Related: NFIP challenges & reform options from the Amercian Academy of Actuaries

Congress is required to reauthorize the National Flood Insurance Program (NFIP) every five years, with the next deadline at the end of September. The program is nearly $25 billion in debt. NRDC's analysis found costs will skyrocket as sea level rises due to climate change, repeatedly flooding millions of properties located along the coasts and inland waterways. The way the NFIP currently operates, it will pay hundreds of billions to rebuild these properties multiple times, even if homeowners would prefer to move to higher ground.

Key findings

Among the report's key findings:

• More than 30,000 “severe repetitive loss properties” have been insured through the NFIP, according to FEMA data acquired by the NRDC through a freedom of information act request. The properties have flooded an average of five times, on average every two to three years, and are the most flood prone properties in the program.
• Sixty percent of the homes are modest, valued at less than $250,000. While they represent just 0.6 of the 5.1 million properties insured by the NFIP, they account for a disproportionate 9.6 percent of all damages paid between 1978 and 2015, totaling $5.5 billion.
• Almost one out of every 10 of these properties received insurance claim payments that cumulatively exceeded the value of the structure.
• In coming decades, sea level rise may cause as many as 2.5 million properties to repeatedly flood, which the NFIP could pay as much as $447 billion to repeatedly rebuild before they are finally inundated. Damages to these properties will cost the program $143 billion to $447 billion in claims.
• Among these properties, there are over a half-million and nearly 1.6 million homes that are more modest homes (worth less than $250,000). It would cost $52 billion to $163 billion to buy out all of these properties before they are inundated by sea level rise. The NRDC estimated the NFIP will pay out $72 billion to $224 billion to repeatedly rebuild them.
• The top states, ranked by both number of properties and total damages, were:

o Louisiana (7,223 properties, $1.22 billion in damages).

o Texas (4,889 properties, $0.96 billion in damages).

o New Jersey (3,246 properties, $0.66 billion in damages).

o New York (1,802 properties, $0.40 billion in damages).

o Florida (1,601 properties, $0.37 billion in damages).

o Missouri (1,526 properties, $0.19 billion in damages).

Recommended reforms

The NRDC recommended that Congress reauthorize the NFIP with a series of reforms that will better provide the type of assistance a growing number of American homeowners need.

• Through the NFIP, provide homeowners with a guaranteed buyout, if they no longer want to rebuild. For homeowners who want to move out of harm's way, the NFIP should help, not hinder, that from happening.
• Give owners the right to know about their home's history of flood damages. Providing the flood history of a property can help homeowners make better decisions.
• Make more data on the NFIP publicly available. The public has a right to know where flood damages occur, the cost of those damages, and what communities are doing to reduce their vulnerability to flooding and sea level rise.
• Flood maps should show how sea level rise and other effects of climate change will impact future flood risk. Flood maps are used by government officials, developers, and planners to decide where it is safe to build. Without the inclusion of future flood risks, communities cannot make fully informed and sustainable decisions.
• Invest in resilience and in reducing our vulnerability to flooding. According to the National Academy of Sciences, more funding should be dedicated to reducing vulnerability to flooding, rather than rebuilding over and over.

Related:

Offering private flood insurance in California: Golden Bear's experience

Flood gates: Will best intentions lead to a healthy private insurance market?

Changing tides: Reframing the client conversation around flood insurance

Victoria Prussen Spears, Esq., ([email protected]) is associate director of FC&S Legal, editor of the Insurance Coverage Law Report, and senior vice president at Meyerowitz Communications Inc.