What This Bill Does
This bill requires the Federal Emergency Management Agency (the federal agency that handles disasters and emergencies) to make information about flood insurance pricing transparent to the public. The bill specifically focuses on a pricing system called Risk Rating 2.0 that the agency uses to determine how much people pay for flood insurance. The agency must complete several actions within one year of the bill becoming law.
Who It Affects
- The Federal Emergency Management Agency Administrator (the head of the agency)
- People who have flood insurance through the National Flood Insurance Program
- The general public
- Congress (specifically the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services)
Key Provisions
- The Administrator must make public all data and methods used to set flood insurance prices under Risk Rating 2.0 or similar pricing systems (Sec. 2(b)(1))
- The Administrator must create an online database where flood insurance customers can see what their insurance rates would be under Risk Rating 2.0 and under other pricing scenarios (Sec. 2(b)(2))
- The Administrator must publish a comprehensive report evaluating how Risk Rating 2.0 will affect flood insurance affordability, property values and government revenues over the next 20 years (Sec. 2(b)(3))
- The Administrator must conduct a public comment process (a formal way for citizens to share feedback) about Risk Rating 2.0 and develop a fair process for handling disputes about insurance rates (Sec. 2(b)(6))
- The Administrator must publish insurance rate data for each county showing the median (middle value), average, highest and lowest rates under different pricing methods (Sec. 2(b)(7))
What Changes
If this bill becomes law, flood insurance customers will have access to an online database showing their rates under Risk Rating 2.0. The public will be able to see the data and methods behind how the government sets flood insurance prices. The government will conduct a public comment process about the pricing system. For each county, the government will publish information about how insurance rates are distributed across different properties.
Important Definitions
- Administrator: the head of the Federal Emergency Management Agency (Sec. 2(a)(1))
- National Flood Insurance Program: the insurance program established under the National Flood Insurance Act of 1968 (Sec. 2(a)(2))
- Chargeable premium rates: the amount of money a person must pay for flood insurance coverage (Sec. 2(b)(1))
- Risk Rating 2.0: a methodology (system or approach) used to determine how much flood insurance costs (Sec. 2(b)(1))
Effective Date
The required actions must be completed no later than one year after the bill becomes law. (Sec. 2(b))
II
118TH CONGRESS
1ST SESSION
S. 602
To require the Administrator of the Federal Emergency Management Agency
to take certain actions relating to the National Flood Insurance Program,
and for other purposes.
IN THE SENATE OF THE UNITED STATES
MARCH 1, 2023
Mr. KENNEDY (for himself and Mrs. HYDE-SMITH) introduced the following
bill; which was read twice and referred to the Committee on Banking,
Housing, and Urban Affairs
A BILL
To require the Administrator of the Federal Emergency
Management Agency to take certain actions relating to
the National Flood Insurance Program, and for other
purposes.
Be it enacted by the Senate and House of Representa-
1
tives of the United States of America in Congress assembled,
2
SECTION 1. SHORT TITLE.
3
This Act may be cited as the ‘‘Risk Rating 2.0 Trans-
4
parency Act’’.
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SEC. 2. TRANSPARENCY REQUIREMENTS.
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(a) DEFINITIONS.—In this section—
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•S 602 IS
(1) the term ‘‘Administrator’’ means the Ad-
1
ministrator of the Federal Emergency Management
2
Agency; and
3
(2) the term ‘‘National Flood Insurance Pro-
4
gram’’ means the program established under the Na-
5
tional Flood Insurance Act of 1968 (42 U.S.C. 4001
6
et seq.).
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(b) REQUIRED ACTIONS.—Not later than 1 year after
8
the date of enactment of this Act, the Administrator shall
9
complete each of the following actions:
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(1) Make available to the public all data and
11
methods used to prescribe chargeable premium rates
12
for types and classes of properties for which insur-
13
ance coverage is available under the National Flood
14
Insurance Act of 1968 (42 U.S.C. 4001 et seq.) (re-
15
ferred to in this subsection as ‘‘chargeable premium
16
rates’’) under Risk Rating 2.0, or any substantially
17
similar methodology.
