Floods are becoming more common and insuring one’s home or business against it could become a more complicated or costly process. In the US, FEMA’s National Flood Insurance Program has made updates to the methodology they use to evaluate flood risks. Called Risk Rating 2.0, the methodology incorporates new physical and actuarial models, considering such conditions as flood frequency and type, distance from water bodies, and rebuilding costs.
“Because technology is getting so much better and the carriers and FEMA can run much better predictive models, they are better at pricing. Whether that’s going up or down depends on the risk itself. I believe over 70% of insureds that buy a national flood insurance policy [will see] their rates for that specific policy go up,” says Carter Bumgardner, a producer at Graham Company, of the impacts of the changes, to GlobeSt. “Flood insurance has been changing drastically over five to ten years with how underwriters are evaluating the risk.”
In Canada, issues with floodplain mapping have left a significant number of homes in situations where owners may be unable to obtain flood insurance. With up to 10 percent of homes in flood plains, obtaining insurance is becoming a greater challenge as insurance providers update their risks in response to climate change.
Says Bill Blair, Minister of Emergency Preparedness, of the importance of updating flood insurance in the wake of the recent flooding in British Columbia, to The CBC, “It does, I think, add an element of urgency to our work with the insurance industry and the development of a National Flood Insurance Plan.”
Source:
https://www.globest.com/2021/11/22/new-flood-insurance-rules-will-matter-to-cre-property-owners/?slreturn=20211028120222
https://www.cbc.ca/news/canada/marketplace-home-insurance-1.6262386
