including for homes that are elevated," Holehouse said. "When you have homeowners going from four hundred or six hundred dollars to now over eleven thousand dollars a year, it’s a pretty big swing."

FEMA data showed that 80% of federal policies in Florida will see an increase in premiums. 

The news of increased premiums has a group U.S. Senators working to delay the rollout of the new premiums. 

If approved by congress, legislation known as the "NFIP Risk Rating 2.0 Delay Act of 2021" would delay the rollout of revamped flood insurance policies until at least September 2022.