Homeowners Abandoning Flood Insurance at their Peril
Flood insurance premiums have risen steadily with the rising tide of flooding linked to climate change. As a result, as many as one million homeowners may sign up for the coverage or maintain their existing policy, a report by the Federal Emergency Management Agency cautions.
The report was not publicly released by FEMA and only became known after The Associated Press obtained a copyunder the Freedom of Information Act.
FEMA has since downplayed the report, calling its estimates pessimistic but some members of Congress have expressed the fear that many middle-class homeowners are giving up their coverage because of the higher premiums.
FEMA has been steadily increasing premiums, both because of the higher incidence of flooding and because of allegations that the agency was using taxpayers money to prop up millionaires’ beachfront villas.
But politicians from coastal states say it’s inaccurate to say that most waterfront property is the playground of the wealthy. Sen. Bob Menendez (D-NJ) say FEMA has not been upfront about the effect of the higher premiums.
“This report makes it crystal clear that FEMA failed to be transparent with policyholders, Congress, and ultimately the American public,” Menendez said in a statement. It shouldn’t have taken a records request for details to emerge, he said.
Operates in the red
The federal insurance program was started when private insurers stopped offering policies in high-risk areas. It has traditionally operated in the red, paying out more in claims than it collects in premiums.
Critics say homeowners should bear the cost themselves but Menendez and other politicians represent areas of the country – like the Jersey Shore – where the majority of homeowners are middle-class and would be unable to afford flood insurance without government support.
It’s not just homeowners who benefit from the coverage, said said Chad Berginnis, executive director of the Association of State Floodplain Managers, in an AP report.
“We are talking the basic economic health, I think of not only our households and businesses, but our communities at large,” if fewer people buy flood insurance, he said.