Risk_Rating_Industry_Day_01_24_2017_Final.pptx

FE

2017 National Flood Insurance Program (NFIP) Risk Rating 2.0 Program:

Industry Day January 19, 2017

Federal Emergency Management Agency (FEMA) - Federal Insurance and Mitigation Administration (FIMA)

Slide ‹#›

Introduction The purpose of this Industry Day is to provide industry with background information on the Risk Rating 2.0 program goals in support of an anticipated procurement for Risk Rating and Classification Capabilities Request for Information (RFI) HSFE60-17-I-0003, Risk Rating and Classification Capabilities Adobe Connect Link: https://vao.adobeconnect.com/femafimaaof1/ Program Managers: Andy Neal and Nancy Niedernhofer Contracting Officer: Freda McDonald Contract Specialist: Marianne McCallum

Proprietary

Ground Rules This Industry Day is not meant to be interactive Questions pertaining to the RFI or Industry Day content:

Shall be emailed to the contracting officer and contract specialist only Submitted during the teleconference via Adobe Connect Chat Room Questions deadline is 4:30 pm (EST) on Friday, 20 January 2017 Answers will be posted on FedBizOpps (www.fbo.gov) by 12:00 pm (EST) on Tuesday, 24 January 2017

Background Current rating system jointly developed by NFIP and private insurance industry Current system was developed in the 1960’s and 1970’s Based on best practices of fire and home insurance sector

NFIP has not stayed current with industry NFIP risk rating approach has changed over time but without real regard for industry Need to develop an approach that can be continuously upgraded and stay current

A customer-experience assessment identified the following gaps:

policyholders lack understand their flood risk Inconsistency in program value proposition

Updating the Risk Rating approach is a step towards improved customer experience SOURCE: Company websites; TMAC 2015 Interim Annual Report; FEMA’s National Flood Hazard maps

Communicate flood risk through a simple, integrated flood score

Experiment and innovate to continuously improve our understanding of risk What this could look like for the NFIP Flood score that reflects individual property risk

Structure-specific flood risk assessment Current zoning model

Premium, $PP …to individualized curves Flood hazard rating X A V

From blocks… Examples of individualized risk in car insurance Examples of rating scales What this could look like for the NFIP

Incorporates behavioral changes in individual risk assessments, and adjusts premiums accordingly FEMA does not endorse any non-government entities, organizations, or services. Any logo appearing on this page is intended to provide a visual example only for discussion purposes and should not be considered to expressly or implicitly endorse the entity, organization, or service so referenced

Risk Rating and Classification Procurement FIMA is modernizing its risk rating approach, the first steps are to:

build a close, collaborative partnership with private sector, to merge NFIP flood risk expertise with industry expertise in catastrophic risk rating develop alternative approaches and compare with NFIP existing approach align NFIP approach with industry actuarial best practices address policyholder concerns with pricing found in the Customer Experience Initiative

Gather and evaluate data output from catastrophic risk models, internal FIMA modeling capabilities, stakeholder input, and other tools and technologies, Develop a proposed NFIP risk rating and classification approach, across the following areas: data collection, risk classification, risk rating, and pricing;

Areas Targeted for Improvement

Understandability Reduce complexity and expense of inputs Increase cost-effectiveness by using purposeful, value-driven approach to collecting, analyzing hazard and structure data

Improve property owner understanding of risk, resulting in increased flood coverage across America Address inconsistencies in risk to rate Efficiency Accuracy Improve accuracy of the NFIP’s risk classification system and Risk Rating model to inform policy, pricing decisions, and cost Ensure rate communicates the risk a structure faces

NFIP is primary expert is flood risk and there are significant differences from other perils Homes with similar geography can have drastically different levels of flood risk Flexibility can be constrained by Congressional oversight NFIP is both the primary and residual flood insurer Developing a risk rating approach for an existing product

Unique Challenges

Timeline (NOTIONAL)

Closing Remarks The Risk Rating 2.0 Project is foundational to the NFIP transformation FIMA is charged to increase the resiliency of the nation, to ensure that Americans are better prepared for and protected against flooding Individuals understanding their own risk is critical to building resiliency We see the private industry as allies in increased understanding of flood risk, addressing gaps in coverage, and helping survivors recover quickly from disasters This effort is one way FIMA is building a private-public partnership and improving flood resiliency in America

RFI Submission Requirements Page limit: fifteen (15) 8 ½ x 11 inch pages (front and back) 1 inch margins (top, bottom, sides) Times New Roman font – 10 point Page limitation does not include: 1 cover page or 1 letter of introduction Do not include promotional materials Proprietary information should be clearly marked Subject line of email submission shall contain the following: Response to Sources Sought Notice HSFE60-17-I-0003 – Risk Rating and Classification Capabilities Indicate any current existing Government Schedule Agreements (i.e. GSA or DHS) or Small Business Certifications

Contact Information

No calls will be accepted at this time.

Contracting Officer: Freda McDonald, Freda.McDonald@fema.dhs.gov Contract Specialist: Marianne McCallum, Marianne.McCallum@fema.dhs.gov

Thank You image2.png image3.jpeg image23.png image6.png image5.png image24.png image25.png image26.jpeg image27.png image28.png image29.jpeg image30.png image1.jpeg oleObject1.bin image17.emf image18.jpeg oleObject3.bin oleObject5.bin