Since FEMA began using a new method to calculate the price of its flood insurance...
A photo from when Barbara Herndon married her husband in her current home is nailed to the wall on Friday, Oct. 21, 2022 in Houston. Herndon, now a widow, turned down a house from GLO, saying she wanted to stay in her current home.When Luke Senechalle bought a home in 2020 north of Memorial Park,Memorial Day Flood, Tax Day Flood, Hurricane Harvey, Tropical Storm Imelda.
In the months since FEMA began phasing in its new pricing on Oct. 1, 2021, Houston-area insurance brokers have seen yearly rates for many properties go up hundreds of dollars, and the number of FEMA flood insurance policies in the region plummet. A FEMA spokesperson attributed the drop in insurance policies to several factors. Homeowners have been battered by the economic impact of the pandemic and surging inflation. New homeowners are already stretching their budgets thin to purchase houses in a market market hit by both high home prices and surging mortgage rates. The number of flood policies tends to decline in years when there aren't major flood events.
The National Flood Insurance Program, through which FEMA provides coverage to the vast majority of country’s flood insurance policy holders, has required multiple bailouts from Congress as its rates fell short of covering the damages sustained by enrolled homeowners in an era of increasingly common natural disasters. So the agency recalculated its pricing, a change that it calls Risk Rating 2.0.
Then in April of this year, FEMA began phasing in the change for existing policyholders who were seeking to renew their flood insurance. Because annual premium increases are limited to 18 percent under federal law, the premium for a house not located in the flood zone — $572 in 2021 for maximum coverage under the old system — could only go up $103 in the first year. It could take multiple years before current policyholders pay the full premiums calculated by the new risk rating.
"We tend to characterize this as the boiled frog approach," said Jeffrey Wiley, chief executive of the Fort Bend Economic Development Council."People don't recognize what's going to hit them in terms of increases in flood insurance."Barbara Herndon, 72, has lived in the neighborhood of Lake Forest long enough to see her home flooded twice — once during Tropical Storm Allison, and again during Hurricane Harvey.