The new system is designed to address some of those problems. The agency plans to pair its existing mapping data with “commercial catastrophe models,” as well as the “geographic and structural characteristics” of the home, according to a briefing document presented by FEMA to private flood insurance representatives in October and obtained by Bloomberg.
The goal, according to that document, is more transparent and understandable costs, which will in turn spur more people to get flood protection.
“Policies that are easier to sell and buy = more insurance coverage,’’ the document says.
The document offers the example of two homes in a 100-year flood plain. The first home, at the edge of that zone, faces low risk of flooding from inland flooding or storm surge; the second faces higher risk from both. Under the current system, each home pays the same premium; with the changes, the first home’s premiums would fall by 57 percent, while premiums for the second home would more than double.
Customer Risk
The same document, dated Oct. 17 2018, said that FEMA would first introduce the new risk rating system for states along the Gulf Coast and Southern Atlantic, from Texas to North Carolina. New rates would begin to take effect in 2020.
A FEMA spokeswoman said parts of the document were no longer accurate, but declined to say which ones.
“Our new system will determine a customer’s flood risk by incorporating multiple, logical rating variables –- like different types of flood, the distance a building is from the coast or another water source, or the cost to rebuild a home,” Maurstad said.
The agency said it didn’t yet know what the effect of the new system would be on premiums. But rates are likely to go up in neighborhoods with the greatest exposure to flood risks, which could hurt property values in those areas, according to Michael Berman, a former chairman of the Mortgage Bankers Association who worked on housing issues for the Obama administration and has been briefed on the plan.
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