Flood insurance premiums in New York City and around the country are set to skyrocket if congress doesn’t pass legislation amending a 2012 law aimed at shoring up the finances of the National Flood Insurance Program.
For some individual homeowners in New York City’s most vulnerable areas, failure to amend the legislation could lead to rate increases of between $5,000 and $10,000 annually, according to a RAND Corporation study. Homeowners in nearby Brick Township, NJ could see increases of more than $30,000 annually.
These astronomic increases are the result of the Biggert-Waters Flood Insurance Act, which was passed in 2012 with strong bipartisan support. The legislation was written to fortify the finances of the National Flood Insurance Program, which at the time was more than $18 billion in debt. It balanced the program’s budget by eliminating long-term subsidies that had kept down rates for homes in flood zones.
Eliminating subsidies may have sounded savvy inside Washington’s Beltway, but now that new insurance bills are coming due — and a redrawing of FEMA’s flood maps is increasing the number of people in recognized flood zones — constituents are screaming and elected officials are scrambling for fixes.
“In the wake of Hurricane Sandy, many homeowners are still rebuilding and recovering throughout the city,” says Steven Spinola, president of the Real Estate Board of New York. “The substantial increases in flood insurance premiums allowed under the Biggert-Waters Flood Insurance Reform Act amendments may be devastating for those who are struggling to put their lives and homes back together.”
Californian Congresswoman Maxine Waters, one of the legislators for whom the bill is named, released a statement saying she is “outraged by the increased costs of flood insurance premiums that have resulted from the Biggert-Waters Act. I certainly did not intend for these types of outrageous premiums to occur for any homeowner.” Her voice is one in a growing chorus of public officials from the New York area and around the country who want to modify Biggert-Waters.
“Adopting a risk-based premium structure for the National Flood Insurance Program is the right approach,” New York City’s former Deputy Mayor of Operations Cas Holloway said at a news conference, “but it has to be done in a way that is affordable and encourages homeowners to take common-sense measures to protect against flooding and other climate impacts.”
Responding to these calls for reform, Senator Robert Menendez of New Jersey proposed the Homeowner Flood Insurance Affordability Act late last year. It would delay insurance hikes for primary residences until FEMA finishes an affordability study that the agency’s director W. Craig Fugate has said could take at least two years to complete.
On January 8, Charles Schumer of New York, a member of the Democratic leadership, promised a vote on the legislation was coming “in the very near future.” A vote on similar legislation in the Republican-controlled House is less certain.
Regardless of the legislation’s prospects, advocates of flood insurance reform are looking at a variety of options to lessen the impact of rate increases. At the top of the list for New York officials is a better understanding of flood risk, particularly in dense urban areas.
Right now, FEMA does not have actual elevation data for many of the buildings insured through the National Flood Insurance Program. Instead, they average the elevations (which in New York run from 12 feet below sea level to four feet above it) across the entire pool, modify that number based on which flood zone the building resides in, along with other general factors, and issue a price based on that calculated risk.
This, of course, doesn’t take into account the most obvious criteria for flooding: the actual elevation of the building as it relates to the base flood elevation of an area, or other, more active factors, like individual and neighborhood mitigation efforts.
For instance, up until the month after Sandy, FEMA did not treat homes in the flood zone that had raised their mechanicals out of harm’s way any differently than those that left their mechanicals in flood-prone basements. After pressure from New York and other cities, the program was changed. Now officials are fighting for other tweaks that will help FEMA and homeowners better understand actual risks and calculate premiums as well, like the efficacy of mitigation efforts, based on those risks.
In the RAND Corporation study commissioned by New York City, crediting homeowners who take risk-mitigation measures is mentioned as a way to reduce an individual’s financial burden, encourage flood awareness and reward sensible efforts. “Much is to be gained from establishing a schedule of premium reductions for different structure types and risk-mitigation measures and making the information readily available to property owners,” the report’s authors write. They also suggest working to collect more fine-grained data to inform rates and decision-making; allowing higher-deductible, lower-premium coverage; investigating the possibility of low-interest loans or grants to fund mitigation efforts; and an increase in the enforcement of the mandatory purchase requirement, which would ensure that the insurance burden is spread among the entire pool.
“In building a stronger, more resilient New York, we must work to reduce flood risk and to ensure that insurance remains available and affordable,” says Dan Zarilli, Director of Resiliency at the Office of Long-Planning and Sustainability. “That is why the city is pursuing a comprehensive set of investments to reduce flooding impacts, and providing additional data and analysis to FEMA to ensure that FEMA’s affordability study accurately reflects the dense urban conditions found in New York City’s coastal neighborhoods.”
Graham T. Beck has written about art, cities and the environment for the New York Times, The Believer, frieze and other august publications. He’s a contributing writer for The Morning News and editor-in-chief of Transportation Alternatives’ quarterly magazine, Reclaim. He lives in New York City and tweets @g_t_b