The cost of flood insurance could reach crisis levels for low-income New Yorkers and other low-income Americans if Congress does not act to reform FEMA’s National Flood Insurance Program (NFIP). As part of the de Blasio Administration’s OneNYC resiliency plan, the Mayor’s Office of Recovery and Resiliency (ORR) commissioned a groundbreaking study, which found that increasing flood risk – coupled with federal efforts to update flood maps and Congress potentially phasing out special rates – could result in higher flood insurance premiums for many property owners in New York City and across the country.
“This report underscores the challenges we face as we build a more resilient and fair city. If Congress doesn’t act, rising flood insurance rates will put a critical tool to build more resilient communities out of reach for too many New Yorkers,” said Mayor Bill de Blasio. “In the meantime, we’re making strides in the fight to keep flood insurance affordable by working with FEMA to revise New York’s floodplain maps. I am proud to unveil this report, a key part of the City’s innovative, multilayered resiliency program to help communities across the city prepare for the threat of rising seas.”
Flood insurance is already difficult to afford for 25 percent of owner-occupied, one to four family homes and a financial burden for nearly two-thirds of extremely and very low income households in the study area. Higher premiums would likely put flood insurance out of reach for those New Yorkers that need it most, thus removing a crucial tool for homeowners to build resilience to coastal storms and tidal flooding.
The NFIP is the nation’s primary source of residential flood insurance; Congress’s current authorization of the program expires on September 30, 2107. If Congress does not preserve affordability programs, such as grandfathering, when it reauthorizes the NFIP later this year, individual homeowner premiums could increase on average by $2,000 a year. Given the potential for premium hikes to spark an affordability crisis and foreclosures in our coastal communities, the City is urging Congress to:
- Ensure flood insurance remains affordable for the most vulnerable, including means-tested financial assistance to households that need it most; and
- Consider grants for low- and middle-income households to make their homes less vulnerable to flood risk.
Practical, doable, solutions like these would direct support to those most in need.
“A key initiative under New York City’s resiliency program is to ensure that residents in the floodplain are prepared for coastal storms and rising seas, which requires that the right tools, like flood insurance, remain available and affordable,” said Daniel Zarrilli, Senior Director, Climate Policy and Programs and Chief Resilience Officer at the New York City Mayor’s Office. “The findings by RAND underscore the urgency with which we must act with our partners in Congress to reauthorize and improve the National Flood Insurance Program to better serve our coastal communities as we seek to build a more resilient city.”
The study, conducted by RAND, a public policy research organization, analyzed the potential impact of premium increases for one to four family homes in high-risk flood zones across the city – neighborhoods in southern Brooklyn, around Jamaica Bay, on the Rockaway peninsula, and on the East Shore of Staten Island. The study clearly indicates that if Congress does not act to protect flood insurance affordability, the potential impact of rising premiums could destabilize neighborhoods already facing affordability challenges, negatively impact property values, and increase the likelihood of mortgage defaults for low-income homeowners.
“For a city like New York, with its more than 520 miles of coastline, flood insurance is an important resource for protecting the most valuable asset most New Yorkers will ever own—their home,” said Jainey Bavishi, Director of the Mayor’s Office of Recovery and Resiliency. “Proposals to withdraw special NFIP rates without replacing them with financial assistance to protect affordability for low-income homeowners will destabilize neighborhoods and turn-back or slow down the recovery we have seen since Hurricane Sandy.”
After Hurricane Sandy, which revealed that many homeowners did not have flood insurance, the City encouraged residents to purchase flood insurance as part of its comprehensive resiliency plan to help the city withstand the increasing impacts of coastal storms and sea level rise from climate change. With a focus on ensuring that homeownership and housing remain affordable, the City partnered with RAND to understand the real life costs of purchasing flood insurance for low-income New Yorkers.
Since Hurricane Sandy in 2012, the number of New Yorkers purchasing flood insurance has increased however, as the cost of flood insurance climbs, take-up rates are expected to fall, reducing the capacity of households and communities to recover from coastal storms and tidal flooding. The study also models several paths Congress could take to ensure flood insurance remains affordable for most vulnerable, including means-tested financial assistance to households that need it most, as well as grants to low- and middle-income households to make their homes less vulnerable to flood risk. The modeled programs would target support to those most in need, rather than support those based on when and where their house was built.
“This important study highlights the challenges homeowners will face with rising insurance costs. Over the past several years, the Department of City Planning, along with our City agency partners, have worked closely with waterfront communities to develop zoning tools that allow homeowners to make investments in their homes that reduce their flood risks,” said Marisa Lago, Director of the Department of City Planning and Chair of City Planning Commission. “Federal reform of the flood insurance program is necessary for homeowners to receive credit for upgrading the resilience of their homes in ways that are appropriate for New York City neighborhoods.”
As Congress debates NFIP reform, the de Blasio Administration is working with FEMA to revise New York City’s flood maps. FEMA’s flood maps require homeowners in the highest flood risk areas to purchase flood insurance to cover the cost of flood damage, if they have a mortgage. Revised flood maps will provide New York City residents with more precise current flood risk data, in addition to providing a new map product reflecting future conditions. These revisions will assist New York City in making coastlines more resilient, while ensuring homeowners are not required to purchase more insurance than their current flood risk requires.
