What REALTORS® Need to Know About Risk Rating 2.0

On October 1, 2021, FEMA will implement a new pricing system for National Flood Insurance Program (NFIP) policies called Risk Rating 2.0. This new pricing methodology comes just as the latest NFIP extension expires on September 30th . Expirations of NFIP extensions are something Louisiana citizens are all too familiar with, but the implementation of Risk Rating 2.0 will bring many changes to how NFIP flood policies are priced. 


Louisiana REALTORS® encourages REALTORS® and their clients to contact their insurance companies to determine what their new NFIP rates will be under Risk Rating 2.0. Many property owners are finding that their flood insurance rates will increase significantly under Risk Rating 2.0 while others are finding that their rates will remain relatively the same. Agents should also have discussions with their clients about sellers assigning their flood insurance policies to buyers so buyers can take advantage of any premium discounts a seller currently has (currently known as grandfathering). 


New NFIP policies, will be subject to the new pricing methodology. Existing policyholders eligible for renewal will be able to take advantage of any immediate decreases in their premiums. All remaining policies renewing on or after April 1, 2022, will be subject to the new pricing system.


REALTOR® members can be assured that Louisiana’s congressional delegation is leading the way to address both these matters. Senators Cassidy and Kennedy, along with other co-authors, introduced legislation to extend the NFIP program through September 30, 2022. And, Congressmen Scalise and Graves officially urged FEMA to delay the implementation of Risk Rating 2.0, however there has been no indication to date that Risk Rating 2.0 will be deferred. 


REALTORS® and their clients should reach out to their trusted insurance partners to learn how these changes will affect their individual NFIP policies so informed decisions can be made going forward.