Gulfshore Insurance > Gulfshore Blog > Condo Associations > Risk Rating 2.0 – FEMA 2021 Flood Rate Changes

Commercial Lines Condo Association FEMA Risk Rating 2 0FEMA’s Risk Rating 2.0 rollout is now underway as the agency announced April 1st that NFIP flood insurance policyholders will see a new system calculate their premiums. Risk Rating 2.0 is a new pricing methodology from FEMA for flood risk. It is designed to better reflect a property’s unique flood risk while also providing rates that are easier for agents and policyholders to understand. It will use the latest actuarial practices to set risk-based rates, allowing consumers to make more informed decisions about flood insurance.

What is changing:

According to FEMA, the current NFIP pricing methodology has led to policyholders encountering average premium rate increases of $8 per month each year at renewal. After incorporating additional flood information and variables into the pricing methodology, FEMA provided that Risk Rating 2.0 will have the following impacts on current NFIP policyholders’ premium rates:

  • Nearly a quarter (23%) of policyholders will experience premium rate decreases.
  • Two-thirds (66%) of policyholders will encounter moderate premium rate increases.
  • The final 11% of policyholders will experience more significant premium rate increases.


To make the changes more equitable, FEMA will look at detailed flood risk variables such as distance to a water source, flood frequency, flood types, and property characteristics like the cost to rebuild and elevation.

What is not changing:

  1. Setting limits on rate increases. Risk Rating 2.0 maintains limits on rate hikes. Rates may not increase by more than 18% per year.
  2. Utilizing flood mapping. Risk Rating 2.0 will continue to use FIRMs to assess the flood risk, rebuild requirements, floodplain management strategies, and see if a location’s flood insurance is mandatory. FIRMs also remain as tools for creating flood management policies.
  3. Offering discounts. Finally, Risk Rating 2.0 keeps features from the original risk ratings, including premium discounts for pre-FIRM subsidized and newly mapped properties. The discounts for participation in the Community Rating System continue to apply.

NFIP will roll out Risk Rating 2.0 in two phases:

  • Phase I. Risk Rating 2.0 starts for new policies beginning on October 1, 2021. Renewing policyholders may see discounts on their premiums.
  • Phase II. Policies with renewals on or after April 1, 2022, will price according to Risk Rating 2.0.


Click here for additional information on FEMA’s Risk Rating 2.0.

Joe Thompson is a Client Advisor and Partner at Gulfshore Insurance who specializes in managing risk for community associations and various contractorsComments and questions are welcome at

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