We have already dove into the upcoming changes to the flood insurance rate in Arkansas statewide in our previous blog.

Today, we want to dive deeper into further understanding these changes as we focus on smaller parts of the state, the counties that are most impacted by these upcoming events to the federal flood insurance rates.

NFIP: Federal Answer to a Flood Event

We encourage everyone to get a flood policy for your properties since flood happens everywhere and most of the time without notice. One afternoon, you might get a moderate rainfall that lasts until late in the evening in Little Rock and you might be surprised to see how an inch of water from rain can bring flood coming in from your basement door. Regardless of your flood zone, flooding happens everywhere.

However, getting flood insurance is simply the first step in making sure that you're protected. It's another thing if when you miss out on changes coming to your policy. It isn't a question of where to get flood insurance nowadays since there's a lot of flood insurance companies out there.

You have private insurance companies building up a community for private flood insurance and also the more widely known federal government and the National Flood Insurance Program (NFIP).

These NFIP flood insurance cover both damages to the building and contents. When we say building, this generally pertains to a residential property or a commercial structure that gets flood coverage that maxes out to $250,000 (up to $500,000 for commercial flood policies only). At the same time, you'll also find contents coverage of $100,000 or the personal property you have listed with the insured building.

FEMA and the NFIP also help in other ways as well since policyholders are eligible for their Increased Cost of Compliance (ICC) and what's called the Community Rating System (CRS).

The ICC is an additional $30,000 flood coverage to give way for flood mitigation efforts for the insured property to avoid massive losses from a future flood event. The CRS on the other hand is a community-based rating system that measures the overall flood mitigation efforts made by the community in general; basically, this means that the higher your CRS score is, the bigger the discount. 

Risk Rating 2.0

First, let's go through a brief rundown of the changes coming to the National Flood Insurance Program (NFIP) which is provided by the federal government under the Federal Emergency Management Agency (FEMA). These changes are through what's called the Risk Rating 2.0.

This is what FEMA calls equity in action when it comes to making the cost of flood insurance policies fairer per policyholder. Generally, this is because property values for each individual property will be accounted for when finalizing your quote and flood insurance premiums with the National Flood Insurance Program (NFIP).

It's important to note, however, that this won't mean that the cheapest flood insurance will go automatically to lower-valued homes. It's equally important that we take into account, just like FEMA does and the private flood insurance industry, what's called flood risk variables which includes, but is not limited to the following:

• Flood zone designation in the flood map. Is the property in a high-risk flood zone or a low-risk flood zone?
• History of flood incidents, flood damage, and flood loss experienced by the insured property
• Flood claims made in the last ten years 
• Flood hazard like proximity to the closest water source or body of water
• Overall risk for flooding in the area and chance of flooding
• Mitigation efforts made on the property. Are there enough flood openings? Is the lowest floor above the base flood elevation?

Today, we want to focus on the good, the bad, and the ugly changes to Pulaski County's policyholders with FEMA in this new rating methodology. The Risk Rating 2.0 and its changes will be starting this October 1, 2021.  

The Good

We want to cover the good things coming to Pulaski County people first. We'll divide these good changes into two to specify the changes coming to flood insurance rates. This good change will bring an immediate decrease in the premium rates of those impacted. About 30.7% or 770 of the policies in the county will get impacted by this change.

The first half will impact about 16.1% or 406 policies will be getting a decrease that ranges from $0, which means there'll be no change at all, to $50 per month ($0 - $600 per year). The other half of this good change impacts 14.5% or 365 policies which will get a better deal since the decrease ranges from $50 to more than $100 per month ($600-$1200 per year). 

The Bad

Now, let's move into the bad news and bad changes that the Risk Rating 2.0 will bring to residents of Pulaski County in Arkansas About 56.2% or 1,412 policies in force from FEMA will get an increase ranging from $0 to $10 per month ($0 - $120 per year).

The Ugly

Lastly, let's move to the farther end of the graph and talk about the ugly news. This is divided into three parts: what we'll call the less ugly, the ugly, and the ugliest. 

The less ugly will impact 8.8% or 221 of the policies. This will create an increase for those impacted once the Risk Rating 2.0 kicks in. The increase will be ranging from $10 to $20 per month ($120 - $240 per year).

On the other hand, when it comes to that ugly portion, we're going to start to talk about a more drastic increase in flood insurance rates. Another 3.8% or 95 policies fall under this change. The increase in rates will be from $20 to $50 per month ($240 to $600 per year). 

Lastly, the ugliest of these three is something that 0.6% or 15 policyholders will have to deal with. The rate increases, this time around, from $50 to more than $100 per month ($600 - $1200 per year).

This price hike can easily be deemed as an alarming increase especially for the low-income communities that might be impacted by this change. This is why it's equally important to understand your flood insurance options as this increase may not help your situation and only cause more headache than peace of mind.

When Will It Happen?

