FEMA updates Flood Insurance Manual

This month, 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. 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 to explain 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.

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