News Provided By: The Hill
Article Author: Rachel Frazin
Date: April 1, 2021
The Federal Emergency Management Agency (FEMA) on Thursday unveiled changes to the National Flood Insurance Program that it says will be aimed at being more equitable.
A fact sheet from the agency said that it will be able to do this by calculating premiums based on home value and flood risk, with more expensive homes potentially costing more to insure.
The agency said that currently people with lower-valued homes are “paying more than their share of the risk” while those with higher-value homes are paying “less than their share.”
The agency said that under its “Risk Rating 2.0” methodology, 23 percent of policyholders will see their premiums decrease. Sixty-six percent will see increases of up to $10 per month; 7 percent will see increases of between $10 and $20; and 4 percent will see greater increases.
The fact sheet noted that currently, policyholders see average increases of $8 per month.
“We are putting equity at the forefront of our work at DHS and making reforms to help our nation confront the pressing challenges caused by climate change,” said Homeland Security Secretary Alejandro Mayorkas in a statement.
“Risk Rating 2.0 advances those goals by fixing longstanding inequities in flood insurance pricing and creating a system that is better equipped for the reality of frequent flooding caused by climate change. These updates will improve individual and community resilience, reduce disaster related suffering, and ensure fairness,” he added.
Changes to the federal flood insurance program have been resisted by some Democratic lawmakers over fears it would raise premiums for their constituents.
The changes will go into effect for new policies on Oct. 1 and for renewals on April 1, 2022. FEMA said that policyholders who are slated to see decreases and are up for renewal can also take advantage of that starting Oct 1.