ST. LOUIS (AP) – After being questioned by members of Congress, the Federal Emergency Management Agency said its new national flood insurance plan will result in more people signing up for help, although many will pay more.
But in a FEMA report obtained by The Associated Press under the Freedom of Information Act, the agency estimates that a million fewer Americans will buy flood insurance by the end of the decade — more people at risk of financial loss.
As climate change increases the risk of flooding in many parts of the country, FEMA has changed its flood insurance policy to better reflect the risk, and to make the program more solvent. It is in part a response to criticism that taxpayers are paying too much when large coastal buildings in dangerous areas are flooded.
But nine senators from both parties expressed “serious concern” about the new tariff plan last September, after hearing that the agency’s internal figures predicted a 20% drop. The following month FEMA told the AP that the figures were “misleading” and “nonsensical” and that when it came to how many people would be insured there was “no research or reporting.”
The agency drew a different picture, however, at the end of the year when it sent a report to the secretary of finance and a few congressional leaders that the rising prices will drive the decline of 1 million policies compared to the beginning of the decade.
The issue of how many people are vulnerable to flooding is important, said Chad Berginnis, executive director of the Association of State Floodplain Managers.
“We’re talking about economic health, I’m not just thinking about our families and businesses, but our communities as a whole,” he said if fewer people buy flood insurance.
The federal flood insurance program was started when many private insurers stopped offering policies in high-risk areas. It operates in the red, paying more than it earns in fees. By accurately pricing, the change, called Risk Rating 2.0, makes it more expensive to live in flood-prone areas, shifting the risk of disaster to homeowners.
Risk Factor 2.0 will factor in land damage from flooding – such as its distance to water and the cost of rebuilding. The old system was based mainly on the height of the building and if it was in a flood prone area. Many policyholders have now seen their rates rise. But for the first time, nearly a quarter of policyholders will see theirs drop. New policy buyers started seeing new prices in October.
FEMA downplayed the report the AP found as pessimistic, focused on economic forecasting, not insurance participation. The agency said it has not directly studied how many people will buy flood insurance.
“There are many reasons why growth can happen over time,” said David Maurstad, head of the National Insurance Program, adding that the registration review should take into account the efforts of the organization, the clear messages of the flood risk program, the prices decrease. and other things.
But critics like Sen. Bob Menendez, DN.J., said affordability is difficult and FEMA has not disclosed the cost increase.
“This report clearly shows that FEMA has failed to be transparent with policymakers, Congress, and the American people,” Menendez said in a statement. It wouldn’t have to rely on documents to inform the public, he said.
When Francisca Acuña, a climate activist and grassroots activist in Austin, Texas, was given a new voice, it was hard to believe.
“I’m going, ‘no, you’re wrong,'” he said.
Acuña had already paid $446 a year. Under a Risk Rating of 2.0, they were charged $1,893. A very high level is rare. The increase usually reaches 18% per year, but Acuña, while managing other funds, allowed his order to lapse so he had to pay the full amount immediately.
“There is no way, no, as much as I can,” Acuña said.
When told about Acuña’s progress, Mr. Maurstad said the prices reflect real risks. It’s unfortunate when people are facing such a big increase, but making sure the program’s money is running smoothly and the prices are right, it’s “good public policy,” he said.
Jim Rollo, an insurance agent in New York, said he is seeing a change in consumer sentiment. Others seem to be more skeptical of the stock that has already flooded and has a lot of money. Some “roll the dice” and drop expensive insurance if it’s not necessary.
“We’re scoring fewer points than we used to,” Rollo said.
Congress should create a low-cost program for people struggling to buy insurance and funds to help protect against floods, said Joel Scata, an attorney at the Natural Resources Defense Council, an environmental advocacy group.
But Maurstad said FEMA’s mission is different from the private sector. FEMA is supposed to help people “before, during and after a disaster” and to compensate vulnerable people and the economy.
“We have certain responsibilities that are assigned to us. The number of policies sold is not one of them, again, because we are a government program,” he said.
However, the commission’s report predicts that the program, despite the large amount of money, will continue to go into debt.