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NFIP’s Decreasing Participation, Increasing Full-Risk Rates Receive Media Coverage

Newly released NFIP data corroborates predicted reductions in program participation since the October 2021 implementation of Risk Rating 2.0.  Following AP’s reporting on an internal FEMA report suggesting that one million policyholders may drop coverage,  E&E News reports that 425,000 policyholders have already discontinued coverage.  The Hill and Government Executive have also published pieces on participation, in which policy experts offer that income-based subsidies, changes in purchase requirements, and improvements to flood mapping may increase participation.

Meanwhile, The Advocate has released an article with information on full-risk rates in Louisiana, as obtained through a federal public records request.  In response to this request, FEMA shared that the average policy in Louisiana will increase from $722 to $1,700.   Until now, FEMA has only released information on pricing for year one of Risk Rating 2.0’s implementation, rather than full-risk rates.  Now, a long-term impact of Risk Rating 2.0 for policyholders within Louisiana is better understood.

In the feature, CSFI’s Michael Hecht expressed that, “While we appreciate FEMA’s step towards transparency in releasing Louisiana’s full-risk rates, this data underscores our concerns about affordability and reaffirms the need for FEMA to address the weighting of each rating factor of Risk Rating 2.0.”  CSFI’s current reauthorization platform, providing a menu of reforms to improve NFIP’s affordability, can be downloaded and distributed here.  CSFI is currently preparing a white paper on NFIP’s affordability and its effect on program participation.  This document will be released in advance of NFIP reauthorization, required by September 30, 2022.