Energy & Environment

FEMA Is Changing Its Flood Insurance Program. Here’s How It Will Impact Texans

Under the restructuring, some 89% of policyholders in Harris County could see their premiums go up in the first year of the program.


David J. Phillip/AP
Roughly two-thirds of flood loss claims from Hurricane Harvey were from properties outside of the 100-year floodplain. FEMA’s new risk model aims to more accurately calculate a property’s flood risk.

Roughly 86% of Texans with federal flood insurance could see their premiums go up next year when a new program goes into effect, according to data from the Federal Emergency Management Agency.

FEMA's National Flood Insurance Program is revamping how it calculates flood risk for the first time in 50 years to better reflect a property's flood risk and to be able to "adapt and re-adjust rates based on a changing, unpredictable climate," according to the agency.

Previously, flood risk was largely based on a property's elevation and whether or not it was located in the 100-year floodplain. Now, the restructuring — known as Risk Rating 2.0 — will be more tailored to each individual property by taking into account additional factors such as flood frequency, distance to a water source and the cost of rebuilding.

It will also factor in different types of flooding, including storm surge, river overflow and heavy rainfall, while also taking into account modeled flood events that are both bigger and smaller than a 100-year flood.

"FEMA is building on years of investment in flood hazard information by incorporating private sector data sets, catastrophe models and evolving actuarial science," read a statement from David Maurstad, senior executive of the National Flood Insurance Program.

Lucio Vasquez / Houston Public Media
In one part of Orange, Texas, cars were submerged in waist-deep water after Hurricane Laura brought storm surge into the area on Aug. 27, 2020.

The decision comes as climate change has led to increased flooding due to sea-level rise, heavier rainfall, and stronger, wetter hurricanes. Those climate impacts, combined with our built environment, are causing more homes to flood than ever before, according to Sam Brody, a professor at Texas A&M Galveston and the director of the Institute for a Disaster Resilient Texas.

"We know that changing development patterns, the built environment, along with environmental change are changing the location and degree to which homeowners and residents, in general, are vulnerable to flooding," Brody said.

Increased insurance claims have put the FEMA-run program more than $20 billion in debt. That's even after Congress canceled $16 billion in debt so that FEMA could pay off claims stemming from hurricanes Harvey, Irma and Maria in 2017.

"The existing rate structure was unsustainable," Brody said. "We’re seeing so many more people flood than they did before. Plus, more and more people are getting insurance policies because it’s a great deal. It’s literally bankrupting the insurance program."

In Harris County, roughly two-thirds of flood loss claims after Hurricane Harvey were from properties outside of the 100-year floodplain, according to the Harris County Flood Control District. And Hurricane Harvey was just one of six major flooding events that Houston has had since 2015.

Alongside more accurately reflecting a property's risk, the updated program also aims to make the system more equitable by lowering rates for less-expensive homes that don't cost as much to rebuild, while raising costs for more affluent properties with high flood risk.

According to FEMA, roughly 11% of flood insurance holders in Harris County could see immediate decreases to their premiums, while the remaining 89% could see increases of up to $60 per month in the first year. On the extreme end of the spectrum, some policyholders in Texas could see an increase of more than $100 a month, according to FEMA.

The new rates go into effect for new policies beginning Oct. 1, while remaining policies up for renewal will see the changes after April 1, 2022.

There are actions local governments can take to reduce flood risk and lower insurance premiums for property holders in their jurisdiction.

FEMA's Community Rating System outlines a series of mitigation actions that local governments can implement, such as improved stormwater management and preserving open spaces, that can lower premiums by up to 45%, says Brody, the Texas A&M Galveston professor.

The city of Houston currently has a "Class 5 Rating" meaning federal flood insurance policyholders can save up to 25% a year, while Harris County is a "Class 7" meaning policyholders can save up to 15%.

"If we don’t want higher rates, we just need to do better at mitigating the risk," Brody said. "I think just focusing on climate-related changes, we’re going to miss the fact that a lot of our flood problems are self-inflicted through development decisions."