This story was originally published byGrist.
This story is the second in afour-part Grist seriesexamining how climate change is destabilizing the global insurance market.
It is published in partnership with theEconomic Hardship Reporting Project.
Laura Humphrey walks a wheelbarrow to a pile of debris while volunteering to clean up in Perry County, Kentucky near Hazard on August 6, 2022. Thousands of Eastern Kentucky residents lost their homes after devastating rain storms flooded the area.Photo: Michael Swensen (Getty Images)
For millennia, the South has been shaped by its water.
Suburbs grew around ports as waterways bustled.
Exurbs expanded as they quieted.
She dragged him in the door, because he couldnt humble himself to do it, May said.
Edward Lee was the first member of his family who was not born enslaved.
By the time May met him, Lee had been displaced from the home he built over 10 years.
It only took SBP two phone calls to find the money to rebuild Lees house.
There was an enormous celebration.
People were so proud of us.
And it really felt gross, he said.
That man suffered for a decade for something we might have solved in one year.
As storms arrive more frequently, flood insurance and disaster relief programs themselves are now failing.
Private markets pulled back from flood decades ago, Kousky explained.
Many are falling through the cracks.
These widespread hurdles are why SBP has stopped measuring success by how many buildings they could help reconstruct.
Themajority of natural disastersin the United States already involve flooding.
Its a problem that will get worse with sea-level rise and more intense rain events.
By 2050, coastlines will see a national average of45 to 85 daysper year of high-tide flooding.
Despite this risk, just4 percent of homeownersin the U.S. have flood insurance.
Even those who do pay for flood protection are often misinformed about their propertys risk.
Homeowners in these areas with federally-backed mortgages are required to purchase flood insurance.
Thanks to climate change, the problem is compounding.
Frequent high-cost flooding will prevent the NFIP from paying its debt, a recentFEMA reportwarned.
By law, it also cannot raise rates for most policies by more than18 percent a year.
Between 2015 and 2019,40 percent of NFIP claimswere outside of FEMAs flood hazard zones.
These maps usehistorical meteorological datathat doesnt take climate change into account.
One of FEMAs goals with these changes was to more fairly price its insurance.
But while nearly a quarter of NFIP policyholders saw their premiums go down, on average its rates increased.
Policies in some states like Louisiana and Florida spiked bymore than 500 percent, phased in over years.
There is no greater risk communication tool than a pricing signal, Wright said.
But people dont like to know that theyre at risk.
And they most assuredly dont like it when theres a price for it.
Ten states and many smaller municipalities arenow suingto block these higher premiums.
The close calls demonstrate just how unstable these systems are.
As storms repeatedly swamp what was formerly dry land, someone is going to have to pay for flooding.
But conversations about the only true alternative managed retreat, or encouraging communities to relocate have been halting.
Our responses are always punctuated by disasters, Kousky said.
As the countrys insurance system flounders, companies are getting stricter with their payouts.
That gut-wrenching experience turned Douglas Quinns dream of living on the water into a nightmare.
The dark night was illuminated only by flashes from downed power lines shorting out.
At first, he wasnt worried.
I believed in insurance, he said.
His insurance company sent an engineer out to assess his damage.
But Quinn had done a pre-purchase inspection, so he had proof the cracks were new.
In the beginning, Im just kind of thinking, well, its a mistake, he recalled.
I just need to show them the pictures.
Despite his meticulous appeal, FEMA sided with the insurance company.
Along with over1,600 otherhomeowners, Quinn filed a lawsuit.
It is a strategy.
And it happens all over the country, Quinn said.
In 2021, the association was working with whistleblowers within the Florida insurance industry.
Then Hurricane Ian hit and new homeowners started running into the same hurdles.
One such case downgraded a $60,000 estimate for roof repairs to roughly $3,000, according to Quinn.
These kinds of widespread insurance practices worsen existing disparities; research shows Black homeownerspay higher premiumsthan nonwhite homeowners.
And floodingoften hits neighborhoodswith high numbers of renters hardest.
When a landlords insurance costs skyrocket, thats often passed on to tenants through rent increases.
When people dont get paid, its a generational loss, said Quinn.
I had days when I couldnt get out of bed, he said.
It is funded through a joint program between the National Science Foundation and the Department of Homeland Security.
New solutions are sorely overdue.
But the trauma of losing his faith in the financial systems he thought protected him hasnt dissipated.
Its a storm after the storm, he said.
When that safety net fails, what you go through is devastating.
And nobody talks about it.
And then poof, theyre gone, he said.
Nobody follows what the survivors go through the months and years of slow, grinding recovery.
This article originally appeared inGristathttps://grist.org/economics/what-happens-when-americas-flood-insurance-market-goes-underwater/.
Grist is a nonprofit, independent media organization dedicated to telling stories of climate solutions and a just future.
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