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Climate Change is Only Going to Get Worse

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Climate Change is Only Going to Get Worse

By: Adam M. Matheny

The NFIP Is Under Siege by Climate Change

In a meeting with House lawmakers, environmental experts warned that the National Flood Insurance Program (NFIP) is at significant risk due to climate change and it’s only likely to get worse in the future. The meeting, hosted by the Financial Services Subcommittee on National Security, International Development and Monetary Policy was held to discuss the macroeconomic fallout from climate change and the financial risks that will come with it.

Ancient Maps Are Seriously Inaccurate

Former U.S. Secretary for Energy Efficiency and Renewable Energy, Andy Karsner who served under George W. Bush said that ” Flood insurance is top of perils we have to face. It is imperative for [insurance companies] to develop new tools of risk management because they are operating on very old model inputs and ancient legacy flood maps.”

Chairman of the Subcommittee, Emanuel Cleaver (D-MO) said that in the first 5 months of this year, his state suffered 232 flash floods that have decimated farms in the state and that the Financial Services Committee has had to deal with flooding issues over and over again.

With over 5 million flood insurance policies the NIFIP brings in approximately $4.75 billion in premiums, surcharges, and fees annually. However, during the 2017-2018 hurricane season, the damage caused by Florence, Harvey, Irma, and Michael cost the program far exceeded the available funds, crippling the program and leaving it seriously in debt. Pres. Donald Trump did sign a disaster relief bill that provided help to the NFIP that let them pay off the many claims.

At the hearing, Marshall Burke, assistant professor of earth system science at Stanford University stated that current research on climate change puts the southern states at high risk of flooding.

Put The Effort In That Other Agencies Don't

It’s no secret, most agencies do not like writing flood. The NFIP offers an outdated product, with antiquated rating variables, at an ever increasing cost. But, what if writing flood insurance in Texas was easy? Luckily, now it is. There are several programs and carriers that use advanced mapping data making elevation certificates a thing of the past. Because the underwriters can selectively underwrite, unlike the NFIP who has to take everything, rates are extremely competitive. Flow Insurance Services brings these markets to you, and makes it easy to submit quote requests with extremely fast turn around time.

An Upsurge in Storm Power and Frequency

Burke said that “On the coast, what we know about tropical cyclones or hurricanes — we don’t have clear evidence that there will be more or less of them — but we know they will be more powerful and move more slowly. That will dramatically increase the likelihood of coastal flooding,”

With the continued increase in the power and frequency of these storms, many lawmakers look to make changes to the program that would allow private insurers enrolled in the NFIP to ensure the availability of much-needed flood insurance and share the risk. However, there are no guarantees that letting these insurance companies assume more of the risk will not have an impact on mitigating the problem.

The only problem with all of the above seems to be expecting Congress to do something about the current situation. To date, they have authorized no less than 13 extensions to the NFIP without making any significant changes. The result is that the program continues to operate in the red, something that doesn’t look like it’s going to change in the near future as Congress seems to always find a way to sidestep the real issues at hand. Instead, they seem to be content with slapping one band-aide over another trying to hold the “floodwaters” back.

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