NFIP Risk Rating 2.0 Pricing Methodology Begins October 1st
On October 1, 2021, the National Flood Insurance Program (NFIP) will begin implementing Risk Rating 2.0 on all new policies and on renewals that benefit from the new pricing. This new methodology focuses on conducting individual analysis of a property when determining how to price an NFIP flood insurance policy. Factors being considered in the new pricing process include flood frequency, flood type (river overflow, storm surge, coastal erosion, and rainfall), distance to water source, and property characteristics such as elevation and cost to rebuild. On April 1, 2022, this new methodology will apply to all policies.
The NFIP published an updated Flood Insurance Manual, which outlines the changes to the flood program. One of the biggest changes that comes with Risk Rating 2.0 is that flood zones will no longer be used to determine pricing. They will also no longer appear on the flood insurance declarations page. Appendix I, Section E, in the newly released NFIP Manual provides a summary of additional changes made to the information shown on the new declarations page, including deletion of grandfathering status. FEMA also provided a sample declarations page in Appendix I, Section C(1) of the revised Manual.
Proctor Loan Protector encourages all clients to review their current procedures to assess the impact of these changes. If Proctor Loan Protector provides services to your organization that will be affected by the changes, your Proctor Loan Protector Relationship Manager will be reaching out to discuss any necessary revisions to your business rules.