Data: Fewer state property owners buying flood insurance

With Gov. Ned Lamont describing as "biblical" the flooding Connecticut has seen in recent years, fewer property owners are getting insurance to cover losses under a new flood insurance rating system, despite continued punishment from summer deluges and tropical storms.

Over the past year, Connecticut saw the number of flood insurance policies in force dwindle by 0.7 percent to about 31,550 as of the end of June, according to the most recent data from the National Flood Insurance Program. Flood damage coverage exceeds 1 percent of the property grand lists in only three of every 10 Connecticut cities and towns, according to a CT Insider analysis of NFIP data.

Nationwide, flood insurance policy coverage was down 1.7 percent as premiums rise for some under NFIP's new "Risk Rating 2.0" system intended to better reflect the financial risks facing any one property from flooding.

Vermont, whose capital Montpelier was swamped in mid-July by flooding along the Winooski River, saw an even greater drop at 2.4 percent over 12 months. Vermont and Connecticut flood insurance coverage ebbed even as New Jersey saw more property owners lining up coverage after a succession of intense rainstorms the past few years.

Homeowners across the Northeast got a fresh reminder of the peril in July after torrential rains flooded portions of towns, from Cornwall and Goshen in the Litchfield County hills to Long Island Sound locales like East Lyme and New London.

"It hit every piece of our state," Lamont said in mid-July, speaking in Glastonbury on the heels of extensive flooding in Connecticut following rainstorms. "It's not the first time we've had floods, but they're more frequent and more severe."

Standard property and casualty insurance does not cover damage from floodwaters, leaving homeowners with the choice of taking the chance of having to pay for repairs or shelling out for coverage under the National Flood Insurance Program.

Factoring in both the value of properties and attendant risk of flood exposure, Connecticut homeowners were paying the highest NFIP premiums in the nation as of September 2022 at nearly $1,600 per policy annually. That was about $150 more than Hawaii, which has the second-highest average premiums.

Losses in Connecticut and nationally swing from year to year depending on the timing, track and severity of storms. For the 12-month period ending in September 2022, NFIP awarded claims of just $460,000 in Connecticut.

That number could go up for the current fiscal year after heavy rains triggered flooding along rivers and streams in July. On Thursday, officials with the Federal Emergency Management Agency were fanning out across several Vermont towns to coordinate aid, with portions of New York's Hudson River Valley also covered under a FEMA disaster declaration.

A decade after Sandy destroyed waterfront homes, Milford remained the most insured city against flooding in Connecticut through last September. Milford had 2,125 flood insurance policies in force under the National Flood Insurance Program and private-sector insurers last year, for $561 million in total coverage against losses.

But as a percentage of the appraised value of all homes and commercial properties, Old Saybrook is the runaway leader for flood coverage in Connecticut, with nearly 14 percent of its property values covered according to NFIP. Westbrook is a distant second with 9 percent of its properties covered, with Milford just above 8 percent along with East Haven, Stratford and Clinton.

With a 23-mile-long coastline encompassing Long Island Sound and the west bank of the Connecticut River, Old Saybrook has large numbers of properties exposed to flooding -- and in many instances, owners with the income to be able to afford the higher rates of flood insurance.

New Hartford has the highest percentage of its grand list covered by flood insurance among towns not located along Long Island Sound or major rivers in Connecticut, with the town situated south of the Barkhamsted Reservoir. Despite ample residential construction along its shore and harbors, Greenwich has the lowest ratio of coverage among Long Island Sound cities and towns, at 1.3 percent of all property values.

Under pressure from Congress to find ways to better balance losses against revenue, the National Flood Insurance Program rejiggered its rating system starting in April in an effort to better match any one property's risk against the premiums paid by that owner. That resulted in an incremental reduction in premiums for many, but sharp increases for others whose homes and businesses are most exposed.

A bill is before Congress that would reauthorize funding for the National Flood Insurance Program, with no Connecticut legislators sitting on a subcommittee of the Financial Services Committee that is considering the legislation. During an April hearing on Capitol Hill, several legislators directed questions to a FEMA official on big premiums some constituents are having to pay under Risk Rating 2.0.

"New policyholders come into the program at full-risk rates -- they no longer come into the program with a discount or a subsidy, and so the doubling of the insurance costs ... is not for a current policyholder," said David Maurstad, FEMA's senior director overseeing NFIP. "A current policyholder's premiums can only go up the statutorily-required 18 percent."