The impact of climate change on flood losses in the United States is projected in a new report from the charity First Street Foundation.
According to the research, The Cost of Climate: America’s Growing Flood Risk, approximately 4.3 million properties have “substantial” flood risks that could cause financial loss after accounting for the long-term effects of a changing climate.
“The premiums would need to increase 4.5 times to cover the expected risk in 2021, and 7.2 times to cover the increased risk by 2051,” the research says, “if all of these homes were to insure against flood risk under the National Flood Insurance Program (NFIP).”
According to a report published by the foundation last year, more than 6 million American homes may be at risk of flooding than what is currently shown on Federal Emergency Management Agency (FEMA) flood maps.
The launch of Risk Rating 2.0, an endeavor to make flood insurance pricing more reflective of each policyholder’s exposure and aid consumers in better understanding their risks and the significance of having flood coverage, makes the new research all the more relevant.
In order to produce rates that “are fair, make sense, are easier to understand, and better reflect a property’s specific flood risk,” the company intends to achieve this by utilizing industry best practices and technology.
Beginning in October 2021, Risk Rating 2.0 will be implemented.
The First Street data offer as an example of an early signal of who could be most affected by risk-based premium adjustments in the near term and as the implications of climate change develop since homeowners with federally backed mortgages who live in SFHAs must get flood insurance.
A multi-pronged approach to mitigation and resilience that includes improved attention to how, where, and whether to build or rebuild as well as expanded availability and affordability of insurance is crucial given the potential financial costs of expanding coverage under the NFIP or, worse, of failing to address the current flood-protection gap.