USA: Flood, rebuild, repeat: The need for flood insurance reforms

By Lucas Eastman

Can you imagine living in a property that has flooded 10 times? How about 20 times? It’s hard to fathom enduring that kind of situation, yet owners of 2,109 properties across the United States experience just that. Not only has each of these properties flooded more than 10 times, but the National Flood Insurance Program has paid to rebuild them after each flood. One home in Batchelor, Louisiana flooded 40 times and received a total of $428,379 in flood insurance payments. 

These properties—and more than 30,000 others that have flooded multiple times—illustrate the current problems of the National Flood Insurance Program and also provide some insights into how challenging it will be to cope with sea level rise, flooding due to extreme weather, as well as other impacts of climate change. It is anticipated that between 4 and 13 million people’s homes could be inundated due to sea level rise by 2100.

How many of these homes will be in the same situation, repeatedly damaged by floods, and the main assistance provided is to repeatedly rebuild? How the nation—and the National Flood Insurance Program—face this dilemma is a key question we need to answer if we are going to prepare for and adapt to the impacts of climate change. That’s why NRDC decided to take a close look at how we’re already addressing properties that have been repeatedly flooded.

Through a Freedom of Information Act request to the Federal Emergency Management Agency, who oversees the NFIP, we received records on the 30,000 most frequently flooded properties in the program, called Severe Repetitive Loss Properties. The data reveal important new information about the flood history of these properties and show that in many, if not most of these cases, it would be cheaper to buy these properties than pay to rebuild them over and over again. At the bottom of this page are some facts about the most frequently flooded properties in the National Flood Insurance Program.

These 30,000 Severe Repetitive Loss Properties represent a disproportionate burden on the NFIP. Despite only representing 0.60% of the 5 million homes in the program, these properties have received 10.6% ($5.5 billion dollars) of all flood insurance claims since 1978. That’s an average of $181,444 paid over the life of each property. Nearly half (13,499) of these properties have been paid more in flood insurance money than their house is worth. 

This prompts the question: how did we get here? And the more relevant question: what can we do to fix this? We arrived at this point because the National Flood Insurance Program (NFIP) is designed to help people rebuild in the same location where they were flooded, a perilous strategy in the face of increasingly severe storms and sea level rise due to climate change. The drive to rebuild is completely understandable, but recognizing that some homes will be flooded again in the near future necessitates a different response.

NRDC has proposed a novel voluntary home buyout strategy that could help address this situation in a fair and equitable way. If homeowners are ready to break the cycle of being flooded and rebuilding, as our research suggests many are, they would sign an agreement with the NFIP that when their property’s damages from flooding exceeds 50% or more of its value, the government will buy out their property at its pre-flood fair market value. The homeowners would then relocate to a safer area with that money and the property would be maintained as open space, providing some buffer against future floods. In exchange for this commitment, homeowners would receive discounted flood insurance and an accelerated buyout process.

A home buyout strategy is so badly needed because, despite being flooded multiple times, the vast majority of properties we looked at have not taken steps to protect against future floods, like putting their home on stilts or pilings or relocating to higher ground. The data we received from FEMA show that 75% of the 30,000 properties we examined have not taken action to reduce their vulnerability to flooding or received assistance to do so. These homeowners are stuck in a difficult situation as their properties have been flooded an average of five times. Instead of repeatedly paying to repair and rebuild these properties in the same place, where it will likely be flooded again, we should be helping these people relocate somewhere safer. 

Some of these homeowners’ situations are even more fragile considering that 2,708 of them sustained damage in excess of 50% of their property’s total value during the last flood they experienced. In flood insurance-speak, this 50% threshold is what’s known as “substantially damaged”, meaning the owner has an obligation to take some action to reduce future flooding, at significant cost to them. It makes sense that many of these property owners want to relocate to higher ground. NRDC’s buyout proposal would allow the homeowners to do that if they want to, and taxpayers would be alleviated of paying to rebuild the property time and time again.

In 2017 Congress will have a chance to reform the NFIP (the National Flood Insurance Act must be reauthorized every five years) and NRDC will be pushing them to consider this option. Among the 30,000 properties examined, NRDC estimates it would cost about $2 billion to buy out those properties that are still insured, unmitigated, and at-risk, a not-unreasonable amount considering these same properties have already collected about $2 billion in flood claims. The NFIP is currently $23 billion in debt, so buying properties that are proven to be flood-prone would reduce the constant insurance and disaster assistance payments (some in excess of their property value), and thus take a significant step toward a safer and more sustainable future for our nation.

The future costs facing the nation are staggering and cannot be entirely avoided. The real estate website Zillow recently estimated that 1.9 million properties worth $882 billion are at risk of being inundated by sea level rise by the year 2100. NRDC does not propose that all those properties be purchased, but we should seriously consider how we assist low-income residents and home owners that are included among those properties. The costs of repairing and rebuilding those 1.9 million properties multiple times before they are inundated will also be staggeringly high. The longer we leave people and their homes in an increasingly vulnerable situation, the more at risk people’s lives are, the more we will pay to repeatedly rebuild, and the greater the pressure will be to erect costly and environmentally questionable flood defenses, a strategy that is not feasible for the entire U.S. coastline.

NRDC has proposed a platform of “climate smart” flood insurance reforms that includes our discounts for buyouts proposal. Our reforms are intended to provide assistance to low-income homeowners to relocate as climate change puts their homes at greater risk and also increase the accountability and transparency that is sorely lacking in the NFIP.