NFIP Rating and the Community Rating System
The Community Rating System
The Community Rating System (CRS) is a voluntary program for National Flood Insurance Program (NFIP) participating communities. The goals of the CRS are to reduce flood damages to insurable property, strengthen and support the insurance aspects of the NFIP, and encourage a comprehensive approach to floodplain management. The CRS has been developed to provide flood insurance premium discount incentives for communities that implement floodplain management practices and exceed the minimum requirements of the NFIP.
The rating process for flood insurance policies in CRS communities is the same for non-CRS communities, except that the CRS discount is automatically applied to the premium subtotal (premium and Increased Cost of Compliance (ICC) premium) by an insurance company.
CRS Community Classifications and Discounts Can Vary
CRS-participating communities are assigned a CRS class rating from CRS Class 1 to CRS Class 10. A Class 1 community requires the most credit points and affords the greatest premium discounts for properties located within its jurisdiction. A CRS Class 10 identifies a community that has never participated in the CRS, or has participated in the CRS in the past but no longer participates in the program. As of October 1, 2012, the CRS communities receiving the most advanced CRS classes included Roseville, CA, with a CRS Class 1 Rating, Tulsa, OK, and King and Pierce Counties, WA.
Communities advance in CRS Classes by improving their floodplain management programs and making changes to help eliminate or reduce exposure to floods. The types of activities recognized through the CRS include:
- better public information about flood risk and the NFIP;
- maintaining high quality and up-to-date mapping and building code regulations;
- working to improve flood damage reduction practices; and
- implementing sound community flood preparedness activities.
Once a community applies to the appropriate Federal Emergency Management Agency (FEMA) Regional Office for the CRS program and its implementation is verified, it receives a rating classification based upon the credit points earned.
A CRS rating classification determines the flood insurance premium discount for policyholders of insured property within the CRS-participating community. Premium discounts ranging from 5 percent for a CRS Class 9 community to a maximum of 45 percent for a CRS Class 1 community. Table 1 shows premium discounts for CRS Classes 1–10 within different flood zones.
Insurance agents need to know what their community is rated to understand whether they can offer their clients lower flood insurance premium through the CRS. A community’s CRS class and associated premium discounts are based on its assigned community number. Often, the agent’s insurance carrier includes CRS rating information within the rating tools they provide to their agents.
TABLE 2. CRS PREMIUM DISCOUNTS
SFHA (Zones A, AE, A1–A30, V, V1–V30, AO, and AH): Discount varies depending on class.
SFHA (Zones A99, AR, AR/A, AR/AE, AR/A1–A30, AR/AH, and AR/AO): 10% discount for
Classes 1–6; 5% discount for Classes 7–9.*
Non–SFHA (Zones B, C, X, D): 10% discount for Classes 1–6; 5% discount for Classes 7–9.
|* In determining CRS Premium Discounts, all AR and A99 Zones are treated as non-SFHAs.
Some Policies are Ineligible for CRS Discount in CRS Community
Keep in mind, certain NFIP policies may not be eligible for the extra discount afforded to them by living in a CRS community. Preferred Risk Policies (PRPs) are not eligible for CRS discounts because these policies already receive a favorable flood insurance rate when compared to their flood risk. Policies provided under the Mortgage Portfolio Protection Program (MPPP) by a lender are also not eligible for a CRS discount.
Also ineligible for CRS discounts are certain post-FIRM structures built out of compliance with a community’s floodplain management ordinance and located in a Special Flood Hazard Area (SFHA), where the lowest floor elevation used for rating is one foot or more below the Base Flood Elevation (BFE). The two exceptions to this ineligible rule are:
- post-FIRM V-Zone buildings with unfinished breakaway wall enclosures and machinery or equipment at or above the BFE; and
- subgrade crawlspaces with certification from a community official.
CRS Ineligible properties are discussed further in the NFIP Flood Insurance Manual at page CRS 1.
Policy Rating in a CRS Community and NFIP Participation
As noted, the procedures used for rating policies in CRS communities is the same as it is in non-CRS communities, except that the discount is applied to the premium subtotal (premium and ICC premium). The CRS discount should not be applied to the probation surcharge (if applicable) or Federal policy fee.
There is no flood insurance coverage available in a community that does not participate in the NFIP. If you are uncertain whether or not your community participates in the NFIP, call your insurance agent, consult a local community official, or check the NFIP Community Status Book link, which is provided at the end of this article. Financial lenders are not required by their regulators to ensure that collateral is protected by flood insurance in communities that do not participate in the NFIP. Keep in mind that some communities may be in the emergency phase of the NFIP and are therefore ineligible.
You must document the flood zone on the insurance application to assist in rating the flood risk for any policy you sell. Common sources of evidence of the flood zone are a Flood Insurance Rate Map (FIRM), an Elevation Certificate, or a Standard Flood Hazard Determination Form. Many insurers provide their agents with access to flood zone determination services. If yours does not, then you can contact any Flood Zone Determination Company found on FEMA’s website to discuss options for assistance.
Calculating the Policy Premium
The rating section of the NFIP Flood Insurance Manual offers guidance on the rating process of flood insurance policies. Your insurer may supply you with rating software; however, you are responsible for knowing how the policy should be rated and where you can find the necessary information. You can always contact your company underwriter for additional assistance.
Once the premium has been accurately calculated and the CRS discount has been applied, an agent can share the premium savings with their customer. It is an added bonus to be able to tell a customer that not only have they saved on their premium because their community participates in CRS, but that they are also better protected against flooding.
For more information:
The NFIP Flood Insurance Manual See rating examples at the end of the manual rating section.
List of Flood Zone Determination Companies (FEMA does not endorse any private companies, we offer this information as a courtesy only)
NFIP Community Status Book online
The FEMA Map Service Center:
- Property owners and others with questions about FIRMs and LOMAs can call the FEMA Mapping Specialist at (877) 336-2627 for information.
- Map Service Center Product Catalogue (historic and current maps can be found here):
Letters of Map Changes
Revisions to National Flood Insurance Program (NFIP) Maps