Environment | Ten Across
Inundating the Gulf: Fewer americans covered by federal flood insurance even as population grows in flood-prone areas
Photo by Kelly Sikkema on Unsplash
Editor’s note: This article is part of a collaboration between APM Research Lab and the Ten Across initiative, housed at Arizona State University.
by EMILY SCHMIDT | July 28, 2022
In Flagstaff, Ariz., intense monsoon rain recently caused roadway, home and forest flooding from run-off through June’s wildfire burn scars. On the East Coast, more than four inches of rain fell in parts of New York City in 24 hours, causing major street and subway flooding from clogged drains and a massive sinkhole to open. Eastern Kentucky received 8-12 inches of rain overnight into July 28, leaving 25,000 without power.
And with an above-normal hurricane season predicted through November, millions of homes and businesses are at risk for flooding, even in places not historically characterized as being flood-prone.
Across the U.S., heavy summer storms have brought increased rainfall and subsequent flooding to cities both prepared and ill-prepared to deal with the catastrophic effects. Regardless of preparedness, these cities will have to rely on flood insurance — insurance with a controversial past and future.
Flood risk and population growth
According to the Federal Emergency Management Agency (FEMA), any location with a 1% possibility or higher of experiencing a flood annually is considered to be high-risk, or within the 100-year floodplain. Over the course of a 30-year mortgage, these areas have a 25% chance of flooding. As a result, properties in these high-risk areas with government-backed mortgages require flood insurance.
Typically, homeowners and renters insurance does not cover flood damage. Flood insurance, a separate and distinct policy, covers the cost of rebuilding after a flood.
Dr. Antonia Sebastian, assistant professor of flood resilience at the University of North Carolina Chapel Hill, said the 100-year floodplain is the primary indicator of flood risk in the U.S., and in some places, the only indicator. And if people don’t live within that floodplain, she said they may perceive themselves as having no flood risk at all.
“There are many people who live outside of the floodplain boundaries, who are not required to buy flood insurance or opt not to buy flood insurance…[but we’re seeing] more intense precipitation events that can cause flooding in places very, very far from floodplain boundaries,” Sebastian said.
First Street Foundation, a nonprofit research and technology group, used modeling to assess flood risk by county, considering tidal, rain, riverine and storm surge. Many of the high-risk counties are situated along the Gulf of Mexico in Texas, Louisiana and the Florida Panhandle.
Eight of the 10 counties with the highest flood risk score are in Louisiana, with the remaining in North Carolina and Florida. Cameron Parish, La. is the only county with a score of nine, precisely 9.16. This means Cameron Parish experiences an extreme depth of flooding. Hyde County, N.C. and Monroe County, Fla., follow behind with scores of 8.72 and 8.3, respectively.
Many of these high-risk counties have experienced notable population growth in the last ten years, and this isn’t an isolated occurrence. A 2022 report from the National League of Cities states that Americans across the country are participating in “climate migration” in search of warmer weather, economic opportunities, affordable housing and access to the outdoors. And these counties along the Gulf Coast certainly have these options.
St. Bernard Parish, La., for example, has a flood risk score of 7.97, but its population increased by over 32% to 48,000 between 2010 and 2020. Similarly, Orleans Parish, La., has a flood risk score of 8.22, yet its population grew by 13% to 390,000.
In Florida, Charlotte County’s population increased by one-fifth to 195,000 and has a 7.05 flood risk score. Galveston County, Texas has a less severe risk score of 6.57, and its population still grew by 18% to 345,000.
A number of these counties and their neighboring large cities are situated along Interstate 10. Sebastian said this region is experiencing really rapid urban growth, which can contribute to urban flooding.
In Houston and other places along the I-10, Sebastian said land development isn’t very regulated. These regions, especially in Texas and Louisiana, are flat and naturally saturated, so they already don’t accommodate much runoff. When cities and their suburbs are expanded quickly, she said concrete and asphalt end up covering large areas of land, making it difficult for water to go anywhere during and after storms.
The National Flood Insurance Program
For many of the people and businesses residing in these counties, the National Flood Insurance Program (NFIP) is a mandatory support system.
Created by Congress in 1968 and administered by FEMA, this government program provides insurance through a network of over 50 insurance companies and NFIP Direct to lessen the disastrous impact of floods. It has received over 2.5 million claims to date, protecting $1.3 trillion in assets for five million policyholders in the U.S.
