Skip to content

Reebok Reebok

Reebok Reebok

  • Latest
  • Economy
  • Personal finance
  • Markets
  • Ebtrepreneurship
  1. Home
  2. /Markets
  3. /Flood insurance hikes will drive 1 million people out of the market, FEMA report says | Economic news

Flood insurance hikes will drive 1 million people out of the market, FEMA report says | Economic news

Markets / July 23, 2022 / Admin / 0

ST. LOUIS — When questioned by members of Congress, the Federal Emergency Management Agency said its new update to the National Flood Insurance Program will encourage more people to purchase coverage, even though many will pay more .

But in a FEMA report obtained by The Associated Press under the Freedom of Information Act, the agency estimates that one million fewer Americans will purchase flood insurance by the end of the decade – a significant number of people at risk of catastrophic financial loss.

As climate change leads to increased flood risk in many parts of the country, FEMA has updated its flood insurance program to more accurately reflect risk, but also to make the program more creditworthy. . It is partly a response to criticism that taxpayers were funding large payouts when coastal mansions in at-risk locations were flooded.

But nine senators from both parties expressed “serious concerns” about the new pricing system in a letter last September, after hearing that internal agency figures predicted policies would fall by 20%. The following month, FEMA told the AP that the numbers were “misleading” and “taken out of context” and that about how many people will be insured “there is no study or report to share”.

The agency, however, painted a different picture at the end of the year when it sent a report to the Treasury Secretary and a handful of congressional leaders claiming that higher prices would drive down a million policies. compared to the start of the decade.

The issue of the number of people uninsured against flooding is vital, said Chad Berginnis, executive director of the Association of State Floodplain Managers.

“We’re talking about basic economic health, I’m thinking not just of our households and businesses, but of our communities as a whole,” if fewer people are buying flood insurance, he said.

The federal flood insurance program was launched when many private insurers stopped offering policies in high-risk areas. It operates in the red, paying more claims than it collects premiums. By setting rates more precisely, the update, officially called Risk Rating 2.0, makes it more expensive to develop in flood-prone regions, shifting disaster risk to those homeowners.

The 2.0 risk rating will take into account a property’s unique flood risk, such as its distance to the water and the cost of rebuilding. The old system was based largely on a house’s elevation and whether it was in a designated flood zone. Most policyholders will now see their rates increase. But for the first time, nearly a quarter of policyholders will see theirs drop. Buyers of new policies started seeing the new prices in October.

FEMA downplayed the report obtained by the AP as a pessimistic projection, aimed at forecasting finances, not insurance participation. The agency said it did not directly study how many people would purchase flood insurance.

“There are many reasons why growth could occur over time,” said David Maurstad, senior manager of the National Flood Insurance Program, adding that an enrollment analysis should take into account the efforts of agency marketing, clear program messages about flood risk, price reductions and other factors.

But critics like Sen. Bob Menendez, DN.J., have said affordability is an issue and FEMA hasn’t disclosed the impact of those higher costs.

“This report makes it clear that FEMA has not been transparent with policyholders, Congress, and ultimately the American public,” Menendez said in a statement. It shouldn’t have taken a record application for the details to emerge, he said.

The biggest stories in business, delivered every day. Register today.

When Francisca Acuña, a climate and community activist in Austin, Texas, received a new quote, she couldn’t believe it.

“I say, ‘no, you’re making a mistake,'” she said.

Acuña previously paid $446 a year. Under the 2.0 risk rating, it was listed for $1,893. Such large rate increases are rare. Increases are usually capped at 18% per year, but Acuña, juggling other expenses, had let her policy expire, so she had to pay the full amount immediately.

“There’s no way, no how, that I can afford it,” Acuña said.

Briefed on Acuña’s situation, Maurstad said the rates reflect the real risk. It’s unfortunate when people face big increases, but ensuring the financial health of the program and accurate rates is “good public policy,” he said.

Jim Rollo, a New York-based insurance agent, said he’s seen a change in the attitude of some buyers. Some seem more skeptical of properties that have already been flooded and have higher premiums. Others “roll the dice” and forego expensive insurance if it is not needed.

“We write less policy than before,” Rollo said.

Congress should create an affordability program for people struggling to get insurance and fund efforts to improve flood protection, said Joel Scata, an attorney at the Natural Resources Defense Council, an advocacy group of the environment.

But Maurstad said FEMA’s mission is different from that of the private sector. FEMA must help people “before, during and after” disasters, as well as charge risk-based and financially sound premiums.

“We have certain responsibilities incumbent on us. The number of policies sold is not one of them, again, because we are a government program,” he said.

Nevertheless, the agency’s report predicts that the program, even with higher incomes, will continue to take on more debt.

___

The Associated Press is supported by the Walton Family Foundation for coverage of water and environmental policy. The AP is solely responsible for all content. For all of AP’s environmental coverage, visit https://apnews.com/hub/climate-and-environment

Related

Admin

'Ruffling feathers': How VW fell in love with Herbert Diess Why you should prioritize your health over your business

Related posts

Commercial Carpet Market Size Expected to Grow by USD 155.77 Million, Berkshire Hathaway Inc. and Engineered Floors LLC Among Key Vendors

Investors abandon value stocks as fears of recession ‘haunt’ markets

Shiba Inu slips to 13th position after stock market crash

10 Legacy Companies Getting Into Crypto Despite Market Slowdown

Hedge funds rack up $125 billion betting against the S&P 500’s big summer rally

Cosmetic Ingredients Market, Rising Demand for Natural and Organic Cosmetic Ingredients to Drive Market Growth – Technavio Research Reports

Latest posts

Commercial Carpet Market Size Expected to Grow by USD 155.77 Million, Berkshire Hathaway Inc. and Engineered Floors LLC Among Key Vendors

Stocks are yet to bottom, BofA says

Investors abandon value stocks as fears of recession ‘haunt’ markets

Walmart, Walgreens and CVS are fined $650 million – here’s why

Shiba Inu slips to 13th position after stock market crash

Recent flight disruptions are ‘unacceptable’, says Buttigieg as he calls on airlines to improve service

Leave a Comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Legal Pages

  • Home
  • Privacy Policy
  • Terms of use
  • DMCA Policy
  • Contact us

Copyright © 2022 Reebok

Search