How Risk Rating 2.0 Makes Flood Insurance More Equitable

Flooded room with chair and plant

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FEMA’s new flood insurance rating system, Risk Rating 2.0: Equity in Action, takes effect for existing National Flood Insurance Program (NFIP) policyholders Friday. To help you understand the new rating system, the National Association of REALTORS® has released two videos featuring FEMA Senior Executive David Maurstad and 2022 NAR Insurance Committee Chair Mabél Guzmán discussing its advantages. The first video focuses on how Risk Rating 2.0 creates a more equitable, transparent, and modern flood insurance program, and the second video explores why it’s beneficial to REALTORS® and homeowners.

Risk Rating 2.0 replaces a 50-year-old system and uses modern technologies, standards, and practices to price flood insurance for each home individually rather than by flood zone. “The old, outdated methodology was about static measurements,” Maurstad says in the video interview. “We’ve developed something that is going to be easier for people to understand, that will clearly communicate flood risk and will treat policyholders equitably by charging them a premium that is in line with the individual characteristics of their property.”

A decade in the making, this new flood insurance pricing system was heavily informed by REALTORS® through direct collaboration between NAR’s Insurance Committee and FEMA. Risk Rating 2.0 was officially unveiled last October for new NFIP policies and will now be applied to renewals.

NAR supports Risk Rating 2.0 and will continue to work with FEMA throughout its implementation. NAR’s Risk Rating 2.0 toolkit contains resources for REALTORS® to assist homeowners and buyers, including ways to connect them with flood experts who can offer risk assessment and mitigation resources as well as answer property-specific questions.