When High-Risk Becomes Higher, Offer Cost-Savings

What’s changing

A client’s flood risk is changing from a high-risk area (Zone A) to higher-risk area (Zone V) or the Base Flood Elevation (BFE) is increasing.

An image depicting a transition from high risk to higher risk

What this means for existing clients

Under Risk Rating 2.0: Equity in Action, all existing policies will move toward their full risk rates based on statutory glidepaths. The increase and target premiums for grandfathered policies are similar to those for non-grandfathered policies – some will see decreases, some will see smaller increases, and some will see larger increases in similar proportion to non-grandfathered policyholders. 

Policies formerly eligible for grandfathering will transition to their new full risk premium under Risk Rating 2.0: Equity in Action. Increases for existing policies will be gradual and within the 18% annual cap imposed by Congress. Decreases will apply upon first renewal on or after October 1, 2021. New policyholders, or those who renew after October 1, 2021, will not be able to participate in grandfathering. All policies will be subject to Risk Rating 2.0: Equity in Action beginning April 1, 2022.

Agent talking points

  • Your building is now at an even higher risk of flooding – renew or purchase flood insurance before the maps update to stay protected and save money.
  • Flood insurance costs are higher for higher-risk areas. But, there is a way to save money.
  • If you purchase or renew coverage before the map update takes place, you’ll secure a “grandfathered” rating, locking in rates based on your current lower-risk zone or BFE.
  • You should also remember to renew your policy annually to stay protected and keep your lower rates.
  • Flood insurance is required if you have a mortgage from a federally regulated or insured lender.
  • Even if you don’t have a loan, you are strongly encouraged to purchase a policy. There is at least a 1 in 4 chance of flooding over the life of a 30-year loan in high-risk areas.