New research shows that the National Flood Insurance Program is undercharging property owners.
Florida flood insurance rates aren’t as high as they need to be to reflect the risk associated with the property, says the results of a recent study. It indicates that the National Flood Insurance Program is undercharging people and that it could justifiably raise its rates.
Undercharging Floridians means that it is more affordable for people to live in dangerous locations.
The Florida flood insurance rate findings were made following a new analysis by First Street Foundation. The nonprofit examined climate change and its impact on property value. What it determined was that most property owners in the state have a higher risk of flooding than is indicated by their policies.
These findings have occurred at a time during which the National Flood Insurance Program (NFIP) is preparing to roll out a new premium calculation later in 2021. According to experts, residents of the state should expect to be paying higher rates, particularly in the most flooding-prone locations. In some areas, this could potentially mean that rates will be substantially higher. For instance, according to First street, the average premium in Miami is about $1,069 per year. That said, if adjusted to reflect the actual property value and risk, it should be closer to $1,500.
Certain specific areas could find that their Florida flood insurance rate will rise considerably.
Certain cities such as Miami Beach show extreme underpricing according to the nonprofit’s calculations. In that case, premiums would need to increase by about ten times to align the rates with the risk. That said, doing so would mean that annual premiums could be $20,000. On the other hand, in South Miami, the research showed that there is a chance that the residents are overpaying compared to their risk, and that their rates could be decreased by 16 percent.
First Street is among the first estimates released regarding the rate hikes that could happen by the end of the year. That said, the Federal Emergency Management Agency (FEMA), which is responsible for setting NFIP, has underscored that it 
remains “premature” to compare the results of the Florida flood insurance rate study with the new official rate formula which has not yet been released.
