What’s happening?

FEMA is changing how it calculates risk “to provide more equity,” and is incorporating more risk variables based on individual properties.  These include:

• flood frequency
• multiple flood types—river overflow, storm surge, coastal erosion and heavy rainfall
• distance to a water source
• property characteristics such as elevation and the cost to rebuild.

These changes — known as opens in a new window Risk Rating 2.0—begin for new policyholders on Oct. 1, while changes for existing policyholders won’t take effect until April 1, 2022.

opens in a new windowFEMA is claiming that Risk Rating 2.0 delivers more equitable pricing – and that policyholders with lower-value homes are paying more than they should while policyholders with higher-value homes are paying less than they should.  

Our NJ Representatives and others from states who flood have thoughts:

opens in a new windowThe House is worried about affordability

opens in a new windowThe Senate is worried about affordability too and they are worried that “FEMA’s internal analysis shows that 900,000 policyholders, or nearly 20% of all policyholders will drop out of the program over the next 10 years due to unaffordable premiums under Risk Rating 2.0.”  

What do we think about it?

This is one step forward, and four steps back – there are major overhauls necessary to make sure the NFIP is fair, functional and equitable.  If disaster survivors were in charge of the overhaul – this is not where we would start. 

The one step forward – they seem to be committed to more accurate mapping, and helping more people understand they’re in a flood zone.  That’s important because if you don’t have flood insurance – and both renters AND homeowners can have flood insurance coverage – you’ll find after a disaster that your other insurance doesn’t really cover flooding. 

The problem is we’re inviting more people into a program that doesn’t put families, fairness, and forward thinking first.  

We need to change the NFIP to ensure that all families can afford flood insurance coverage – and affordability should be based on income, mitigation efforts, and a general philosophy to keep as many people in the program as possible, not property value.  Property values in NJ right now are so high, particularly at the shore.  Our ED, Amanda’s house has doubled in value in the last 3 years.  But that doesn’t mean her income has doubled – in fact – we know it hasn’t.  Just because your home is worth a lot doesn’t mean you’ve got money in the bank.  Particularly in a place like NJ. Working families should not be priced out of their communities.  

When we talk about cost, and equity, we’re not talking about how private insurance companies have taken advantage of the program, made record profits while systematically underpaying policyholders.  We have to ensure that private write-your-own insurance companies stop gutting policyholders’ ability to recover.  And we know how to do this – we implemented changes with Superstorm Sandy that could be permanent, but somehow that’s not a priority for FEMA. 

Flood insurance is more affordable when community members are able to access funding to mitigate their flood risk.  It’s a win-win situation – we’re less likely to lose everything in a disaster and less likely to have costly NFIP claims or need disaster recovery funding.  Studies show that for every $1 we spend in mitigation we save $6 in disaster recovery funding.  

We need to increase ICC funding and make it available before disaster and significantly increase grant funding available to communities to better prepare for storms – including making buyouts available to folks who are ready to move to higher ground.  

But, instead of addressing these critical issues, FEMA is rolling out Risk Rating 2.0 without input from communities like ours. That’s why we need Congress to act and pass the NFIP Re Act of 2021 – communities on the frontlines of disasters know what we need to change.  This legislation includes those lessons, is a truly unique collection of bipartisan sponsors, and works to ensure families do not have to struggle like ours have.