What Does This Graph Say?
In the graph below, the details show that there were 9 years between 2004 and 2019 that the National Flood Insurance Plan (NFIP), organized by FEMA, has either broken even, or done better, when looking at flood premiums versus flood claims. However, those 3 spike years of significant flooding has more than bankrupted the program.
And now, fast forwarding to 2021 with massive flooding in Texas, Louisiana, and then the Northeast, those claims have further added to the deficit.
“Given that ownership of a home with a mortgage requires flood insurance, this is a major change.”
Where Is This Headed?
On 10/1/2021, FEMA Risk Rating 2.0 took effect. In short, this means that under 2.0, the standard rating tables used to generate flood insurance rates will no longer be used. Instead, they are being replaced by rates calculated by an algorithm. Additionally, flood zones and base flood elevation will no longer be used in rating as well, but elevation will still be a consideration for all properties.
Given that ownership of a home with a mortgage requires flood insurance, this is a major change.
Some of the new rating variables will include:
- Distance to flood source and type of source
- Construction type
- Rebuild value- high value rebuilds will influence the rates
- Prior claims
Fees and surcharges should also not be forgotten.
This a whole new ball game for property sellers, owners, and buyers.
If you have any questions about a property and flood, reach out to Kyle at firstname.lastname@example.org or call us at (203) 637-6655.