Flood insurance hikes will drive one million from market – FEMA report
While the Federal Emergency Management Agency (FEMA) initially said that the National Flood Insurance Program’s (NFIP) “Risk Rating 2.0” update would lead to more people signing up for coverage – with the caveat that many would be paying more for coverage – a recently uncovered report from the same agency projects that one million Americans will drop out of the program by the end of the decade.
According to the report obtained by The Associated Press from FEMA under the Freedom of Information Act, NFIP’s higher prices would lead to a million policies dropping off compared to the start of the decade. FEMA’s report was originally directed to the treasury secretary and several congressional leaders.
The report also predicted that even with higher revenue, the NFIP will continue to be buried in debt.
FEMA declared the report obtained by the AP as a “pessimistic projection” focused on projecting finances, and not insurance participation. The agency also stated that it has not directly studied how many people will purchase flood insurance through the NFIP.
“There’s numerous reasons that growth could occur as time goes on,” said NFIP senior executive David Maurstad, who prefaced that an enrollment analysis should consider FEMA’s marketing efforts and how NFIP has made clear the risk of flooding, price decreases, amid several other factors.
Critics have pointed out that the NFIP’s affordability is a major problem, and that FEMA did not adequately disclose the impact of increased rates under Risk Rating 2.0.
“This report makes it crystal clear that FEMA failed to be transparent with policyholders, Congress, and ultimately the American public,” said Sen. Bob Menendez, D-NJ, who added that it should not have taken a records request for these details to emerge.