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The National Flood Insurance Program (NFIP), managed by FEMA, provides insurance to help reduce the socio-economic impact of floods in the United States. Homes and businesses in high-risk flood areas with mortgages from government-backed lenders are required to have flood insurance. The cost of this insurance is determined by the FEMA Risk Rating 2.0 methodology, introduced on 1 October 2021, using over 35 property attributes, more than 50 rating tables and over 200 calculations.
This article shows how North52’s advanced business rules engine for Microsoft Dynamics can be used to model the complex rules for the NFIP premiums.
Rules for Calculating National Flood Insurance Program Premiums
There are a significant number of rules used in calculating premiums. These are defined in several technical documents on the fema.gov website:
- Risk Rating 2.0 Methodology and Data Sources
- Risk Rating 2.0 Methodology and Data Sources – Premium Calculation Worksheet Examples
- Risk Rating 2.0 Methodology and Data Sources – Appendix D Rating Factors
- Levees in Risk Rating 2.0
These rules have been analyzed and translated into Decision Tables and xCache Data Tables to allow for automated calculation of the appropriate premium.