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Changes are coming to your flood insurance with new FEMA risk calculation methodology

Flooding on Kauaʻi in April 2018.
Staff Sgt. Keith Anderson
U.S. Army
Flooding on Kauaʻi in April 2018.

Hurricane season lasts in Hawaiʻi until the end of November, but the rainy season lingers for several more months.

That has some homeowners checking their flood insurance — and those rates are going to be changing. It’s all part of a new way of calculating risk.

No matter how a Hawaiʻi property owner buys flood insurance, the rates and risk estimates are set by the Federal Emergency Management Agency.

FEMA administers the National Flood Insurance Program and recently introduced a new approach on pricing called Risk Rating 2.0.

The previous methodology, in place since the 1970s, looked only at a property’s elevation and location within flood zones on the Flood Insurance Rate Map.

In Risk Rating 2.0, FEMA added such variables as flood frequency, flood types and distance to a water source, among others.

According to Elaine Panlilio, account executive with the AOAO Group in Atlas Insurance Agency, more than 61,000 properties in Hawaiʻi carry flood insurance. That includes condominiums, residential homes and commercial properties.

Atlas Insurance estimates that nearly 80% of policyholders will see their premiums increase, by as much as $240 per year.

That works out to a little more than 48,000 policyholders who will pay more. Just under 8,000 policyholders will see their premiums decrease under the new calculations.

State law requires condominiums in flood zones to carry such insurance, and residential and commercial owners in a flood zone who have a mortgage on the property are also required to carry it.

The intent of Risk Rating 2.0 is to keep the national insurance pool solvent and new rates will take effect for policy renewals on and after April 1, 2022.

A. Kam Napier is the editor-in-chief of Pacific Business News.
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