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DHS FEMA NFIP Services - eWaterwark Article
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Increasing Policyholder Discounts
Residents of more than a dozen NFIP communities are now receiving premium discounts of 5 percent or
greater, because their community joined the Community Rating System (CRS) this year. In addition,
on October 1, 2006, more than 30 communities already receiving CRS discounts were able to increase
them by 5 to 20 percent. One CRS community--Roseville, California--is now earning its residents the
largest discount offered by the CRS: a 45-percent reduction on the annual premium paid for flood
insurance coverage.
Reducing premiums is a compelling strategy for boosting flood insurance sales. And, saving property and
lives can be an effective way to convince taxpayers to fund mitigation projects. The CRS is a successful
FEMA program designed to meet these three goals: (1) reduce flood losses; (2) facilitate accurate
insurance rating; and (3) promote the awareness of flood insurance.
A Class System
More than 15 years ago, the CRS was created as a mitigation incentive program based on a partnership
of local, State, and Federal agencies and insurance industry experts to provide flood insurance
premium reductions in recognition of proactive community floodplain management efforts that exceed
NFIP minimum standards.
Modeled after the insurance industry's Community Fire Rating System, the CRS provides discounts in
5-percent increments for each of 10 rating classes. A community accrues points to improve its CRS
class rating and receive increasingly higher discounts. Points are awarded for engaging in any of
18 creditable activities, organized under four categories:
- Public Information
- Mapping and Regulation
- Flood Damage Reduction
- Flood Preparedness
Sometimes, it is merely a matter of documenting creditable activities that are already under way for
a community to earn CRS credit. The number of points awarded for each activity is dependent on how
well the community meets the goals of the CRS.
Most communities enter the CRS as a Class 9 (earning a 5-percent premium discount) or a Class 8
(earning a 10-percent discount). However, the following communities were already engaging in so many
mitigation activities that, when they joined the CRS in October 2006, they entered at class levels
that earned their residents discounts of 15 to 20 percent.
| Community |
Class Rating on Entry |
Premium Discount |
| Miami Lakes, Florida |
6 |
20% |
| Vassar, Michigan |
6 |
20% |
| Rock Island County, Illinois |
7 |
15% |
| Sugar Grove, Illinois |
7 |
15% |
Once a community joins the CRS, it can continue to improve its class rating by engaging in mitigation
and outreach activities that earn it even more points. As of October 1, 28 communities improved their
class by one step. Two communities--Waveland, Mississippi, and Skagit County, Washington--moved to Class
5, making their residents eligible for a 25-percent discount on their flood insurance premiums.
| Improvement in CRS Class |
Number of Communities |
| 9 to 8 |
10 |
| 8 to 7 |
11 |
| 7 to 6 |
5 |
| 6 to 5 |
2 |
Some communities engaged in so many creditable activities since their last rating, that they improved
more than one class. The following communities improved two CRS classes.
| Community |
Improvement in CRS Class |
Improvement in Premium Discount |
| Nez Perce County, Idaho |
9 to 7 |
5 to 15% |
| Sand Springs, Oklahoma |
8 to 6 |
10 to 20% |
| Elm Grove, Wisconsin |
8 to 6 |
10 to 20% |
| Noblesville, Indiana |
7 to 5 |
15 to 25% |
The community of Roseville, California, is especially notable. During this last rating cycle,
Roseville, California, jumped over three classes--moving from a Class 5 community with a 25-percent
premium discount, to become the first Class 1 community and earn a 45-percent premium discount for
NFIP policyholders in the floodplain.
1,049 Strong, and Growing!
The CRS was implemented in 1990 with 300 communities. By October 1, 2006, the number of CRS
communities had grown to 1,049, representing more than 3 million NFIP policyholders. Although CRS
communities represent less than 6 percent of the 20,236 NFIP communities in the United States and
its territories, they contain 67 percent of all NFIP policies in force. The accompanying bar chart
shows the distribution of CRS communities in each class. Most are Class 9 and Class 8 communities.
It takes only 500 points to improve class ratings. Sometimes this can be accomplished with just one
or two mitigation initiatives such as providing drainage system maintenance (maximum 330 points),
installing a flood warning system (maximum 225 points), keeping Elevation Certificates on file
(162 points), or engaging in community outreach (maximum 315 points). Or, a community can accumulate
enough points to lower insurance premiums dramatically by engaging in major activities such as
acquisition and relocation of floodprone property (maximum 3,200 points) or instituting high
regulatory standards for the floodplain (maximum 2,720 points).
The CRS strategy is twofold: to recognize floodplain management and insurance activities that
meaningfully distinguish one class of community from another, and to act as a catalyst to encourage
communities to initiate new prevention activities.
Since 1990, 50 percent of all CRS communities have improved their CRS classifications by undertaking
more flood loss activities.
For more information about how to join the CRS or how to improve the class rating and premium
discount of a community that is already participating in the CRS, contact the Insurance Services
Office by email (nfipcrs@iso.com) or telephone (317-848-2898).
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| Last Modified:
Friday, 21 January 2011 |
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