A new report commissioned by the Federal Emergency ManagementAgency raises the question of whether climate change will make thecost of flood insurance unaffordable for many people by the end ofthe century.

Unless current trends revealed by the report are not slowed orreversed, people may have to adjust where they live due to thecost of flood insurance, according to Stuart Mathewson, amember of the American Academy of Actuaries' Flood InsuranceSubcommittee who has studied flood issues.

It also likely means that the current policy of grandfatheringexisting rates for many customers affected by changes in floodplains will have to be modified, the actuary adds. Withoutchanges, homes in flood zones could become completelyunaffordable.

“The increase in loss cost estimates is significantly impactedby the current 'grandfathering' programs,” says the report.“As more policies become grandfathered because of increasing depthin [A zones] grandfathered policies may become a larger portion ofthe policy base.”

“The Impact of Climate Change and Population Growth on theNational Flood Insurance Program” predicts that becauseof climate change, for inland areas, the average increase in boththe river depth and the area in the flood plain are expected toincrease by 45 percent by 2100. Areas classified as partof a flood plain would increase by over 100 percent forportions of the Gulf of Mexico and the Atlantic coasts, but lessthan 50 percent along the Pacific Coast.

“This means an 80 to 100 percent increase in the number of homesthat go from a B, C or X zone for purposes of flood insurancepremium rates to be paid through the National Flood InsuranceProgram—meaning they will have to pay significantly more,”says Mathewson.

“The key issue in getting flood insurance financially viable isthat we need wider participation,” he says, adding that the academyrelease a study in 2011, “The National Flood InsuranceProgram: Past, Present … and Future?”–published with theintent to educate people about the structure of and solvencyissues surrounding the flood insurance program.

“This is an affordability issue because people who live inriverine and coastal areas that gradually become more prone toflooding will end up being moved into the A zone” for NFIPpremiums, says Mathewson, a property-pricing actuary working forSwiss Re-Corporate Solutions.

“People living in flood-prone areas are likely to be moved andwill move. It will be impossible to rebuild in the same places hitwith floods, based on the guideline elevations,” he continues. And,“there are those who will choose not to rebuild because of theincreased frequency of floods.”

The FEMA-commissioned report was released against the backdropof President Obama announcing during an address at GeorgetownUniversity numer of climate change-related actions, including adirective for the Environmental Protection Agency to establishcarbon emission standards for both new and existing powerplants.