Risk Rating 2.0
FAQs and Important Facts

• To aid in the transition to RR 2.0, the flood processing platform application entry process will maintain its current look and feel. In order to accommodate the new RR 2.0 rating methodology, some questions will be simplified for policies effective on or after October 1, 2021, and some new questions will be added. UPDATED on 8-16-2021
  
  

• The flood zone process will not change in the short term and it is still a required field for RR 2.0. While it is no longer part of the rating factors used, it will still be necessary for mandatory purchase requirements and first-floor height calculations, and is still a required input for the National Flood Insurance Program (NFIP) 
  
  

• For policies expiring between October 1, 2021 and March 31, 2022, they will be billed under 1.0 rates; however, beginning October 1, an agent will be able to access renewal policies effective 10/1 and later, enter required RR 2.0 information and obtain a 2.0 renewal quote. If the 2.0 premium is less than the 1.0 premium, the agent will have the ability to bill the risk rating 2.0 premium. 
  • A. Why doesn’t the flood processing vendor automatically bill the 2.0 renewal if it’s more beneficial?
    • Every policy will require some level of additional information on the policy that will need to be entered and/or validated by the agent before a 2.0 renewal quote can be obtained
  • B. What is the additional information the agent will need to input to quote RR 2.0 rates?
    • While the information that will need to be input and/or validated will differ based upon the policy, the potential inputs or data to verify could include:
      • Replacement Cost Documentation - FEMA will automatically calculate the replacement cost for all single family structures. This includes 2-4 family buildings, residential building/units, and residential mobile homes. The standard replacement cost documentation agents obtain in the current program will still need to be provided by the agent for any General Property or RCBAP policy. Following the existing verification process for RCBAP's, all General Properties and RCBAP's will need to verify the replacement cost value every three years unless the property meets an exclusion criteria. 
        • Supporting Building Replacement Cost Value documentation is not required if:
          1. The policy is contents only;
          2. The replacement cost is less than $1,000;
          3. The building occupancy is Non-Residential Manufactured/Mobile Building;
          4. The building description is either Storage/Too Shed or Detached Garage; or
          5. The building or unit's square footage is less than 1,000 square feet
        • Documentation must include property address, the foundation, and value. If home insurances use tools such as 360Value, Xactware or Marshall & Swift , this type of report is sufficient.
          UPDATED on 10-12-2021
      • Construction Type - only on Single Family Dwellings.  Inputs will be frame, masonry, and other.  
      • Building Square Footage (unit square footage if it’s a unit owner policy).  
      • Number of detached structures on the property
      • Properly elevated machinery, equipment, and appliances
      • The floor number of the unit is on (for residential and non-residential units)
      • Number of floors in the building (excluding enclosures, basements, crawlspaces, and unfinished attics)
      • Total number of units in the building (for residential and non-residential units)
      • Foundation Type - this will only be needed in scenarios were we are unable to translate from the existing 1.0 policy. Torrent anticipates this being the exception
      • Coastal Barrier Resources Act designation - this will be an exception, in most cases it won’t be required or can pre-determine
  • C. When will this process be available on the TorrentFlood system?
    • The ability to move a 10/1/2021 through 03/31/2022 renewal from 1.0 to 2.0, if beneficial, will be available starting 10/1/2021
  • D. What if a renewal policy with an effective date between 10/1/21 and 3/31/22 has already been paid, and the policyholder wants to take advantage of a lower RR 2.0 premium?
    • We will provide the ability to cancel and rewrite the policy back to the inception date if the RR 2.0 rates are more favorable.  Even if the benefit to the policyholder is discovered well into the renewal, there is no time limit on when the policy can be canceled and rewritten and the premium refunded.  Cancel reason 25 will be used for this situation and producer commissions will be retained.
      
      

• For all policies expiring on or after 04/01/2022, we will be unable to renew until the agent has provided the required RR 2.0 information
• In order to facilitate the collection of information, we will be creating a new queue that will be accessible from the Agent’s dashboard
  • The new queue will show all policies for that agent that need RR 2.0 information to be applied
  • When policies are accessed from the queue the user will be taken to a page where only the needed RR 2.0 information will be asked for
  • Once the information is obtained, the policy will be eligible for RR 2.0 renewal and will be removed from the queue
• In order to provide additional tracking and insight we will be developing a report that will track all 04/01/2022 forward renewals to show:
  • Which policies don’t have the RR 2.0 information
  • Which policies have obtained RR 2.0 information
    • Of those, which have been billed
    • Of those that have been billed, which have been paid
      
      

• We will provide the ability to cancel and rewrite the policy back to the inception date if the RR2.0 rates are more favorable
  
  

Is an Elevation Certificate (EC) going to be required with RR 2.0 rated applications or policies? 