Between 2014 and 2018, NFIP policyholders who lived outside high-risk flood areas filed more than 40% of flood insurance claims. They even required one-third of federal disaster assistance for flooding. This provides financial and direct services to individuals and households affected by a disaster, or those who have uninsured or underinsured serious expenses.
Just in the first four months of this year, over 4,000 NFIP claims have been filed. Washington had the largest number of claims in the country, with 662 amounting to about $28 million in payments. Extreme flooding from early January storms contributed to this surge. Maryland (426), Texas (396), Florida (295) and Alabama (259) rounded out the five states with the highest number of claims filed.
Most notably, the 10 states with most claims filed have a coastline bordering the Atlantic Ocean, Pacific Ocean or the Gulf of Mexico. Many of the states with lower claim numbers do not border a major body of water.
In 2021 though, Louisiana had the most NFIP claims by far — 20,865 — a direct result of Hurricane Ida. New Jersey had the second-most claims with 7,297, also due to the remnants of Hurricane Ida that moved up the East Coast.
Insurance affordability
Over the last year, FEMA has updated the NFIP’s risk rating methodology with a new pricing system called Risk Rating 2.0. This new methodology, completely updated for all policyholders as of April, replaces the previous one that hadn’t been reviewed in 50 years.
Currently, the NFIP is $20.5 billion in debt because the program is paying more out than collecting, a symptom of the antiquated risk methodology.
Before the rating overhaul, policyholders with lower-valued homes were paying more than they should for flood insurance, while policyholders with higher-valued homes were paying less.
By considering home value and unique flood probability, FEMA states that Risk Rating 2.0 revises and redistributes those premium costs across all policyholders to ensure fair rates and equitable premium increases and decreases.
Despite this redesigned risk methodology, a FEMA report obtained by the Associated Press estimates one million fewer Americans will purchase flood insurance by 2030.
This pattern is already reflecting in the loss of 236,000 NFIP contracts-in-force, a 4.7% decrease, between April 2021 and April 2022.
While all 50 states saw a decrease in contracts, Minnesota, North Dakota and Arizona saw the largest drop. Flood-prone Texas and Florida both experienced a 5% decrease, but Louisiana only declined by 2.3%.
Dr. Samuel Brody, director of the Institute for a Disaster Resilient Texas and professor at Texas A&M University at Galveston, said raising flood insurance rates has become an equity issue because they’ve become so expensive that people can’t afford them.
“It can literally change the socioeconomics of the Gulf Coast,” he said.
At the heart of this equity problem, Brody emphasized, is the way the government approaches flooding as a natural disaster. Other countries have focused on preventing floods from happening, whereas the U.S. primarily focuses on recovery efforts after floods have occurred.
“Our entire system is based on recovery reactions, so flood insurance, essentially, is accepting failure,” he said.
Flood resilience
Experts, including those at FEMA, agree that resilience in the face of flooding and, more largely, climate change is a collaborative effort across governments, agencies and communities.
“Disaster resilience is a cross-cutting and integrated effort among a wide range of stakeholders from the public and private sectors. Each area of expertise and sphere of responsibility affects another,” said David Maurstad, deputy associate administrator for resilience.
He added that “insurance coupled with mitigation is key to disaster resilience against climate change.”
When asked about the most flood-resilient state, both Sebastian and Brody pointed to Texas, specifically Houston, as the best example for efforts in watershed flood planning, real estate risk disclosure regulations, and freeboard standards among others.
Brody said Houston has more flood buyouts than any other part of the country, in which the local government buys flood-prone properties from residents who relocate to areas of lower flood risk.
Sebastian named Louisiana as a state investing in not only structural and coastal protection in the New Orleans surge barrier, but also softer, nature-based solutions in the mash and delta landscape.
While these high-risk states are making strides in flood resilience, Sebastian said, “[The frequency and intensity of flood events there] are increasing at rates faster than in other parts of the country. Simultaneously, we're pouring more and more people into those areas, and those two things are exacerbating each other.”
And to combat these forces, Brody said governments must take more proactive measures to build resiliency. These include buying out flood-prone properties, protecting properties before they're developed and elevating structures being built in flood-prone areas to appropriate levels.
Given the progressive flood resilience measures Houston took after Hurricane Harvey, Brody said, “It makes me hopeful for communities around the country to be able to understand the problems and act on it in a way that is going to create a more resilient future.”