FEMA Knows a Lot About Climate-Driven Flooding. But It’s Not Pushing Homeowners Hard Enough to Buy Insurance

The Federal Emergency Management Agency (FEMA) has been collecting a lot of information about flood risks across America, including the increased risk of flooding linked to climate change. But the agency has not effectively used that new knowledge to persuade more Americans to buy flood insurance, according to a new report from the Government Accountability Office.

As a result, homeowners are at increasing risk of costly damage from floods, and the government is facing rising costs for disaster relief assistance, the report found. The report called on Congress to consider requiring FEMA to evaluate how the agency can use the “comprehensive and up-to-date flood risk information” it has been collecting to determine which properties should be required to have flood insurance under the National Flood Insurance Program.

Under that program, managed by FEMA, insurance is available to anyone living in one of the 23,000 participating communities. Homes and businesses in areas with a high risk of flooding and mortgages from government-backed lenders are required to have flood insurance.

When people without insurance are flooded, “there are consequences to taxpayers and to the program itself,” said Alicia Puente Cackley, director of financial markets and community investment for GAO. “It is also not as good for the homeowner,” she added. “The assistance you get through a disaster declaration isn’t as much as with insurance.”

In a written response to GAO, Jim H. Crumpacker, director of the Department of Homeland Security’s (DHS) liaison’s office with GAO, said that the department, which includes FEMA, agreed with the accounting office’s recommendations. Crumpacker said that under FEMA’s 2018 to 2022 strategic plan, it was working to double participation in the flood insurance program through community outreach. But he pointed out the agency does not have the authority to enforce lender compliance, a task that falls on “at least ten other federal agencies.”

In part because of that bureaucracy, the accountability office found it difficult to understand the full extent to which lenders were complying with the insurance mandate.

“We were not able to estimate a compliance rate,” Cackley said. “Nobody has all of the information you’d need to do it, that would be put in a way that would allow us to do it,” she said.

An Insurance Program Underwater

The flood insurance program is generally expected to cover all claims and operating expenses with the premiums it collects, and it was largely able to do that until 2004, according to the GAO report. As climate change has fueled record numbers of billion-dollar disasters, including major flooding often associated with hurricanes like Katrina and superstorm Sandy, the program has been drowning in debt. As of August 2020, FEMA’s debt was $20.5 billion, despite Congress having canceled $16 billion in debt in 2017, according to the GAO, an independent, non-partisan agency that works for Congress.

The report is the latest GAO study to issue recommendations and articulate the troubles of the National Flood Insurance Program, a system that Pulitzer Prize winning journalist and author Gilbert Gaul described this week as “broken, every which way you look at it.” Gaul, author of the 2019 book, “The Geography of Risk: Epic Storms, Rising Seas, and the Cost of America’s Coasts,” said a key problem with the insurance program, especially with high value coastal properties, is that the rate structure has had it “backwards. People with the highest risks are getting the biggest discounts.”

This GAO report did not concern itself with FEMA’s insurance premium rate structure or make any specific recommendations about what to do with the FEMA floodplain maps that are used to determine which flood-prone properties must get insurance and what the policies will cost.

But the report noted that FEMA has been working on a new rate-setting methodology, called Risk Rating 2.0, that seeks to have flood insurance premiums better reflect the actual flood risks faced by the program’s customers, and that the GAO first called for premiums that accurately reflected the risk of losses from flooding 13 years ago.

FEMA on its website claims the new methods tap “industry best practices and cutting-edge technology to enable FEMA to deliver rates that are actuarially sound, equitable, easier to understand and better reflect a property’s flood risk.” An estimated 77 percent of policy holders are projected to see their rates increase, though the increases will be subject to Congressional limits.

The new ratings system is scheduled to be phased in starting in October.

Floodplain Maps Haven’t Kept Up

Cackley, the financial markets director, said that another GAO group was looking at possible recommendations for floodplain mapping. Still, this report cited continuing problems with the agency’s floodplain maps, citing a FEMA official’s testimony that it takes on average seven years to update them when the law requires updates every five years.

The maps also don’t include risk related to flooding that occurs when extreme rainfall, sometimes called a rain bomb, creates flash flooding not associated with an overflowing water body, the GAO report said.

The maps are often fought over at the local level because when they are revised, they can mean more people are required to purchase flood insurance, said Rob Moore, director of the water and climate team with the Natural Resources Defense Council (NRDC). 

Moore was a coauthor, with legal scholars from the Sabin Center for Climate Change Law at Columbia University, of a 2019 Environmental Law Institute article that argued that the national flood insurance program should have “deterred development in flood-prone areas” and “ensured that any new development in the floodplain was designed to minimize the risk of flood damage.” That, Moore and his colleagues wrote, would have saved the federal government money. “In practice, the rising debts of the program and growing severity and frequency of flood disasters imply the opposite is true,” they wrote.

In an interview, Moore said the GAO report contains a lot of good information but that its recommendations fall short of what’s necessary.  “I would have liked to see a few other recommendations, including suggesting to Congress that it adopt a national disclosure law” that would require property owners to inform buyers of past floods and flood risks during real estate transactions, Moore said. NRDC counts 21 states with no such disclosure laws and six more with what it considers to be inadequate laws.

Still, Moore said he was pleased to see continued attention on mapping systems failures, including calling out FEMA flood maps for not factoring in a changing climate, despite a 2012 law that instructed the agency to do so.

The GAO report said, “most maps do not reflect how flood risk will likely change in the future.” Moore called that a “pretty generous” conclusion. There have been 8,000 flood maps finished since the 2012 legislation, he said, “and as far as we know, there isn’t anything about climate projections in any of those.” 

In January, NRDC and the Association of State Floodplain Managers petitioned FEMA to develop maps that project future flood risks and to  update agency rules for building and land use in the nation’s floodplains.

“Today’s maps are based on rainfall estimates that are anywhere from 10 to 50 years out of date,” said Larry A. Larson, a professional engineer and senior policy advisor for the Association of State Floodplain Managers. He called the GAO report, with its minimal recommendations “kind of weak.” But he said he was glad that the GAO did the report, and that it points out to lawmakers on Capitol Hill that if they want to make sure the rules mandating the purchase of flood insurance are done right, “there must be a role for FEMA because it is doing the maps.”

Politics Subvert Climate Considerations

In the most recent National Climate Assessment, U.S. government scientists warned that global warming was intensifying and increasing the frequency of extreme rainstorms that cause devastating flooding. Hurricane rainfall and intensity are also likely to increase, as are the frequency and severity of “atmospheric rivers” of rain on the West Coast. Sea-level rise also makes flooding storm surges more dangerous.

In 2018, the Gulf Coast town of Mexico Beach, Florida, became a vivid example of how FEMA’s flood maps were failing millions of Americans who owned property in low-lying areas along coastal zones, rivers or streams, as Inside Climate News reported at the time. The town lost more than 200 homes in an area that FEMA had categorized as having minimal flood risk associated with Hurricane Michael, which delivered a storm surge of 14 feet and significant additional wave activity that exacerbated the catastrophic damage.

The GAO report was silent on why FEMA was not factoring in climate change in its maps used for determining who must buy flood insurance.

“It’s politics,” said Gaul, the book author. “Everybody wants to beat up on FEMA, including me, for the flood insurance program,” But to be fair, he said, when “FEMA tries to do the right thing to make rates reflect risks, Congress steps in.”

The authors of the report, Cackley said,  also found it difficult to get an understanding of the extent to which lenders were complying with the law.

“We were not able to estimate a compliance rate,” Cackley said. “Nobody has all of the information you’d need to do it, that would be put in a way that would allow us to do it.”