Flood Insurance Changes

Link to FEMA’s Flood Insurance Reform webpage that discusses the history of the formation of the NFIP, the current state of nation-wide mapping, legislation and its impacts on the NFIP, rate changes, how we work with our partners, like Write Your Own private insurance companies, and more.

Background:  In 1968, Congress created the NFIP to provide a means for property owners to protect themselves financially from flood events.  The NFIP offers flood insurance to homeowners, renters and business owners if their community participates in the NFIP.  Participating communities agree to adopt and enforce floodplain management ordinances that meet or exceed FEMA requirements.

Since the NFIP’s inception, additional legislation has been enacted to strengthen the program, ensure its fiscal soundness and inform its mapping and insurance rate-setting through expert consultation, reports and studies.

Today the program is focused on implementing recent legislation by adjusting premium increases, issuing new rates and map updates, supporting mitigation and ensuring special advocacy to connect policyholders with the information they need to better understand the program.


FEMA Updates Flood Insurance Manual

Sept. 1, 2021

FEMA released the updated edition of the National Flood Insurance Program’s (NFIP) Flood Insurance Manual, one month before it’s effective date.

The manual presents guidance for FEMA’s new rating methodology, known as Risk Rating 2.0 – Equity in Action. The manual updates existing NFIP underwriting policies and processes to enable effective and consistent program implementation of the new rating methodology. Risk Rating 2.0 provides more accurate flood insurance premiums, better communicates flood risk to individuals and promotes action to mitigate against flooding.

By leveraging industry best practices and current technology, FEMA can deliver rates that are equitable, easier to understand, more accountable to policyholders and taxpayers and better reflect a property’s unique flood risk.  FEMA will roll out the rates to the new methodology in a two-phase approach.

In Phase I, new NFIP policies beginning Oct. 1 will be subject to the new rating methodology and existing policyholders eligible for renewal will be able to take advantage of immediate decreases in their premiums.

In Phase II, all remaining policies renewing on or after April 1, 2022 will be subject to the new rating methodology. 

To complement the NFIP Flood Insurance Manual, FEMA released an Industry Transition Memorandum. The memo explains how transitioning from the legacy rating plan to the new methodology will occur and provides business, data and information technology guidance for NFIP insurers and vendors on how to accomplish that transition


Flood Insurance Rates Increase

October 1, 2020

On Oct. 1, FEMA announced key changes for the National Flood Insurance Program (NFIP), to begin on April 1, 2021.  These changes include updated rate increases to comply with the premium rate caps established by the Biggert-Waters Flood Insurance Reform Act of 2012 and the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA).   

Beginning on April 1, 2021, policy renewal premiums will increase an average of 10.2%.  These amounts do not include the HFIAA Surcharge, or any additional policy fees.  Nearly 80% of NFIP policyholders pay a full-risk rate and will not experience this rate increase. 

In addition to the rate increases, revisions to the NFIP “Flood Insurance Manual,” which is updated twice a year, went into effect on Oct. 1. FEMA incorporated the NFIP program changes published in April 2020 into this edition. 

Link to April 1, 2021, and January 1, 2022, Program Changes.


Congressional Research Service Takes a Deep Look into Private Flood Insurance & the NFIP

July 2018

The report describes the current role of private insurers in U.S. flood insurance, and discusses barriers to expanding private sector involvement.  The report considers potential effects of increased private sector involvement in the U.S. flood market, both for the NFIP and for consumers.  Finally, the report outlines the pro-visions relevant to private flood insurance in the House and Senate NFIP reauthorization bills.  Read the full report here.


FEMA Releases Affordability Framework for the National Flood Insurance Program

April 17, 2018

FEMA released an Affordability Framework for the NFIP, which for the first time provides data-driven analysis of the cost burden borne by flood insurance policyholders and potential policyholders, identifies the populations most burdened by the cost of flood insurance, and provides options for policymakers to consider to help close the flood insurance gap across the nation by reducing the cost burden of flood insurance.

Through the Biggert-Waters Flood Insurance Reform Act of 2012 and the Homeowner Flood Insurance Affordability Act of 2014, Congress directed FEMA to examine options to aid individuals so they could afford risk-based premiums under the National Flood Insurance Program (NFIP), and to develop a framework to help policymakers consider how to provide targeted assistance to policyholders and potential policyholders.

In the Affordability Framework, FEMA proposes several options based on income and offers descriptive models of the cost of each option.  The following tasks were considered:

  • Understand the affordability of the current NFIP portfolio as a baseline to better understand the impact of changes going forward.
  • Begin the process of building the affordability framework.
  • Complete the process of building an affordability framework.

As part of FEMA’s 2018-2022 Strategic Plan, FEMA is working to close the insurance gap with the assistance of both public and private insurers.  As the largest provider of flood insurance in the United States, the NFIP is working to double the number of properties covered by flood insurance from the current 4 million to 8 million by 2023.

The Affordability Framework is available online at www.FEMA.gov/national-flood-insurance-program-publications.


FEMA Communicates Flood Risk Information to Policyholders

January 11, 2017

In January 2017, FEMA began the next phase of implementation of Section 28, Clear Communication of Risk, of the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA), which requires the Agency to clearly communicate full flood risk determinations to individual property owners.  To meet this requirement, the NFIP reviewed the flood risk and underwriting information for every flood insurance policy, and is writing to all NFIP policyholders to communicate how their flood risk impacts their premium rate.

Policyholders will begin receiving one of seven letters, depending upon their policy, in 2017.  Policyholders who renewed policies in October 2016 through December 2016 will also receive their first mailing at this time.  The letter will continue to be mailed at each subsequent renewal.  With flood risk information varying from one policy to the next, the letter encourages each policyholder to contact their insurance agent to discuss their policy and options.  It may also be helpful to visit FEMA.gov/cost-of-flood.

In addition to Section 28, HFIAA requires gradual insurance rate increases to properties that currently receive artificially low (or subsidized) rates, rather than immediate increases to reflect the property’s full flood risk.  HFIAA requires increases to premiums for most subsidized properties by no less than 5 to 15 percent annually, but no more than 18 percent for an individual policyholder – with limited exceptions –until the premium reaches its full-risk insurance rate.  Approximately 80 percent of NFIP policyholders currently pay full-risk rates and are minimally impacted by these increases.

Information for policyholders and insurance agents can be found at FEMA.gov/cost-of-flood.  This important information is to help National Flood Insurance Program policyholders and agents understand how a building’s flood risk impacts the cost of flood insurance.

WYO Program Bulletins

FEMA periodically issues WYO Program Bulletins related to recent legislative changes and clarifications to the NFIP Flood Insurance Manual.  The bulletins are posted at http://www.nfipiservice.com/nfip_docs.html.





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