Water & Drought

‘Too many people are in denial.’ California homeowners urged to buy flood insurance

Since President Donald Trump last signed a short-term extension to the National Flood Insurance Program, Americans have faced an unprecedented hurricane, fresh warnings from U.N. scientists over rising sea levels and confirmation that the past year was the country’s wettest on record.

Congress is expected to hand him a thirteenth 60-day extension of the program when the current one expires at the end of September. But significant reforms will be an uphill battle.

The flood insurance program has been plagued for years by outdated maps of at-risk flood zones and billions of dollars in accumulating debt, compounded by rising sea levels and increasingly powerful storms strengthened by warming oceans.

Some of those maps have not been updated for over 40 years and fail to alert homeowners to the true risks their properties face as climate change heightens threats to floodplains.

The result is that insurance premiums fail to reflect the true risks to properties, David Maurstad, chief executive of the National Flood Insurance Program, said.

He is encouraging homeowners to purchase flood insurance regardless of the locations of their properties on aging government maps.

“We’ve been working to make sure people understand right now that not enough people have the flood insurance they need – not only after big events like Dorian,” Maurstad told McClatchy, referring to the strongest major Atlantic hurricane to form so far this season.

“Too many people are in denial about their flood risk,” Maurstad said. “We need to continue to work hard to gain the trust of the American public, that the program is there to work for them.”

Maurstad said that the Federal Emergency Management Agency, which manages the program, has an “obligation” to communicate threats from a changing climate in its messaging on flood insurance.

But the program’s debt continues to grow for a variety of reasons. Primarily, experts say, premium rates are no longer “actuarially sound” and have become increasingly disconnected from growing flood risks. Hurricanes are incurring more costly damage on the nation’s major coastal cities. And to the consternation of FEMA, fewer people are buying insurance despite a rise in flooding events year after year.

More than 240,000 Californians have flood insurance, according to FEMA statistics, and Sacramento is the flood insurance capital of the state.

A total of 42,977 residents in the city had flood insurance totaling $15.7 billion worth of coverage, FEMA said. The city of Los Angeles was a distant second, with 9,688 residents having coverage totaling $3.2 billion.

That’s hardly surprising, given Sacramento’s widely-regarded status as the second most flood-prone city in America, after New Orleans. Federal, state and local officials have been working over the past two decades to improve levees and other infrastructure.

City officials imposed a building moratorium on the Natomas district in 2008 after FEMA declared that Natomas’ levees lacked 100-year flood protection, which is considered the minimum. The levees have been partially upgraded to the point that city officials lifted the moratorium in 2015

Lawmakers remain at an impasse over how to proceed shore up the flood insurance program.

Divisions persist in Congress between representatives from at-risk areas – especially those along the coasts – seeking to cap premium increases on their constituents and allow continued construction in floodplains, and those from lower-risk regions opposed to subsidizing a seemingly broken government system.

Expectations are low that Congress will proceed with meaningful reform ahead of the September 30 deadline.

“Reauthorization of the program by Congress goes a long way,” said Maurstad. “We continue to think that a multi-year reauthorization is what the program needs.”

Several members of Congress, including Senate Minority Leader Chuck Schumer of New York, are expressing concern the program may lapse at the end of the month. In August, Schumer warned that a FEMA plan designed by the Trump administration to restructure premiums based on evolving risks would devastate local communities.

“After (Hurricane) Sandy, we learned we’re as vulnerable as anyone else. Unfortunately, when it comes to protecting our homes, there are crosscurrents in Washington,” Schumer said at an event in Long Island.

Schumer and other coastal members of Congress – ranging from Republican Sens. Bill Cassidy of Louisiana and Marco Rubio of Florida to Democratic Sens. Elizabeth Warren of Massachusetts and Cory Booker of New Jersey – are proposing a five-year reauthorization for the flood insurance program that would cap premium increases at 9 percent.

But a competing approach from a bipartisan group in the House, led by the top Democrat and Republican members on the House Financial Services Committee, would allow FEMA to increase premium rates to actuarially sound levels based on the risk associated with the locations of individual properties – a reform supported by the Trump administration. That bill unanimously passed through the financial services committee earlier this summer.

“The best way to understand the flood risk – a good signal, anyway – is what the insurance cost would be,” said Maurstad, explaining FEMA’s strategic thinking behind the agency’s rollout of its new pricing strategy, Risk Rating 2.0, that would use private sector data to shape updated flood risk models.

FEMA has the ability to implement the new risk-based strategy under current authority without additional action from Congress, and plans to detail the new policy on April 1, 2020.

But Congress could increase flood insurance rates through legislation – or cap them, as Schumer has proposed.

While there are substantive policy disagreements thwarting a long-term reauthorization of the insurance program, Sen. Tim Scott, R-S.C., also said that action has been stymied because of lack of support from members of Congress of lower-risk states.

“The fact that we don’t have a long-term solution, or resolution, to flood insurance should not be surprising to anyone, when half the policies in the program come from Louisiana, South Carolina and Florida,” said Scott, who comes from coastal South Carolina. “It tells you the difficulty of the uphill struggle for flood insurance to have traction everywhere in the nation.”

While FEMA officials caution residents that flooding can occur anywhere and from various sources – including in the Midwest, which experienced historic flooding this year – hurricanes put a spotlight on the flood insurance crisis for coastal states. In South Carolina, North Carolina and Georgia, for example, where Dorian threatened to buzzsaw oceanside communities, only a fourth of all coastal homes are insured, amounting to $99 billion in property value.

Lawmakers may have become complacent because they know approval of a short-term extension is likely each time a deadline nears. They see little need to devote limited time and resources to a fight over how to reform a complicated, arcane program.

“We’ve seen this movie before where Congress has kicked the can down the road,” said Shana Udvardy, a climate resilience analyst with the Union of Concerned Scientists. “I think we will definitely see an extension – I don’t think there’s any appetite to see the program lapse.”

Emma Dumain contributed to this report.

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Michael Wilner joined McClatchy as its White House correspondent in 2019. He previously served as Washington bureau chief for The Jerusalem Post, where he led coverage of the Iran nuclear talks, the Syrian refugee crisis and the 2016 US presidential campaign. Wilner holds degrees from Claremont McKenna College and Columbia University and is a native of New York City.