FEMA updating flood rating system

The U.S. Federal Emergency Management Agency (FEMA) is redesigning the Community Rating System (CRS) for the National Flood Insurance Program (NFIP).

The agency’s redesign work, which began in 2022, was published for public comment in July. The comment period ended September 9. FEMA will plan implementation of an updated CRS in 2025, and implement it in 2026, according to Tony Hake, an official from FEMA, who addressed the National Association of Insurance Commissioners summer meeting last month.

Over 1,500 communities participate in CRS, a program recognizing and encouraging community floodplain management practices that exceed NFIP’s requirements. 

Stakeholder feedback led FEMA to make “bold programmatic changes” to CRS, according to Hake. The redesign of the program includes revisions to its scoring and operational elements, Hake said. 

The U.S. Government Accountability Office (GAO) made two recommendations for changes to the CRS. The first is to calculate a community’s rating “based only on community activities that reduce flood risk,” Hake said. GAO wants the program to include discounts in premiums based on actual valuations of risk reduction, meaning CRS must be actuarially sound, according to Hake.

The second recommendation is to evaluate other ways to incentivize desirable community activities, even without actuarial justification, so these can be a basis for discounts, Hake added.

The redesign of CRS intends to support “communities to take measurable payments, make sustainable progress, reduce future flood risk, embed equity as a foundation into the program, incentivize communities to promote homeowners to participate in flood insurance to reduce the financial risk due to flood and deliver a participant centered and modernized program,” he said.