Now, the date when you can adopt this program really depends if you're doing a renewal or if it's a new business policy. You see, you can expect these changes to start on October 1st and you're going to adapt to these rate changes if you're buying flood insurance from FEMA on or after that date. 

On the other hand, if you're doing a renewal with FEMA after that date then you don't have to take in these new rate changes until April 1st, 2022, or the date of your upcoming policy renewal.

So, you want to be very ready for this. We've been talking about this since last year since basically the NFIP is already 30 years old already and is in need of this change. 

If you have questions on these upcoming changes, what are your flood insurance options in Arkansas, or anything about flood, reach out to us through the links below. You can also watch this on our YouTube channel.

Remember, we have an educational background in flood mitigation and we want to help you understand flood risks through education and awareness in flood insurance and preparedness.

The Federal Emergency Management Agency (FEMA) is rolling out changes when it comes to flood insurance rates across all states in the country. Today, we will unpack these changes coming to Arkansas and how they can impact your flood insurance in the future.

Arkansas, at the time of writing, is currently in a flood warning state due to these low-pressure systems coming in. Since last month, the state is already getting these flood forecasts that minor to moderate flooding. The National Flood Insurance Program (NFIP) is changing this year and it's been a long time coming. 

Today, we want to cover the upcoming flood insurance rate changes that the Risk Rating 2.0 (also known as NFIP 2.0) will present to residents of Arkansas come to Fall this year. This update will change the landscape of being prepared for flood risk and responding to all possible flood damage to your personal property. We really believe that the true risk here is not having the right flood coverage from flood waters more than the flood itself.

These changes are expected to start on October 1st, 2021.

The NFIP 2.0

The Risk Rating 2.0, or commonly known as NFIP 2.0 as well, is more of a move of equity. This update on the federal flood insurance program itself will allow you to no longer pay more than your fair share when it comes to premiums as this would now be based on the value of your property or home starting this October. 

When it comes to the rate changes happening across the country, you're going to see these colors in ranges which are the green, blue, pink, and grey range bars. Now, each of these colors represents the good, the bad, and the ugly changes coming to each state.

It's important to note that these changes will also include having your rates depend on your property value which includes also the risk of flooding, the distance of your lowest grade to the base flood elevation, flood insurance claims history, and overall flood hazard. 

Let's unpack these and see what they mean for flood insurance.

The Good

Let's start with the green range or what we call the good change. This will impact 33% of policies with the NFIP in Arkansas or about 4,771 policies. The green range shows that you're going to get a decrease in your flood insurance premiums for more than $100 (up to $1200 per year). 

This means that if the average premiums in Arkansas are about $900, you can expect this to go significantly lower starting this Fall. This can really help a lot of people who found it hard to go with the federal flood insurance due to the overall cost of flood policies with FEMA.

This will also be significantly felt by those who are sitting in high-risk flood zones or the special flood hazard area (SFHA) and the coasts where the chance of flood is very extreme in most cases.

The Bad

When looking at the light blue range in FEMA's Risk Rating 2.0, you have to know that this is mostly a bad change coming to policyholders since this indicates that you're going to get an increase in your rates.

This bad change since about 57% or 8,138 policies will get up to a $10 rate increase per month ($120 per year). It means that you're going to start paying for that premium that starts at that $1000 mark.

This might not mean much for those who carry flood policies for their residential property however this may be a significant issue with premiums for commercial properties where generally the rates and premiums are significantly higher.

The Ugly

Lastly, the ugly change is covered by that dark blue and grey range. We put this in the ugly change even though generally it takes up the lowest percentage, this part has the highest increases in flood insurance rates when it comes to FEMA. Let's break these two down first.

When it comes to that dark blue range, it's going to impact 6% or about 919 policies in Arkansas which will increase from $10 to $20 per month ($120 to $140 per year). That's putting your average premium to $1000 at the lowest.

On the other hand, the grey area — composed of 4% or 570 policies in Arkansas — will get more than a $20 rate increase per month ($240 per year). This generally means that the premium you're going to pay to start this October will be at $1000 or $2000 even. 

A full graph of these changes with the NFIP 2.0 can be seen below:

When Will It Happen?

Now, the date when you can adopt this program really depends if you're doing a renewal or if it's a new business policy. You see, you can expect these changes to start on October 1st and you're going to adapt to these rate changes if you're buying flood insurance from FEMA on or after that date. 

On the other hand, if you're doing a renewal with FEMA after that date then you don't have to take in these new rate changes until April 1st, 2022.

So, you want to be very ready for this. We've been talking about this since last year since basically the NFIP is already 30 years old already and is in need of this change. 

If you have questions on these upcoming changes, what are your flood insurance options in Arkansas, or anything about flood, reach out to us through the links below. You can also watch this on our YouTube channel.

Remember, we have an educational background in flood mitigation and we want to help you understand flood risks through education and awareness in flood insurance and preparedness.