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[UPDATE] National Flood Insurance Program to end on September 30, insurers rally for extension

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In response to the unpredictability of the 2021 Atlantic hurricane season, insurers are asking the U.S. Senate to extend the expiration of the National Flood Insurance Program (NFIP) from September 30 to December 3, 2021. 

Although the program is due for reform, several insurance and real estate organizations are rallying together to extend the current program just a little bit longer to prevent policyholders from experiencing a lapse in coverage as many people nationwide are still being impacted by COVID-19, and people in some areas are facing severe and unprecedented flooding events. 

In addition, the National Association of Professional Insurance Agents (PIA) requested to push the scheduled launch of FEMA’s new model, Risk Rating 2.0, from October 1, 2021 to April 1, 2022. The group suggested that the model isn’t ready, revealing concerns around engine failure, the absence of adequate training for flood insurance agents and general confusion around the system. 

However, NFIP officials argue that implementing the new rating model into writing new policies shouldn’t be delayed any longer. 

The restructuring plan will alter premiums for 5 million policyholders who buy flood coverage through FEMA’s NFIP, marking it as the largest revision in the program since its creation in 1968.


On April 1, FEMA announced that it will phase in a price-setting method in the  National Flood Insurance Program (NFIP) that will determine new premiums based on a property’s value, risk of flooding and other factors

In the past, FEMA based risk ratings and premiums on two factors: whether a home was located inside a severe flood zone, and the elevation of the home within that zone. This methodology was developed in the 1970s. The NFIP currently serves around 5 million homes, and although premiums for these homes have steadily increased over the years, the program is more than  $20 million in debt due to the uptick in climate change-related sea-level rise and storms, which have led to more widespread flooding. 

With Risk Rating 2.0, FEMA will consider factors like rebuilding costs, flood frequency, distance to a water source and other flood risk variables to equitable distribute premiums across all policyholders based on home value and unique flood risk. This change marks the first update to FEMA’s pricing methods in 50 years, and is based on updated technology and FEMA’s evolving knowledge of flood risks. 

Effective October 1, 2021, for new policies and April 1, 2022, for existing policies, the agency expects to see an increase in premiums for 4% of policyholders. None will face more than an  18% annual increase

Learn more about flood insurance and the NFIP.

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Jasmine Kim
Jasmine KimB2B Content Manager

Jasmine is The Zebra’s newsroom content writer. With a background in journalism, she reports on breaking news, trends, mergers and acquisitions, and financial reports related to the insurance industry.