• No, EC’s are no longer required but they are optional. Agents will have the opportunity to enter the EC information for a more accurate premium rating and to determine if the EC will benefit the policyholder.
  • If an EC is optionally provided, but the EC information leads to a less beneficial premium than the NFIP’s first floor tool, RR 2.0 will not use the EC information for premium calculation.  
  • The EC data will only be used if it benefits the policyholder. If the EC is beneficial and used, then a copy of the elevation certificate and photos must be submitted for the policy file.
    UPDATED on 10-12-2021
• Effective October 1, 2021, the measurements from Section E of the EC can be entered for any flood zone.
  
  

• Remapping will still be required with RR 2.0 and that process will continue with minimal changes
• With RR 2.0, there will be less impact on remapped policies with flood zone changes   
  
  

• There currently isn’t any impact on the agent or insured processes and there are minimal changes on the internal claims processing
  
  

• RR 2.0 will not impact the insureds’ ManageFlood experience at this time
  
  

• RR 2.0 changes will not impact the path or process for excess or private flood quoting and binding within the  flood processing platform
  
  

• The flood processing vendor is offering a variety of training options including live webinars. Some sessions will be recorded for training-on-demand. Short video clips will also soon be available. Please visit the agent training schedule and sign up for a session! 

How will flood sources impact the rate calculation in Risk Rating 2.0?

• With Risk Rating 2.0, FEMA now has the capability and tools to address rating disparities by incorporating more flood risk variables. These variables include flood frequency, multiple flood types—river overflow, storm surge, coastal erosion and heavy rainfall—and distance to a water source along with property characteristics such as elevation and the cost to rebuild. This rating criteria is determined through the FEMA rating engine and is not published for each individual property. 8-5-2021

• Eligible statutory discounts can be maintained through the assignment process and/or for new policies after a real estate transaction that meet the criteria/documentation. The number of years a policy is in force does not impact the rating calculation but rather the rating characteristics specific to the structure being insured. 8-5-2021
  
  

• Loss history is protected under the Privacy Act. A property owner can obtain the loss history through FEMA's Mapping and Insurance eXchange at 1-877-FEMA MAP (1-877-336-2627). The property owner is also sent the loss history on an annual basis.
• If this is a new purchase it is suggested that the buyer ask the seller for their history report to know if there were prior claims.
• For policies rated in Risk Rating 2.0, the prior claim count will display on the declaration page for paid flood losses within the rolling 20 year window. 8-5-2021
  
  

• The Industry group in FEMA is working on a suite of materials to distribute to the companies, such as an escalation guide, a simple guide for agent to write a policy, and samples of questions and answers that come from agent trainings. It is standard government practice to have these materials vetted and approved before distribution. This often takes time. As soon as the materials are ready, they will be released to the companies and vendors. 8-9-2021
  
  

• Yes, an insured can purchase any building coverage amount up to the maximum coverage limit available in the NFIP. The replacement cost value compared to building coverage is used for pricing purposes only. If the insured purchases building coverage more than the replacement cost value, FEMA will use the building coverage in lieu of the replacement cost value for pricing purposes. 9-1-2021
  
  

• Elevation. Elevating a structure is the most resilient defense against flood damage. A structure’s first floor height in relation to the ground is an important rating component in Risk Rating 2.0 regardless of flood zone. 9-1-2021
  
  

• A land survey completed by a licensed surveyor or engineer can be used as a source of lowest adjacent grade and/or first floor height information, just like an elevation certificate. Land survey formats vary; FEMA does not intend to specify what information must be on a land survey or any further requirements for its use as an elevation data source. You can find further information in the Flood Insurance Manual:
  • How to Write, II.  General Rating Information, C. Structural Variables, 4. First Floor Height, c.  Elevation Certificate/Land Survey and d. Additional Information on Elevation Certificates
    9-1-2021
    
    

• The new owner of an NFIP-insured building can buy a new NFIP policy and receive any statutory discount the prior policyholder received if all of the following apply:
  • The building is not in condominium ownership before or after the transaction;
  • The building was insured by the NFIP with building coverage at the time of transaction;
  • The new NFIP policy will be effective on, or within one year after, the transaction date; and
  • The insurer submits the prior NFIP policy number and NAIC number to FEMA and maintains acceptable documentation of the title transfer.
    9-7-2021
    
    

• Yes, insurers should continue with their standard business practice when endorsing a policy to reflect a new agent of record.
  9-7-2021
  
  

• A new owner may receive the same discounted premium as the previous owner. However, the annual increase cap (which is a component of the discounted premium) is based on the information provided by the new owner. The discounted premium does not include assessments, fees, or surcharges.
  9-7-2021
  
  

When does the new time requirement to submit endorsements for policy assignments begin?

