FEMA Risk Assessment 2.0 is leading to increasing flood insurance offerings in southwest Florida

FORT MYERS

Tropical systems.

Torrential rains every day.

Water rushing in the streets.

Floods or flood damage are certainly not unknown in southwest Florida.

For decades, homeowners have relied on the federal emergency service for their flood insurance because of the lower prices. But now experts assume that the market will become more competitive and cheaper rates may be possible with private insurance companies.

“I think that’s the greatest fear when you stand on your doorstep and watch the water rise from the street,” said Brian Chapman, CEO of Chapman Insurance Group. “And then you see an hour later and it comes up another foot, and another hour later it’s another foot and then (for) long, you know, it’s you in your house.”

Not only does Chapman sell flood policies through his company, he must have one in his house.

He’s already seeing flood insurance offerings rise for people looking for coverage after FEMA updated the National Flood Insurance Program.

“Risk Rating 2.0 is a real estate killer, it will prevent business,” Chapman said. “I mean, you have someone who comes here from Tennessee, Ohio, New York and you are considering buying a house here and you see $ 7,000 flood insurance on a house that the deal is unlikely to go through.”

According to FEMA, Risk Rating 2.0 sets a homeowner’s annual flood insurance rate based on how likely the home is to flood and how much it would cost to repair it. It looks at a specific house rather than the area it is in as it was in the past.

So if you live near or on a canal, you pay more than someone who lives a few blocks away.

“We can no longer ignore the fact that some of our policyholders have wrongly subsidized other policyholders,” said David Maurstad, a senior executive on FEMA’s National Flood Insurance Program. “Insured with lower-value houses who paid more than they should, will no longer bear the cost of insured persons with higher-value houses, they paid less than they should. The 2.0 upgrade corrects this injustice. “

FEMA predicts that more than a million homeowners across the country will decline thanks to Risk Rating 2.0

That may not be the case with most Floridaers.

“About 80% of all current flood insurance policyholders covered by FEMA’s National Flood Insurance Program will see some growth,” said Mark Friedlander of the Insurance Information Institute.

Homeowners who receive new flood policies will receive rewards based on the risk rating 2.0. Anyone who currently has insurance coverage will not see the price change until their policy is renewed and after April 1st.

However, there is an 18% cap on increases until the amount prescribed by FEMA is reached.

“On the 18% glide path, it will take a relatively long time for them to reach their full risk rate,” said Maurstad.

For example, someone who pays $ 1,000 a year for flood insurance through the FEMA program might see that the National Flood Insurance Program charges $ 3,000 a year because they live on a canal.

When their policy is renewed, their rate increases by 18% to $ 1,180. The interest rate will continue to rise 18% until it hits $ 3,000.

“We all shake our heads and say, ‘If you’re trying to get the right price, that’s not right,” said Chapman.

Friedlander believes Risk Assessment 2.0 will encourage people to look for other options for flood insurance.

“Florida has a larger private flood market than any other state,” Friedlander said. “So there is an opportunity to buy your reporting. And this is a great time to do so. “

See similar https://www.winknews.com/2021/09/29/femas-risk-rating-2-0-causing-surging-flood-insurance-quotes-in-southwest-florida/

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