FEMA’s flood insurance program gets revamp, but the change could cost some Americans
Risk Rating 2.0 changes how likelihood of flooding is assessed with some areas now expecting premium hikes.
WASHINGTON (Gray DC) - Mother nature could cost Americans a premium. The federal government is rolling out its new flood insurance program, called Risk Rating 2.0 which is leading to price hikes for some, and price cuts for others.
“It’s the right thing to do,” said David Maurstad, FEMA’s Deputy Associate Administrator for Federal Insurance and Mitigation and Senior Executive of the National Flood Insurance Program.
Maurstad said the new calculation for how much Americans pay for flood insurance is based on better data ensuring everyone pays what they should, as opposed to the old system which had price increases regardless of location. He said the flood insurance methodology has not been updated since the 1970s.
“The long-term goal of Risk Rating 2.0 is to provide property owners with an accurate picture of their flood risk,” said Maurstad.
The methodology looks specifically at each property to assess how likely flooding is. According to FEMA’s website, 80 percent of policies in flood-prone Louisiana will see monthly price increases, though 70 percent of those will be less than 10 dollars per month.
A state like Utah will see 53% of policies decrease in price. FEMA touts this as equity in action and notes no policy will raise by more than 18% annually because of a Congressional mandate. The agency says over the last 50 years they’ve collected $60 billion in insurance premiums but paid $96 billion in costs. They hope the new system fills that gap.
“Risk Rating 2.0 will lead to more insured survivors, less disaster suffering, and a more resilient nation,” said Maurstad.
Sen. Bill Cassidy (R-LA) is ripping the new system. He said he is looking for answers from FEMA about how financially disadvantaged people in his state are meant to cope.
“Let’s just raise everybody’s rates and see what happens. That’s not going to work,” said Cassidy.
Cassidy said he spoke to FEMA about his concerns but the agency was not receptive. He said he is trying to drive changes to the program from the Senate, where he is introducing legislation to modify the National Flood Insurance Program. Cassidy argues flooding in his state is inevitable and he does not want his people punished for living there.
“For a family which that insurance premium is a significant part of their disposable income, they won’t be able to afford the insurance and they will drop it,” said Cassidy.
All policies renewing on or after April 1, 2022 will be subject to the Risk Rating 2.0 rating methodology. All new policies are already operating under the new system as of October 1.
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