Raising flood insurance premiums seems fair. This is not the case.

The National Flood Insurance Program (NFIP), one of the primary tools we use to manage flood risk in the United States, is often viewed as failing. Amid rising sea levels and worsening storms, the program’s debt already stands at tens of billions of dollars, which is widely seen as an indication that the insurance it is selling is woefully under-selling. assessed, leaving taxpayers at the mercy of what looks like a grant. to coastal life.

In response, FEMA is set to launch its plan to address some of these issues. “Risk Rating 2.0”, which is due to come into effect today, is the most ambitious overhaul of flood insurance pricing since the inception of the NFIP in 1968. Risk Rating 2.0 will add many new variables to the calculation of the rate. risk of flooding, which will allow premiums to be monitored more closely. the actual risk incurred by each individual property. For many homeowners this will mean cheaper flood insurance, but for most premiums will increase, in some cases dramatically. The plan has garnered much praise from experts, many of whom have been proposing similar changes for years.

But there are already signs of trouble. Members of Congress on both sides of the aisle recently indicated their opposition to the changes, including in the form of legislation that would deprive FEMA of the power to eliminate subsidized fares without an act of Congress. They probably haven’t forgotten the last time Congress tried to reform NFIP pricing: in 2012, it removed subsidized premiums, only to find itself facing an unexpected wave of opposition, forcing it to cancel a big deal. part of his own work just 14 months later.

Why is NFIP reform so difficult? One of the problems is that the risk of flooding is expensive and many people cannot afford the premiums that would be needed to cover it. FEMA’s own analysis showed that despite the popular image of chic beachfront mansions in places like New Jersey and Florida, these types of homes aren’t actually the majority of homes prone to flooding. According to a 2007 estimate from the Congressional Budget Office, over 80% of NFIP policies relate to primary residences, which have a median value well below $ 500,000. People who live in flood-prone areas tend to have lower incomes than those who live outside them. In fact, more than a quarter of NFIP policyholders in flood-prone areas are classified as low income.

Increasing premiums therefore risks excluding people altogether from the program, or creating a world in which communities are forced out of their homes based on their ability to pay for flood insurance, with low-income areas being the first to disappear. To its credit, FEMA recognizes this problem and insists that the 2.0 risk rating will make flood insurance more affordable for a wide range of policyholders (mostly low risk).

But a deeper problem remains. Not all insurance is priced according to individual risk, so there is no reason to think flood insurers should be either. Health insurers, for example, are prohibited by law from considering most factors that affect health risk, including pre-existing conditions. It seems fair to us because of ideas like choice and consent: People don’t choose to have cancer or diabetes, and they often can’t choose to forgo medical care either. The ban on making care more expensive under certain conditions comes from the understanding that it would be unfair to make them bear the often enormous financial burden of the care they need. We have decided, as a society, that the costs of medical care should to a large extent be shared.

So is the risk of flooding a health risk? Is living in a flood prone home like having a pre-existing condition? Most commentators reject this idea outright, arguing that because people in flood-prone areas have chosen to live there, they should pay the full cost of doing so. It is certainly true of some people living with flood risk, like former Treasury Secretary and Goldman Sachs CEO Hank Paulson, who surely knew about the risks of hurricanes and sea level rise when he bought the Little St. Simon Island, a low-lying boggy area off the South Carolina coast — for $ 33 million in 2014.

But many more likely did not choose to live in flood-prone areas, at least not in a morally meaningful sense. For a choice to be morally meaningful, it must be free, and to be free, it must be made with knowledge of the risks it entails and a real opportunity to choose differently. In other words, choices that are made under conditions of ignorance or coercion are not really choices at all.

It may seem obvious to anyone paying attention that rising sea levels will inundate many coastal areas across the country by 2100 – the homes of 4.7 million people, according to a study. But individual decisions about where to live must face the risk of flooding affecting individual properties. Even official FEMA flood maps do not account for sea level rise (or any of the projected effects of climate change) at that level. As a result, studies routinely find that official FEMA maps underestimate the extent of flood risk across the country, sometimes dramatically. This problem also has a racial dimension, according to a study by climate change analysis firm risQ: communities of color are more likely to have their flood risk underestimated on FEMA maps, especially in interior regions.

More deeply, the risk of flooding is usually communicated using a jargon metric called a “return interval,” the percentage of probability that a flood of a particular magnitude will occur in a given year. . Hurricane Harvey, for example, was a “500 year” flood, meaning it was an event with a 0.2% probability of occurring in any given year. Most people understand terms like these to mean that a storm like Harvey is only expected to happen once in a 500-year period, but as players and baseball players eventually learn, the chances of an event happening this year are not affected by the fact that it happened last year. This is one of the reasons why Houston has experienced three “500 year” floods in as many years. Another explanation is that we don’t really know how likely these events actually are. We only have about 100 years of data to draw from, and with rapid global warming, the predictive power of the last 100 years of data is a matter of deep uncertainty. So we can forgive many people for not really understanding what they were getting into when they bought their flooded home.

Equally heavy is the assumption that we all choose where to live. Hank Paulson surely had many options open to him. But most of us don’t. We end up where we do thanks to a combination of family and work, and many residents of places like Houston, New Orleans and Boston have found that the only neighborhoods they can afford are those that present a significant risk of flooding. If rising flood insurance premiums make these places unaffordable, residents might frantically wonder where they are supposed to go. And as climate change makes the problem worse, it’s worth remembering that individuals whose lives are at risk of being turned upside down tend not to be the primary contributors to the problem.

Just because many people did not choose the flood risk they currently face does not mean that we are stuck in an endless cycle of destruction and debt. NFIP reform should focus less on imposing full-price premiums on everyone and more on empowering people to make better choices about where they live. This means there is less emphasis on penalizing those who stay and more emphasis on incentives to leave. Buyouts have long been touted as extremely profitable, and many residents of flood-prone areas have lobbied for them. But the buyouts have so far been one-off programs with Byzantine procedures, a situation that calls for reform. We also need to better communicate about the risks of flooding. No one should buy a home in 2021 without realizing the danger of flooding, expressed in terms everyone can understand.

No reform of this problem will be easy. Flooding is the most common and costly natural disaster in the United States, and the toll it brings will only grow worse as our climate continues to change. If we are to make progress, it is best to start with a place of empathy for those who are dealing with the worst effects of our collective broadcasts. Many of them did not choose to be on the front lines of climate change, and we owe it to them to help them escape.

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