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The cost of flood insurance is rising for millions of homeowners. The Federal Emergency Management Agency says its new rates better reflect flood risk in a warming climate. As NPR's Greg Allen reports, it could also make some housing unaffordable for some middle-income Americans.
GREG ALLEN, BYLINE: There may be no place affected more by the new risk rating system than the Florida Keys. Almost all homeowners on the island chain are required to carry flood insurance if they have a mortgage. On Big Pine Key, after years of looking for a house she could afford, Amy Tripp and her husband were finally able to buy a home.
AMY TRIPP: It was damaged in Irma, so it was totally gutted and has a new roof. We purchased it through Habitat.
ALLEN: That's Habitat for Humanity. The high cost of housing has long been a major problem here. They haven't moved in yet. The house still needs work, including batteries for the beeping smoke detectors. Tripp is a graphic artist and web designer. Her husband installs fire sprinkler systems. It's a modest house and already elevated 10 feet above ground level to prevent flood damage. But before they finalized the sale, Tripp says they had an unwelcome surprise. They found out FEMA's new flood rating system would raise their premiums by nearly 15 times, making her home suddenly unaffordable.
TRIPP: Then it was going to go to 5,000 if we didn't close before October 1. And there were, I think, seven other families that were in the same position.
ALLEN: They scrambled to close the sale early and avoid that. But her rate will rise over time. Throughout the Keys, FEMA's new flood rates have dramatically increased the cost of owning a home. It's also left homeowners, realtors and insurance agents like Rebecca Horan confused.
REBECCA HORAN: Honestly, I can't see any rhyme or reason to where they're coming up with the premiums.
ALLEN: FEMA's new risk rating system depends on software that delivers sometimes surprising results. Horan says her house is nearby and similar in size and construction but with a flood insurance estimate much lower than Tripp's quote.
HORAN: Mine - if somebody were to purchase it today, the premium would be $1,700. So why hers would be so much higher than mine I don't know, and I don't understand.
ALLEN: David Maurstad, the person in charge of FEMA's National Flood Insurance Program, says the new system takes many more factors into account. In the past, he says, a homeowner's flood insurance premium was mostly based on where they were in a flood zone and what their home's elevation was.
DAVID MAURSTAD: Now it's multiple flooding sources. It's multiple flooding frequencies, how close one is to a water source - a river or the ocean or a lake - and, of course, elevation still, in addition to the cost to rebuild.
ALLEN: This is a big improvement, says Laura Lightbody, who works on community flood issues with Pew Charitable Trusts. She says the old risk rating system didn't take into account the mounting effects of climate change, which is making extreme rain and flood events more intense and more frequent.
LAURA LIGHTBODY: It was not designed for the flooding that we know today, the sea-level rise that so many Floridians experience.
ALLEN: With the growing number of extreme weather disasters, the federal flood insurance program is also some $20 billion in debt. Congress has pushed to modernize it and bring it back to solvency. Lightbody says the fact is people in the Florida Keys live in a high-risk area, and their flood premiums should reflect that. FEMA's David Maurstad agrees.
MAURSTAD: If you're living in an area where you have hurricane risk and riverine risk and now rainfall risk, yes, your risk is greater than what it's been indicated in the past under the old methodology
ALLEN: In Monroe County, the Florida Keys, FEMA says more than 90% of homeowners will see their annual flood insurance premiums go up, sometimes by thousands of dollars a year. It would be higher, but Congress has capped annual increases for each homeowner at 18%. Still, people buying new homes may now face bills 10 times higher than before. Lisa Tennyson, the legislative affairs director in Monroe County, says it may price homes out of reach for middle-income workers.
LISA TENNYSON: Teachers, nurses, firefighters, government workers, utility workers - they own small businesses. These are your average people.
ALLEN: When the flood insurance program was last updated nearly a decade ago, rising rates sparked an outcry, and Congress stepped in, making some changes to soften the impact. That could happen again. A bipartisan group of senators is calling the new risk rating system, quote, "an actuarial disaster" and is working on proposals to reform it. Greg Allen, NPR News, Miami. Transcript provided by NPR, Copyright NPR.
