As climate change intensifies storms, many are left unprotected against flooding.

  • Flooding risks are increasing due to climate change, yet many homeowners lack flood insurance.
  • FEMA’s flood maps are outdated, leading to a false sense of security among homeowners.
  • The number of flood insurance policies has declined, with many homeowners unaware of their vulnerability.
  • A significant portion of flood claims comes from properties outside designated high-risk zones.
  • The federal flood insurance program is facing financial strain, with taxpayers often bearing the cost of uninsured damages.

Faun James, the mayor of Westfield, Pennsylvania, experienced a devastating storm last month that flooded her town. While at work, she watched her possessions float away on security cameras, including her husband’s lawn mower and a canoe. Like most of her neighbors, James does not have flood insurance, despite the increasing risk of flooding in areas previously considered safe. Climate change is causing more intense rainfall, yet FEMA’s flood maps have not been updated to reflect this new reality, leaving homeowners unaware of their vulnerability. nnIn Westfield, the number of homeowners with flood insurance has decreased, partly due to rising costs associated with federal coverage and regular homeowners insurance. FEMA’s flood maps indicate that eight million properties are in high-risk zones, but research shows that the actual number at risk is over 18 million. Many homeowners are caught off guard, as a third of federal flood insurance claims from 2013 to 2023 came from properties outside these high-risk areas. nnThe National Flood Insurance Program (NFIP) has seen a decline in policies, with only 4.65 million active at the end of July, down from a peak of 5.7 million in 2009. States like Texas, Florida, New Jersey, New York, Louisiana, and North Carolina account for a significant portion of claims, yet many residents in these areas still lack coverage. In Florida, for instance, only 12% of properties have federal flood insurance, despite the state’s vulnerability to flooding. nnThe shortfall in flood insurance means that taxpayers often foot the bill for disaster relief, with estimates of uninsured flood damage from recent storms reaching as high as $12.6 billion. The rising costs of flood insurance have led to a decline in policies, as many homeowners struggle to afford coverage. Efforts to reform the NFIP have been hindered by political disagreements, and the program’s payout cap has not been increased since 1994, despite rising rebuilding costs. nnIn Westfield, James noted that the high cost of insurance is a significant barrier for residents, many of whom are now hoping for federal assistance. As flooding risks continue to rise, the need for updated flood maps and affordable insurance options has never been more critical.·

Factuality Level: 7
Factuality Justification: The article provides a detailed account of the flooding situation in Westfield, Pennsylvania, and discusses the implications of outdated flood maps and the decline in flood insurance policies. While it presents factual information and statistics, it also includes anecdotal evidence and personal perspectives that may introduce some bias. Overall, the article is informative but could benefit from a more objective tone.·
Noise Level: 8
Noise Justification: The article provides a detailed analysis of the increasing flood risks due to climate change, the inadequacies of current flood insurance policies, and the implications for homeowners. It includes data and examples to support its claims, holds powerful entities accountable, and discusses the consequences of decisions made regarding flood insurance. The focus remains on the topic of flood insurance and its relevance to climate change, making it a thoughtful and informative piece.·
Public Companies: Fannie Mae (FNMA), Moody’s RMS (MCO), Verisk Analytics (VRSK)
Private Companies: First Street Foundation,Neptune Flood,Gallagher Re
Key People: Faun James (Mayor of Westfield), Jeremy Porter (Head of Climate Implications Research at First Street Foundation), Lisa Miller (Insurance Adviser), Ross Miller (Homeowner), Jeff Jackson (Interim Senior Executive of the National Flood Insurance Program), Trevor Burgess (Chief Executive of Neptune)

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Financial Relevance: Yes
Financial Markets Impacted: The article discusses the decline in flood insurance policies and the financial implications for homeowners and taxpayers, which can impact insurance companies and government disaster relief budgets.
Financial Rating Justification: The article addresses financial topics related to flood insurance, the economic burden on taxpayers due to uninsured flood damage, and the implications of changing insurance rates on homeowners, indicating its relevance to financial markets.·
Presence Of Extreme Event: Yes
Nature Of Extreme Event: Natural Disaster (earthquake, hurricane, floods, wildfires, tsunamis, etc.)
Impact Rating Of The Extreme Event: Major
Extreme Rating Justification: The flooding caused significant damage to homes and possessions in Westfield, with estimates of uninsured flood damage ranging from $7.6 billion to $12.6 billion. The event has led to a substantial impact on the community, including loss of property and the need for federal assistance.·
Move Size: No market move size mentioned.
Sector: All
Direction: Down
Magnitude: Large
Affected Instruments: Insurance

Reported publicly: www.wsj.com