Analysis of FEMA Flood Insurance Reviews

Bad news for homeowners with a flood insurance policy – for the majority of homeowners in flood-prone areas, rates are more than likely to increase when policy renewal time arrives.

As of October 1, 2021, the Federal Emergency Management Agency (FEMA) has moved to a new risk assessment system colloquially known as “Risk Assessment 2.0,” which changes the way risk is assessed for homeowners. Previously, the risk depended on whether or not you lived in a flood-prone area; now it depends on a variety of factors including the distance to the source of the flood, the severity and frequency of the flooding, and the characteristics of the property, such as the cost of rebuilding the property in the event of damage.

Nationally, flood insurance rates will increase for around 77% of policyholders, meaning that for 23% of policyholders, rates will decrease. However, due to the expected increase for some owners, the premium increase will be spread over a few years so the impact of the new model will be easier on the portfolio.

Most homeowners (66%) will see an increase of about $ 120 per year while 11% will see their rates increase between $ 120 and $ 240.

According to research by, a typical rise in flood insurance premiums would be about $ 7.35 per month or $ 88 per year, which would bring the average annual price to $ 822, a 12% increase from what ‘he is actually. Currently, the national flood insurance rate averages $ 734 per year.

The move to a new rating system comes from the need for the program to remain solvent; a litany of disasters has driven the program into massive debt of around $ 20 billion over the past decade. This was due to insufficient rates which did not accurately reflect the cost of repairs / reconstruction in the event of a flood.

The National flood insurance program was originally started in 1968 as a way for homeowners to obtain a federally insured flood insurance policy for those living in high risk areas. The program was created at the time because of decisions by insurance companies that flooding was an uninsurable risk, prompting Congress to protect these homeowners. This program also created maps of flood zones which were virtually non-existent at the time. It should be noted that homes and businesses located in high flood risk areas with mortgages from government backed lenders are required to have flood insurance.

While the majority of policyholders may see a rate hike, those in flood-prone areas, such as Hawaii and the Gulf Coast states, will experience the highest percentage of rate hikes.

For example, in hurricane-prone Texas, 86% of policyholders will see their premiums increase. In neighboring Mississippi, rates are expected to increase for 84% of homeowners, while those in Florida and Louisiana will see increases of 80%.

“On the other hand, Alaska, the Washington, DC area and several Midwestern states have the lowest proportion of homeowners facing rising flood insurance premiums,” the study said. “In Alaska (14%) and Washington, DC (28%), only a minority of households are about to pay more for flood insurance, while in Washington, DC, adjacent to Maryland, the share is well above 39%.

“Many states in the Midwest are among those with the lowest percentage of homeowners facing price increases in flood insurance. In Michigan, less than half (46%) will pay more, while in states like Nebraska, Indiana, Ohio, Wisconsin and Illinois, that share is between 54% and 57% of all the owners.

Click here to view the full report on The web page also includes a postcode tracker where one can search by postcode to see how rates may be affected by the new risk management calculator.

About Teresa G. Wilson

Check Also

Boise’s pandemic housing boom begins to reverse

(Getty) The country’s most overvalued housing market is coming back from a pandemic spike as …