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Texas double disaster: Beryl’s deluge and receding flood insurance

By Thomas Frank, Avery Ellfeldt, Anne C. Mulkern | 07/09/2024 06:25 AM EDT

The falling number of policies threatens to leave storm survivors with no financial help at the beginning of an active hurricane season.

A vehicle is stranded on a flooded highway in Houston.

Beryl came ashore in Texas as a hurricane and dumped heavy rains along the coast on Monday. Juan A. Lozano/AP

More than 100,000 Texans have dropped federal flood insurance policies in recent years, likely making it costlier to homeowners and taxpayers to recover from Hurricane Beryl.

Beryl’s torrential rain and storm surge have caused massive flooding since the storm made landfall as a Category 1 hurricane along the central coast of Texas Monday morning, before weakening to a tropical storm. Winds knocked out power to 2 million people.

The inundation in one of the nation’s most flood-prone areas occurred as the number of households and businesses with federal flood insurance is falling steadily in Texas and nationwide. The Federal Emergency Management Agency sells about 90 percent of the nation’s flood policies through its National Flood Insurance Program.

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FEMA has warned for years of the financial peril facing people without flood insurance. After Hurricane Harvey caused tens of billions of dollars of damage in Texas in 2017, without flood coverage “had to rebuild their lives with personal savings and whatever federal assistance they were eligible to receive.”

Yet in Texas, the number of federal insurance policies dropped to 655,000 in May from 787,000 in September 2021 — a 17 percent decline, agency records show.

“It’s very concerning given how active this year’s hurricane season is expected to be,” said Madison Sloan, director of disaster recovery at Texas Appleseed, an advocacy group.

Households without flood insurance will have to rely on a separate FEMA program that pays people a few thousand dollars on average for emergency costs, including temporary home repairs to make a residence habitable, Sloan said. Federal flood insurance pays up to $250,000 per claim.

“This also means that there are potentially a lot more people who aren’t even qualified for housing assistance from FEMA or HUD,” Sloan said, referring to the Department of Housing and Urban Development and disaster programs that are available only to people with flood insurance.

The drop in policies coincides with an overhaul of the program that has sharply increased premiums for millions of policyholders nationally. The revised insurance rates reflect more accurately the flood risk of each property and remove widespread discounts.

In Texas, the average cost of a policy is slated to increase to $1,400 from $775 by the time the new rates are fully in effect in several years, FEMA records show.

In Louisiana, where the average premium will jump to $1,900 from $815, the number of federal policies has dropped to 445,000 from 510,000 in late 2021. Many people are dropping flood coverage due to the cost, said Matthew Jewell, president of St. Charles Parish.

“They’re going to take the gamble,” Jewell said, adding that some residents have told him they will be facing $8,000 premiums in a few years, based on policy disclosures. Others are confronting lower — but still steep — price hikes.

“You’re taking people who were historically paying under $1,000 and putting them up at $5,000,” Jewell said. “What do you expect people to do?”

Nationwide, the number of FEMA insurance policies has fallen to its lowest level since at least 2008, records show, dropping from 5.6 million to 4.7 million in May.

“To the extent people had to drop flood insurance because it was too expensive, those homes are going to go unrepaired,” Sloan said. “Communities are going to be less resilient, households are going to be less resilient. We could be looking at more people without housing.”

David Maurstad, FEMA’s assistant administrator of the Federal Insurance Directorate, disputed that the new insurance rates are causing the drop in policies.

“The NFIP was already experiencing a trend in declining policies prior to the implementation of Risk Rating 2.0,” Maurstad said in an email, referring to the new program of higher premiums.

The decline, which FEMA records show began in October 2019, “has leveled off” since April 2022, when the new rate structure took effect, Maurstad said. He noted that some states have seen an increase in the number of policies, most notably Florida, which has seen a 3 percent rise since early 2023.

Florida enacted requiring hundreds of thousands of property owners to have flood insurance.

The number of federal insurance policies typically increases in states after they sustain major flood damage and decreases during periods of no disasters, Maurstad said. “Texas is one such case as it has not seen a large-scale event in nearly seven years,” he said.

Beryl could increase scrutiny of FEMA’s rate restructuring, called Risk Rating 2.0. Republican attorneys general from 10 states including Texas are to halt the new insurance rates, which they say required congressional approval.

Some coastal state lawmakers — both Democratic and Republican — have assailed the new rates, saying they will force policyholders to drop their flood coverage.

“The national numbers, they’re going the wrong way,” said Chad Berginnis, executive director of the Association of State Floodplain Managers.

Part of the problem, Berginnis said, is that Congress has taken no action on a FEMA proposal in 2018 to help lower-income households pay for flood coverage.

At a flood conference in June, a group of congressional staffers told a national audience that “their phones are not ringing off the hook with problems” about the FEMA insurance program, Berginnis recalled. “You can’t address affordability without having congressional flood reform.”

Maurstad of FEMA said the agency is ready “to work with Congress to … deliver a solution that will make NFIP policies even more accessible.”

One uncertainty is the number of former FEMA policyholders who now have flood coverage through a private sector insurer.

Private insurers, which stopped covering flood damage nearly 100 years ago, are resuming writing flood policies as improved modeling makes it easier to predict property losses. But there are varied statistics about how many people are buying private insurance and whether it is fully compensating for the decline in federal policies.