CARTERET COUNTY — With the 2019 Atlantic hurricane season officially underway as of June 1, coastal residents should be aware of updates to the National Flood Insurance Program that will change how the Federal Emergency Management Agency calculates flood risk and insurance policy pricing.
FEMA announced in March it is redesigning its flood risk rating system to deliver insurance rates that more accurately reflect a property’s unique risk of flooding. The effort has been dubbed “Risk Rating 2.0,” and the new rates will be announced next April and go into effect Oct. 1, 2020.
The change could lead to higher insurance rates for some policyholders and lower rates for others, depending on an individual property’s updated flood risk calculation. Under the new system, properties at the highest risk of flooding will generally see higher insurance rates and lower-risk properties may see a lower rate, but FEMA says it is too early in the process to know for certain which policyholders will see an increase and which will see a decrease.
Under Risk Rating 2.0, FEMA will take data from a variety of sources to develop a comprehensive understanding of flood risk, according to the agency. Data sources include existing FEMA flood maps, National Flood Insurance Program policies and claims, U.S. Geographical Survey data, National Oceanic and Atmospheric Administration Sea, Lake and Overhead Surges from Hurricanes model data, the U.S. Army Corps of Engineers data sets and information from third-party flood models.
In addition to raw data, FEMA will take into account factors such as type of flood, distance away from the coast or other flooding source and cost to rebuild when determining new rates. By reflecting costs to rebuild, for example, owners of lower-valued properties will not pay as much for flood insurance as their higher-valued counterparts even if both properties have the same risk of flooding.
With Risk Rating 2.0, FEMA also plans to offer mitigation credits to help incentivize risk reduction efforts and reduce the cost of future flooding events. The program will initially offer credits for three mitigation efforts: installing flood openings; elevating onto posts, piles and piers; or elevating equipment and machinery above the lowest floor.
FEMA says the risk calculation methodology currently in place was developed in the 1970s and has barely been updated over the years, even as technology has evolved to be more precise. Currently, insurance rates are based predominately on the Flood Insurance Rate Map and base flood elevations.
The National Flood Insurance Program is federally-backed and administered by FEMA to provide flood insurance to homeowners, renters and business owners as most standard insurance policies do not cover losses from flood. According to FEMA, floods are the most common and most destructive type of natural disaster in the United States, but the majority of home and business owners do not possess flood insurance.
In conjunction with the NFIP, FEMA maintains a database of community flood hazard maps that help inform floodplain management policies. The flood maps, which are updated periodically, will still be used to assess risk calculation, but they will no longer be the primary source of risk rating.
Even as major changes are coming to the NFIP, there are some questions about the long-term viability of the program, which is about $20 billion in debt. On Thursday, President Donald Trump signed into law a $19.1 billion disaster aid package that includes a temporary extension of NFIP until the end of September as lawmakers deliberate how to reform the program.
In addition, FEMA recently announced it will soon publicly release about 50 million NFIP records as part of an initiative known as OpenFEMA to improve transparency within the agency and the flood insurance program. The agency said those records will be available for viewing on the website fema.gov/openfema by mid-June.
“We believe this will provide transparency, reduce complexity for public data requests, improve how our stakeholders interact with and understand our program, all without compromising consumer privacy,” FEMA chief executive David Maurstad said in a statement about the data.
According to FEMA, flood insurance policyholders in North Carolina received average payments of $40,000 after Hurricane Florence for flood claims. The average annual cost of an NFIP policy for homeowners is about $700.
A single-family home can be insured up to a maximum of $250,000, not including contents coverage, which can be purchased separately and covers up to $100,000. Renters can cover contents up to $100,000, and non-residential property owners can insure their structure up to $500,000 and contents up to $500,000.
FEMA encourages home and business owners to purchase flood insurance before the hurricane season begins, or as soon as possible, because it takes 30 days for a policy to take effect.
Now that the Atlantic hurricane season is underway, FEMA offers other tips to stay safe this year, including the following:
Create an emergency communication plan with your family. This plan spells out how everyone will contact each other, where to go and how to get back together.
Build an emergency kit. Keep it ready at home, at work and in the car.
Know your community’s evacuation plan, evacuation routes and how to receive alerts.
Stay informed about current conditions. Listen to local officials and evacuation orders.
Download an emergency weather app on your phone. Have backup power for your phone. Purchase a weather radio.
Keep all important documents in a waterproof container to take with you if you evacuate.
For more information on the NFIP, visit FloodSmart.gov or call 800-427-4661.
Contact Elise Clouser at email@example.com; by phone at 252-726-7081 ext. 229; or follow on Twitter @eliseccnt.