Flood Insurance Practice Test

Which outcome best describes the impact of a community's CRS activities on policyholders?

It increases the administrative burden for the insurer. It has no effect on premiums. It changes the policy terms for new policies only. It results in a CRS discount for policyholders in the community.

Correct Answer:

It results in a CRS discount for policyholders in the community.

Explanation:

A community’s CRS activities directly affect policyholders by earning premium discounts on NFIP policies. The CRS (Community Rating System) recognizes a community’s floodplain management and mitigation efforts and translates those actions into a discount on policyholders’ NFIP premiums. The size of the discount depends on the community’s CRS classification, with more robust mitigation programs yielding larger reductions. So, the best description of the impact is that policyholders in the community receive a CRS discount on their premiums.

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