The nation's flood insurance program has repeatedly rebuilt some of the most flood-proneproperties in the country, unintentionally setting a trap forowners of modest homes who would prefer to move out of harm's way,according to a new national report from the Natural Resources DefenseCouncil (NRDC).

According to the NRDC, for every $100 the nation spends torebuild homes with national flood insurance funds, the FederalEmergency Management Agency (FEMA) spends just $1.72 to betterprotect people by moving them to safer, less flood-prone land.

Related: Draft legislation to overhaul National FloodInsurance Program released

NRDC's “Seeking Higher Ground” report called onCongress to adopt a series of climate smart reforms, includingchanging the mindset of “flood, rebuild, repeat,” to buying outhomeowners who no longer want to rebuild on a vulnerableproperty.

Trapped homeowners

“Flood insurance traps homeowners in a situation no one wants tobe in: forced to rebuild in a location that will inevitably floodagain. It's time to start helping people move to higher ground,rather than make them wait for the next flood,” said RobMoore, lead report author and senior policy analyst with NRDC'sWater Program.

Related: NFIP challenges & reform options from theAmercian Academy of Actuaries

Congress is required to reauthorize the National Flood InsuranceProgram (NFIP) every five years, with the next deadline at the endof September. The program is nearly $25 billion in debt. NRDC'sanalysis found costs will skyrocket as sea level rises due toclimate change, repeatedly flooding millions of properties locatedalong the coasts and inland waterways. The way the NFIP currentlyoperates, it will pay hundreds of billions to rebuild theseproperties multiple times, even if homeowners would prefer to moveto higher ground.

Key findings

Among the report's key findings:

• More than 30,000 “severe repetitive loss properties” have beeninsured through the NFIP, according to FEMA data acquired by theNRDC through a freedom of information act request. The propertieshave flooded an average of five times, on average every two tothree years, and are the most flood prone properties in theprogram.
• Sixty percent of the homes are modest, valued at less than$250,000. While they represent just 0.6 of the 5.1 millionproperties insured by the NFIP, they account for a disproportionate9.6 percent of all damages paid between 1978 and 2015, totaling$5.5 billion.
• Almost one out of every 10 of these properties receivedinsurance claim payments that cumulatively exceeded the value ofthe structure.
• In coming decades, sea level rise may cause as many as 2.5million properties to repeatedly flood, which the NFIP could pay asmuch as $447 billion to repeatedly rebuild before they are finallyinundated. Damages to these properties will cost the program $143billion to $447 billion in claims.
• Among these properties, there are over a half-million andnearly 1.6 million homes that are more modest homes (worth lessthan $250,000). It would cost $52 billion to $163 billion to buyout all of these properties before they are inundated by sea levelrise. The NRDC estimated the NFIP will pay out $72 billion to $224billion to repeatedly rebuild them.
• The top states, ranked by both number of properties and totaldamages, were:

o Louisiana (7,223 properties, $1.22 billion indamages).

o Texas(4,889 properties, $0.96 billion in damages).

o NewJersey (3,246 properties, $0.66 billion in damages).

o NewYork (1,802 properties, $0.40 billion in damages).

o Florida(1,601 properties, $0.37 billion in damages).

o Missouri (1,526 properties, $0.19 billion indamages).

Recommended reforms

The NRDC recommended that Congress reauthorize the NFIP with aseries of reforms that will better provide the type of assistance agrowing number of American homeowners need.

• Through the NFIP, provide homeowners with a guaranteed buyout,if they no longer want to rebuild. For homeowners who want tomove out of harm's way, the NFIP should help, not hinder, that fromhappening.
• Give owners the right to know about their home's history offlood damages. Providing the flood history of a property can helphomeowners make better decisions.
• Make more data on the NFIP publicly available. The publichas a right to know where flood damages occur, the cost of thosedamages, and what communities are doing to reduce theirvulnerability to flooding and sea level rise.
• Flood maps should show how sea level rise and other effects ofclimate change will impact future flood risk. Flood maps areused by government officials, developers, and planners to decidewhere it is safe to build. Without the inclusion of future floodrisks, communities cannot make fully informed and sustainabledecisions.
• Invest in resilience and in reducing our vulnerability toflooding. According to the National Academy of Sciences, morefunding should be dedicated to reducing vulnerability to flooding,rather than rebuilding over and over.

Related:

Offering private flood insurance inCalifornia: Golden Bear's experience

Flood gates: Will best intentions lead to ahealthy private insurance market?

Changing tides: Reframing the client conversationaround flood insurance

Victoria Prussen Spears, Esq.,([email protected]) is associatedirector of FC&S Legal, editor ofthe Insurance Coverage Law Report, andsenior vice president at Meyerowitz Communications Inc.