Everything Is Getting More Expensive, And That Includes Flood Insurance

FEMA rolled out changes to its National Flood Insurance Program in October last year. According to the insurance policy website QuoteWizard, the changes will cost 86% of Texas residents as much as $100 more per month. Some 768,537 policyholders will be affected, but the remaining 14% will see decreases in their rates.

Davis Maurstad, senior executive of the program, said in a press release that their methods for assessing rates haven't been updated in more than four decades.

"Now is the right time to modernize how risk is identified, priced and communicated," Maurstad said. "By doing so we empower policyholders to make informed decisions to protect their homes and businesses from life-changing flooding events that will strike in the months and years ahead due to climate change."

The updated method is being referred to as Risk Rating 2.0, and it uses new technological and mapping capabilities to determine the flood risk of a given property. "The new rating methodology has exposed inequities in pricing whereby some policyholders have been unjustly subsidizing other policyholders," according to FEMA.

The older pricing method, which was implemented in the '70s, was mostly based on static measurements and emphasized a property's elevation within a flood zone. To determine the property's "true flood risk," the new method takes more variables into account, including climate change, flood frequency, different types of floods, distance to a water source and rebuild costs.

According to FEMA, every policyholder would have seen increases into the foreseeable future under the old pricing system. But under the new system, about 23% of policy holders (more than a million) will see decreases in their premiums. Even more, 34%, will save money in Dallas County, according to QuoteWizard.

However, FEMA also warned some would see rate increases. That's what some Texans, including about 64% of those with flood insurance in Dallas County, may see starting next month. "While some policyholders will experience a decrease under the new methodology, others will experience an increase that is commensurate with their full risk rate," the agency said. "By statute, most rate increases are capped at 18% per year."

In Dallas County, though, only 0.1% of policyholders will see an increase of $60 or more.

Marsha Jackson, a Floral Farms resident, told the Observer her flood insurance has gone up since she bought her property and nothing has changed since FEMA began rolling out its new policy last year. Under the new way of calculating flood risk, Jackson's ZIP code saw 62.5% of policyholders paying up to an extra $10, according to FEMA. Another 4.2% could see decreases of as much as $100.