Flood insurance rates prove controversial for FEMA
Rising flood insurance costs may soon become a problem for the U.S. federal government. The Federal Emergency Management Agency (FEMA) has been working to revise the flood maps that determine what regions of the country can be considered “high risk” areas. According to FEMA, such areas are prone to floods that can cause significant damage to properties and are under considerable risk to falling victim to floods that are caused by storms. Revisions to FEMA’s flood maps have many implications, the most concerning of which involves the rising cost of flood insurance.
Flood insurance program continues to receive criticism
This type of coverage is not typically offered through a private insurer and comes from the National Flood Insurance Program, which FEMA oversees. The federal program has been the recipient of harsh criticism over the past several years, largely due to its dubious financial stability, which was immediately called into question in the wake of 2005’s Hurricane Katrina. Federal lawmakers have been working to resolve the financial problems of the flood insurance program, but the endeavor has proven quite difficult and no definitive solution has yet been discovered.
New flood maps cause spike in coverage rates
FEMA has been introducing revisions to its flood maps in stages. Recently, the agency unveiled changes to the flood maps that account for regions in New York and New Jersey, as well as those found in states along the Gulf of Mexico. In Louisiana, revised flood maps are expected to increase the cost of flood insurance from $400 to over $28,000 annually. Such a drastic increase in premiums has caused many homeowners to protest the revisions being made by FEMA.
Costs to grow even for those receiving government subsidies
While costs for flood insurance appear to be on the rise, FEMA notes that approximately 20% of the National Flood Insurance Program’s 5.5 million policyholders receive subsidies from the federal government that help offset the cost of coverage. Of these, however, some 250,000 will still see the amount they pay for flood insurance coverage increase in the coming months. Thus far, FEMA’s revised flood maps have made flood insurance coverage for 578,000 homeowners throughout the country more expensive.