Some people have switched to private policies, though that is unlikely to account for much of the change, according to Carolyn Kousky, executive director of the University of Pennsylvania’s Wharton Risk Center and an expert on flood insurance.
Last fall, Dr. Kousky convened FEMA staff, along with insurance representatives and state officials, to talk about ways to get more Americans to buy flood insurance. The proposals included: automatically enrolling all homeowners in flood insurance when they get a mortgage, getting local governments to buy flood insurance for homeowners that is paid for through property taxes, and making it harder for homeowners to drop flood insurance once they first buy it.
But each of those ideas presented new obstacles, whether practical, legal or political. “I don’t think they’re ready to run with any of those things,” Dr. Kousky said of FEMA.
Dr. Kousky agrees that a major factor that keeps more Americans from buying flood coverage is the fact that price increases are far outpacing inflation, which has hovered around 2 percent for years.
“As you move up the price scale, people start dealing with immediate trade-offs,” said Mr. Wright, who is now president of the Insurance Institute for Business & Home Safety, an industry-backed research group. “You look at any American’s budget, and you ask, ‘Well, where will that money come from?’”
As climate change causes flood risk to grow, that upward pressure on rates will grow as well. And that will challenge the ability of people to remain in increasingly flood-prone areas.
In addition, the concern that climate change will render insurance unaffordable in some parts of the country goes beyond flooding. In California, for example, officials have sought ways to slow rate increases in areas with a high risk of wildfire, and to stop insurance companies from dropping policyholders.
“There are parts of the U.S. that are at such great risk, and yet we’ve built there anyway,” said Dr. Kousky. “We have to work on reducing the underlying risk.”
Dr. Kaniewski, the FEMA official, said insurance costs could rise more slowly if state and local officials, which have authority over building codes and land-use management, imposed greater rules on how and where people construct homes.