The Associated Press has obtained an internal FEMA report on Risk Rating 2.0.  AP confirms, through a recent news piece, that this FEMA report asserts that RR2.0’s implementation may result in program participation reduction of up to 20 percent, or one million NFIP policyholders.  This report has been cited consistently by Congress in concerns around shrinking participation of the program.

Under RR2.0, 77 percent of policyholders nationwide will experience increases in their flood insurance premiums.  Existing policyholders will see increases for many years, under a congressionally-mandated glidepath.  AP’s article discusses significant affordability challenges that policyholders are already facing and cases of policies being dropped.  CSFI has similarly heard from stakeholders and policyholders that participation is being impacted.  FEMA’s Policies in Force data demonstrates that participation has fallen by 4.7%, or over 235,000 policies, from April 2021 to April 2022.

FEMA suggests that their report’s long-term prediction on participation is pessimistic.  To increase NFIP participation, CSFI has put forward a reauthorization platform, to make NFIP more transparent, affordable, and sustainable – all influences in a policyholder’s decision and ability to obtain or maintain flood insurance.  To this effect, CSFI prioritizes the following provisions in NFIP reauthorization:

1. Forgive NFIP’s Debt
2. Lower Rate Hike Caps
3. Codify a Premium Cap
4. Implement a Means-Tested Affordability Program
5. Release a Public-Facing Rate Calculator with Risk Inputs

CSFI’s current reauthorization platform one-pager, which expounds upon each proposal, can be downloaded and distributed here.