A new study from the nonprofit First Street Foundation projects the impact global climate change may wear on U.S. flood losses.
The report – the value of Climate: America’s Growing Flood Risk –finds that, when adjusting for the long-term impact of a changing climate, nearly 4.3 million homes have “substantial” flood risk that might end in loss.
“If all of those homes were to insure against flood risk through the National Flood Insurance Program (NFIP),” the report continues, “the rates would wish to extend 4.5 times to hide the estimated risk in 2021, and 7.2 times to hide the growing risk by 2051.”
Last year, the inspiration released a report indicating that almost 6 million U.S. properties might be at greater risk of flooding than currently indicated by Federal Emergency Management Agency (FEMA) flood maps.
The new report is especially resonant as FEMA prepares to implement Risk Rating 2.0, an initiative to form flood insurance pricing more representative of every policyholder’s exposure and help customers better understand their risks and therefore the importance of getting flood coverage. It plans to accomplish this by using industry best practices and technology to deliver rates that “are fair, add up , are easier to know , and better reflect a property’s unique flood risk.
Implementation of Risk Rating 2.0 is scheduled to start in October 2021.
Since homeowners who have federally backed mortgages and reside in FEMA-designated Special Flood Hazard Areas (SFHA) are required to shop for flood insurance, the primary Street data function an example of an early indicator of who might be most suffering from risk-based rate changes within the near term and because the impacts of global climate change evolve.
Potential cost consequences of expanded coverage under NFIP – or, worse, of not addressing the prevailing flood-protection gap – underscore the importance of a multi-pronged approach to mitigation and resilience that has improved attention to how, where, and whether to create or rebuild and expanded availability and affordability of insurance.