“Equal and fair access to flood insurance helps the City’s resiliency efforts in the event of coastal flooding and is crucial for thousands of New Yorkers across the five boroughs,” said New York City Council Speaker Melissa Mark-Viverito. “Congress should reform FEMA’s National Flood Insurance Program to preserve affordability programs and ensure that low-income Americans are given the protections they deserve. We must make sure that each and every person in our City—especially those who live in coastal communities—is protected from high flood insurance premiums.”
“Queens urges Congress to act and reform FEMA’s NFIP. Rising flood insurance is a non-starter for many property owners around Jamaica Bay and the Rockaway Peninsula, and would destabilize neighborhoods. We must do everything possible to keep flood insurance affordable,” said Queens Borough President Melinda Katz.
“This is an important report, issued at a critical time. As Congress works on reauthorizing the National Flood Insurance Program, we have to consider all avenues toward lowering prices, increasing resiliency, and ensuring homeownership remains a possibility for New Yorkers regardless of wealth, said Congressman Gregory W. Meeks (NY-5). “I applaud the Mayor for commissioning this study and look forward to working with him, and my colleagues in the New York congressional delegation, to ensure our City’s priorities are kept at the forefront of the flood insurance debate.”
“The RAND study has incredibly helpful data on the impacts of flood insurance reform and potential policy prescriptions. I’ve already shared it with my colleagues in Congress and will continue advocating for the best interests of Staten Island, Brooklyn, and New York City”, said Congressman Dan Donovan (NY-11). “Government created a marketplace with a certain set of policies over the past 40 years, and we need to be very thoughtful about the impacts of changing those policies. I congratulate the City for leading this effort”
“Four and a half years ago, our city’s coastal communities were turned upside down by a storm that many New Yorkers are still recovering from. Yet a storm of a different kind now looms, threatening to deliver a painful blow to those still dealing with the aftermath of Hurricane Sandy. New flood maps and adjustments to flood insurance premiums will put immense financial pressure on coastal residents, potentially forcing them out of their homes altogether. Low-income New Yorkers will be especially vulnerable. We must stand up for these New Yorkers, these Americans. Mother Nature has already put them through the ringer; we as a nation should be offering these people relief, not lining up to deliver more punishment. Congress must act now to keep flood insurance affordable for all. Whether you live in Coney Island, Brooklyn, or New Orleans’ Ninth Ward, this issue impacts the entire vulnerable American coastline and demands urgent and responsible national action,” said City Council Member Mark Treyger and Chair of the Council’s Committee on Recovery and Resiliency.
“Tens of thousands of families have persevered through the worst natural disaster this city has ever experienced, and many are still fighting tooth and nail to rebuild their lives and their homes. But so many could now be priced out of their homes if the broken federal flood insurance program is not fixed, specifically by alleviating the financial burden of high premiums and modifying risk assessment to account for the difficulties of elevating in a dense, urban environment,” said City Council Minority Leader Steven Matteo.
“Flood insurance is a lifeline in vulnerable areas of the city. This study proves the National Flood Insurance Program re-authorization must preserve affordability for homeowners and businesses. If flood insurance is inaccessible, we will not build a resilient city especially for low income New Yorkers for whom flood insurance is already an extreme burden,” said City Council Member Carlos Menchaca.
“This landmark report highlights the critical challenge of affordability for homeowners in our coastal communities, who, having weathered the economic crisis and Sandy recovery, now face the prospect of increasingly exorbitant flood insurance rates,” said Christie Peale, Executive Director of the Center for NYC Neighborhoods. “The report notably showcases key solutions that could assist homeowners to become more resilient, including income-based subsidies and the importance of investing in mitigation. We commend the City and RAND for leading this study and their commitment to sustainable, thriving neighborhoods.”
“The means-tested policy interventions explored in this first-of-its kind study should be evaluated as potential solutions to skyrocketing flood insurance premiums when Congress reauthorizes the National Flood Insurance Program this year. Affordable flood insurance is critical for low-income homeowners, who constitute nearly one third [or up to one third] of homeowners nationwide. Owners of properties in flood plains – including seniors living on fixed incomes – are required to have flood insurance as a condition of their mortgages,” said Marion McFadden, Vice President for Public Policy, Enterprise Community Partners. “While Congress has acted in recent years to make the NFIP actuarially sound, it must now take action to protect low-income families who simply don’t have room in their budgets to pay more for coverage, posing a serious threat to their ability to stay in their homes.”
Ensuring access to affordable flood insurance is just one component of the City $20 billion multilayered resiliency program that is working to improve coastal defenses, adapt buildings, upgrade infrastructure, and make neighborhoods safer. In the four years since Hurricane Sandy, New York City has become a stronger and more resilient city, making significant progress on coastal defense and flood reduction measures in some of the most vulnerable communities across the city, upgrading building and zoning codes, and improving the city’s infrastructure across the five boroughs. For more information, visit https://maps.nyc.gov/resiliency
To ensure residents keep their home and finances safe, the City has launched a consumer education campaign directing residents to FloodHelpNY.org, a one-stop shop for flood risk information. Once the revised flood maps come in effect, additional extensive outreach and education programs will be provided for all communities.
The RAND study, “The Cost and Affordability of Flood Insurance in New York City,” can be found here: