Climate’s Rising Rains Ramp Risk Ratings

August 19, 2022

Above, newest from CNBC Climate ace Diana Olick.
Rising rains and risks giving rise to new tech companies for the climate changed era. Meanwhile, increased prices for flooding insurance drive vulnerable customers to drop insurance coverage.


When the Federal Emergency Management Agency overhauled its flood insurance program last year, it wanted to encourage homeowners to buy coverage by showing them more precisely the risk that each property faces of being flooded.

But instead, hundreds of thousands of people have dropped the flood policies they were buying through FEMA, raising concerns that an unprecedented number of households are financially exposed to flood damage.

Records reviewed by E&E News show that more than 425,000 people have discontinued the coverage they had through FEMA’s National Flood Insurance Program since October, when FEMA began to raise rates on millions of properties to reflect flood risk more accurately. FEMA also lowered premiums on hundreds of thousands of properties where rates were too high.

The NFIP provides most of the nation’s flood insurance and has been trying for years to increase the number of households with flood coverage as climate change and development intensify flood damage. Flood insurance is sold separately from homeowners’ insurance policies.

But FEMA’s own records and interviews with insurance agents indicate that so far, the restructuring is having the opposite effect, prompting some people to let their policies expire when faced with higher insurance premiums.

“It’s going to backfire in their face,” said Tammy Whitehead, an insurance agent in New Orleans who is critical of FEMA’s restructuring.

The number of NFIP policies dropped from 4.96 million on Sept. 30, 2021, to 4.54 million as of June 30 — a decline of nearly 9 percent.

It is unclear how many people who dropped NFIP policies have bought flood coverage through a private insurer.

Tuna Siraci, president of insurance brokerage National Flood Insurance LLC, said insurance companies are taking advantage of the rising NFIP rates and are starting to offer flood coverage, which insurers had avoided for decades because the losses are catastrophic and unpredictable.

“The portion of private flood insurance is increasing rapidly,” Siraci said.

FEMA told E&E News that “there are many factors that could influence this drop in policyholders, including the economic impact of the pandemic, inflation, the housing market, affordability or purchasing flood insurance from the private market.”

“We remain confident that policies will increase, over time, under our new Risk Rating methodology,” FEMA spokesperson Jeremy Edwards said, referring to the agency’s restructuring program, known as Risk Rating 2.0.


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