The Federal Emergency Management Agency is rolling out changes to the National Flood Insurance Program's pricing methodology.
The new system, dubbed "Risk Rating 2.0—Equity in Action," will provide actuarially sound, equitable, and easy-to-understand rates, FEMA says, and updates a methodology that has remained unchanged in five decades.
The pricing methodology will focus on equitably distributing premiums across all policyholders based on their home's value and the unique flood risk of their property. "Currently," the agency said in a statement, "many policyholders with lower-value homes are paying more than they should and policyholders with higher-value homes are paying less than they should."
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