Living in a flood zone? Check your insurance. It may be about to go up. (+video)
A new federal flood-insurance reform law requires maps to take account of projected sea level rise in designating flood zones, as federal subsidies for properties in flood zones fade to zero.
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Subsidies for flood insurance long have been the bane of scientists and policy analysts who work on reducing risks to natural hazards. Over the years, they say, the subsidies on flood insurance have encouraged development in locations subject to repeated floods and storm surge.Skip to next paragraph
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But the Senate hearing on the issue earlier this month was driven in no small part by a rising chorus of complaints from constituents who say the premium increases have caught them by surprise. In addition, concerns have been raised about the ability of low-income residents to pay higher premiums.
Indeed, one scientist who has argued for flood-insurance reform nevertheless says that the current reforms offer "too much tough love and too little compassion for flood-prone homeowners."
In an opinion piece he published in The New York Times in late August, Nicholas Pinter, a geology professor at Southern Illinois University in Carbondale, conceded that "policy reform and fiscal discipline sound great until you sit across the table from flood-plain residents losing their homes because of skyrocketing insurance premiums."
Homeowners elsewhere have complained that the higher premiums that more closely reflect the risk a home faces from floods is undercutting the resale value of their homes.
Proposals to soften the blow range from stretching out the period over which premiums will increase to delaying the adoption of FEMA's new flood maps, which don't yet account for projected sea-level rise.
But to advocates of the reforms, these fixes don't address the flood-insurance program's financial woes. And they could lead to the wrong people paying higher premiums.
For instance, FEMA has noted that the new flood-hazard maps tend to result in just about as many properties seeing their flood hazard reduced as increased, notes Stephen Ellis, vice president of Taxpayers for Common Sense, a fiscal watchdog group in Washington. Delaying the application of the new maps would mean that those with a reduced risk would be overpaying for their flood insurance, he says, in an e-mail.
Meanwhile, FEMA is working with the National Academy of Science to explore ways to provide aid to low-income families, such as means-tested vouchers or low-interest loans to modify their homes in ways that reduce their flood-insurance premiums, notes Erwann Michel-Kerjan, an economist who focuses on risk management at the University of Pennsylvania's Wharton School of Business.
Whatever the outcome, the overhaul of flood insurance is a clear example "that people are waking up to potential liabilities the government faces" with a changing climate and the continued development in flood-prone areas, suggests William Hooke, director of the American Meteorological Society's Policy Program in Washington. "The past history with flood loss is not necessarily the future flood losses. The US could be taking on big risks it's unprepared for."
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