The National Flood Insurance Program (NFIP) is more than $20 billion in debt as of 2022. This is partly due to the increase in the number of flooding events in the US in recent years. But another factor is the need for changes in how flood insurance premiums are calculated for homeowners in the program.
Past attempts to fix the issue in Congress were delayed or scrapped due to outcry from homeowners facing sharp increases in their insurance premiums after government subsidies were eliminated. In 2012, legislation opened the way for more fundamental changes.
Beginning last October, the Federal Emergency Management Agency (FEMA) launched Risk Rating 2.0, a new pricing methodology aimed at making public flood insurance more equitable and transparent. This marks the biggest transition in public flood insurance since the beginning of the NFIP in 1968.