• The new time requirement to submit endorsements for policy assignments applies to endorsements effective on or after October 1, 2021. The owner of an insured building may provide written consent to assign a flood insurance policy with building coverage to the purchaser of the building. The seller must sign the assignment endorsement on or before the closing date, and the new building owner has up to 30 days beyond the closing date to submit the Endorsement Form to the insurer for processing.
  10-12-2021
  
  

• Split level – indicate the number of floors within the building excluding basement, enclosure, crawlspace and/or unfinished attic space.
• Mid-level entry – indicate the number of floors in the building excluding basement, enclosure, crawlspace, unfinished attic space and/or mid-level entry.
  9-16-2021
  
  

• RR 2.0 is a new and different rating methodology. It identifies flood risk at the individual structural level. As a result, when compared to premiums or existing policies there are differences. Some premiums will be lower while some premiums will be higher.
• RR 2.0 uses many variables to assess flood risk such as distance to flood source and elevations. In addition, RR 2.0 identifies flood risk for multiple types of flood like inland, coastal, tsunami and Great Lakes flooding.
• Any premium increases will transition gradually and within the existing statutory limits until the full-risk rate for the property is reached. See FIM Section 4.1.C.2.b
  9-16-2021
  
  

• There are mitigation discounts available for actions such as elevating machinery and equipment, installing proper openings, or removing enclosures. See FIM Section 3.II.C.5.
• Making changes such as increasing your deductible may reduce the premium. See FIM Section 4.II.D.1. for endorsement information and FIM Section 3.II.D.3 for deductible options.
• Talk to your insurance agency and community official to determine the best options for you.
  9-16-2021
  
  

• In most cases, changing a rating variable will impact the premium. There are some cases where changing a rating variable will not impact the premium. This is due to there being thresholds for most rating elements, where once you are above that threshold the change will have little to no impact to changing the flood risk. An example would be changing the floor of interest for a condo unit from 50 to 60 would have little (any maybe no) impact to premium. See FIM Section 3.I.A. Table 1 for a full list of rating variables.
  9-16-2021

If I’m an insurance agent, who do I contact if I have questions about a RR 2.0 quote?

• Insurance agents should contact their NFIP insurer for any RR 2.0 quotes. NFIP insurers have developed processes and systems to process RR 2.0 policies.  FEMA is available to support NFIP insurers as the insurer may not have visibility into the rating logic. The insurer may refer questions to FEMA. See FIM Section 1. IV. A.
  10-12-2021
  
  

Can a building owner or an owner’s representative complete Section E of the EC?

• Yes, Section E of the EC may be completed by a building owner or owner’s representative. Section E, Building Elevation Information (Survey Not Required) marked “for Zone AO and Zone A (without BFE)” can be used in all flood zones for rating purposes.
  • Preparers must compute and enter the elevation differences between the lowest floor and the LAG along with lowest floor and Highest Adjacent Grade (HAG).
  • If Section E is completed for zones other than unnumbered A and AO, the information can be used for rating purposes only and does not relate to floodplain management requirements. 
    10-12-2021
    
    

How will FEMA determine the First Floor Height if no EC is used?

• FEMA will determine a First Floor Height value using application information and various datasets. 10-12-2021
  
  

Are new EC’s required, or can Industry continue using previous versions?

• FEMA will accept previous ECs as long as they contain the required information to determine the First Floor Height. 10-12-2021
  
  

Will homes built to code based on FEMA guidelines be able to be grandfathered using the zone or Base Flood Elevations (BFEs)?

• No, since zone and BFE are no longer rating elements for Risk Rating 2.0 grandfathering is not an option. FEMA is determining premium based on the unique flood risk characteristics of every individual property.
• Existing policies renewing on or after October 1, 2021 will be able to move to their Risk Rating 2.0 full-risk premium either immediately if the premium is lower or gradually based on the statutory annual premium increase caps to the full-risk premium. 10-12-2021
  
  

Will FEMA continue to issue flood maps and make flood zone changes?

• Yes, FEMA will continue to issue updated Flood Insurance Rate Maps (FIRMs).
• FEMA’s regulatory flood hazard data, as displayed on FIRMS, will still be necessary and essential for communities as it will continue to inform floodplain management building requirements, land use decisions, and the mandatory purchase requirement for flood insurance. See FIM Appendix D: Flood Maps for more information. 10-12-2021