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(2) Create an online database that is available
19
to policyholders under the National Flood Insurance
20
Program that provides each such policyholder with
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information regarding what the chargeable premium
22
rate for the applicable property of the policyholder
23
would be—
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•S 602 IS
(A) under Risk Rating 2.0, or any sub-
1
stantially similar methodology; and
2
(B) assuming that the limitation under
3
section 1308(e) of the National Flood Insur-
4
ance Act of 1968 (42 U.S.C. 4015(e)) were not
5
in effect.
6
(3) Complete and publish a comprehensive as-
7
sessment of the economic and social impacts of im-
8
plementing Risk Rating 2.0 (or any substantially
9
similar methodology) during the 20-year period be-
10
ginning in the year in which the assessment is made,
11
which shall include an evaluation of the effect that
12
such implementation will have, during that 20-year
13
period, on—
14
(A) the affordability and availability of
15
flood insurance under the National Flood Insur-
16
ance Program;
17
(B) property values; and
18
(C) non-Federal Government revenues.
19
(4) Supplement (and revise, as appropriate) the
20
Record of Decision for the final nationwide pro-
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grammatic environmental impact statement evalu-
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ating the environmental impacts of proposed modi-
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fications to the National Flood Insurance Program
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(83 Fed. Reg. 24328) to include the impacts of im-
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•S 602 IS
plementing Risk Rating 2.0, or any substantially
1
similar methodology.
2
(5) Demonstrate that the data and methods
3
used to prescribe chargeable premium rates under
4
Risk Rating 2.0, or any substantially similar meth-
5
odology, satisfy the requirements under section 515
6
of the Consolidated Appropriations Act, 2001 (Pub-
7
lic Law 106–554; 114 Stat. 2763A–153), including
8
that, in implementing that methodology, the Admin-
9
istrator ensures and maximizes the quality, objec-
10
tivity, utility, and integrity of information dissemi-
11
nated by the Administrator.
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(6) Conduct public notice and comment rule-
13
making under chapter 5 of title 5, United States
14
Code, regarding Risk Rating 2.0, or any substan-
15
tially similar methodology, which shall include the
16
development of a fair, transparent, and streamlined
17
process to manage—
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(A) disputes over chargeable premium
19
rates; and
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(B) other factors with respect to the imple-
21
mentation of that methodology.
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(7) For each county in the United States, pub-
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lish the distribution of chargeable premium rates
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showing the median, mean, lower and upper quar-
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•S 602 IS
tiles, maximum amount, and minimum amount of
1
chargeable premium rates under each of the fol-
2
lowing:
3
(A) The method used to prescribe charge-
4
able premium rates, as of September 30, 2021.
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(B) The methodology projected to be used
6
to prescribe chargeable premium rates, as of
7
April 1, 2022, assuming that the limitations
8
under section 1308(e) of the National Flood In-
9
surance Act of 1968 (42 U.S.C. 4015(e)) are
10
applied.
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(C) The methodology described in subpara-
12
graph (B), assuming that the limitations de-
13
scribed in that subparagraph are not applied.
14
(D) The methodology described in sub-
15
paragraph (B), assuming that—
16
(i) the limitations described in that
17
subparagraph are applied; and
18
(ii) the administrative costs of the Na-
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tional Flood Insurance Program are allo-
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cated on a uniform, per contract basis
21
rather than as allocated under Risk Rating
22
2.0, or any substantially similar method-
23
ology.
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•S 602 IS
(E) The methodology described in subpara-
1
graph (B), assuming that—
2
(i) the limitations described in that
3
subparagraph are not applied; and
4
(ii) the administrative costs of the Na-
5
tional Flood Insurance Program are allo-
6
cated on a uniform, per contract basis
7
rather than as allocated under Risk Rating
8
2.0, or any substantially similar method-
9
ology.
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(8) Submit to the Committee on Banking,
11
Housing, and Urban Affairs of the Senate and the
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Committee on Financial Services of the House of
13
Representatives a report detailing the satisfaction of
14
the requirements under paragraphs (1) through (7).
15
Æ
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