62 R Elliott
structure-specific data that are easier to understand’ (FEMA 2021b, p. 5,
emphasis added). Though any area’s flood risk is a collectively and historically produced problem (Koslov 2019), each individual insured is imagined
as having dominion over their own portion of it. The new ‘structure- specific’
data includes the property’s distance and elevation relative to a flood source
and other characteristics of the building itself, along with more flood risk
variables (e.g. flood frequencies and types) (Horn 2021).
This tighter classification of risk leads FEMA to claim that ‘Risk Rating
2.0 is equity in action.’ What is equity, as it’s framed here? Principally, the
end of cross-subsidisation will signal the end of ‘unfair’ flows between different types of policyholders. No longer will the premiums paid by a lower-risk
policyholder – someone located further from the water or built at higher
elevation – include some measure of additional cost that makes it possible for their higher-risk neighbour to continue to afford their premiums.
‘Individuals will no longer pay more than their fair share in flood insurance
premiums’ (FEMA 2021b, p. 2).
This idea of a ‘fair share’ reflects and coheres with ideas about ‘actuarial fairness’: a term of art in insurance that ‘foregrounds individuals and
automates accountability’ (Kiviat 2019, p. 1138; see also Landes 2015).
Higher-risk insureds pay higher premiums; this is their ‘fair share.’ Lowerrisk insureds ‘deserve’ to pay lower rates because they introduce less risk
to the pool and are less likely to make claims. As Tom Baker (2002, p. 395)
observes, ‘classifying insureds according to risk both reflects and creates a
moral vision’ – in this case, one where it seems essentially fair that people
should only bear responsibility for the quantity of risk they are in a sense
imagined to ‘own.’ This is true even in the case of flood risk, where exposure
to the risk and one’s ability to manage it at the individual level are profoundly determined by decisions and developments that transcend the property owner’s control (e.g. the existence and maintenance of structural flood
protection, continued real estate development around one’s home, etc.) and
in many cases predate their decision to move into a floodplain (e.g. zoning
that permitted home building, the construction of public infrastructure to
serve the property, etc.). Insurance rating based on risk classification helps
to ‘persuade people that the purpose of insurance is individual protection
and, accordingly, that the insurance group is a collection of individuals
without any responsibility to one another’ (Baker 2002, p. 395).
Ideas about actuarial fairness have persisted throughout the NFIP’s history, informing arguments for reform since long before Risk Rating 2.0.
But the practical realisation of a fully actuarial footing for the program
has been circumscribed by other ideas of fairness that have normatively
and politically justified continued cross-subsidisation (Elliott 2017). For
instance, a ‘grandfathering’ provision has worked such that, when a FIRM
is updated, if a property is remapped into a higher flood risk rate class, the
policyholder can retain their older, lower rate. Even though the long-term
effect of grandfathering is that, as maps are updated, increasing numbers
structure-specific data that are easier to understand’ (FEMA 2021b, p. 5,
emphasis added). Though any area’s flood risk is a collectively and historically produced problem (Koslov 2019), each individual insured is imagined
as having dominion over their own portion of it. The new ‘structure- specific’
data includes the property’s distance and elevation relative to a flood source
and other characteristics of the building itself, along with more flood risk
variables (e.g. flood frequencies and types) (Horn 2021).
This tighter classification of risk leads FEMA to claim that ‘Risk Rating
2.0 is equity in action.’ What is equity, as it’s framed here? Principally, the
end of cross-subsidisation will signal the end of ‘unfair’ flows between different types of policyholders. No longer will the premiums paid by a lower-risk
policyholder – someone located further from the water or built at higher
elevation – include some measure of additional cost that makes it possible for their higher-risk neighbour to continue to afford their premiums.
‘Individuals will no longer pay more than their fair share in flood insurance
premiums’ (FEMA 2021b, p. 2).
This idea of a ‘fair share’ reflects and coheres with ideas about ‘actuarial fairness’: a term of art in insurance that ‘foregrounds individuals and
automates accountability’ (Kiviat 2019, p. 1138; see also Landes 2015).
Higher-risk insureds pay higher premiums; this is their ‘fair share.’ Lowerrisk insureds ‘deserve’ to pay lower rates because they introduce less risk
to the pool and are less likely to make claims. As Tom Baker (2002, p. 395)
observes, ‘classifying insureds according to risk both reflects and creates a
moral vision’ – in this case, one where it seems essentially fair that people
should only bear responsibility for the quantity of risk they are in a sense
imagined to ‘own.’ This is true even in the case of flood risk, where exposure
to the risk and one’s ability to manage it at the individual level are profoundly determined by decisions and developments that transcend the property owner’s control (e.g. the existence and maintenance of structural flood
protection, continued real estate development around one’s home, etc.) and
in many cases predate their decision to move into a floodplain (e.g. zoning
that permitted home building, the construction of public infrastructure to
serve the property, etc.). Insurance rating based on risk classification helps
to ‘persuade people that the purpose of insurance is individual protection
and, accordingly, that the insurance group is a collection of individuals
without any responsibility to one another’ (Baker 2002, p. 395).
Ideas about actuarial fairness have persisted throughout the NFIP’s history, informing arguments for reform since long before Risk Rating 2.0.
But the practical realisation of a fully actuarial footing for the program
has been circumscribed by other ideas of fairness that have normatively
and politically justified continued cross-subsidisation (Elliott 2017). For
instance, a ‘grandfathering’ provision has worked such that, when a FIRM
is updated, if a property is remapped into a higher flood risk rate class, the
policyholder can retain their older, lower rate. Even though the long-term
effect of grandfathering is that, as maps are updated, increasing numbers