Climate change could drive Georgia flood insurance prices higher

Few activities sound more boring to the average homeowner than spending an afternoon checking insurance policies.

As storms and floods become more frequent, determining what risks their homes pose and how much damage a possible accident can cause is a growing concern for many Georgians. increase.

Rising tides, rising risks

Storms are stronger than before, and scientists note their momentum is slowing, causing storms to dump more water into concentrated areas and exacerbating flooding.

Coupled with other threats related to climate change, such as rising sea levels in coastal areas and development to pave soils that help absorb floods, insurers are forecasting more floods and greater risks to their customers and businesses. .

of Federal Emergency Management Agency is already rethinking how flood risk is managed, taking into account future projections. The agency runs a national flood insurance program, and most homeowners obtain flood insurance through his network of over 50 insurance companies and his NFIP Direct. The program reassessed how policies are priced for future floods and last year introduced a risk rating of 2.0.

Old but FEMA Whereas the analysis considered house height, Risk Rating 2.0 takes into account historical flood frequency, type of flood (river, rainfall, coastal flood), distance from house to water source, and reconstruction costs. , considering a wider range.

Georgians may have already seen changes in flood insurance policies.according to FEMA24.3% of NFIP policy Georgia Premium prices fell in the first year of the new risk rating system.

Cost calculation

According to experts, insurance and its price all come down to risk.

Rob Hoyt is the chairman of crisis management When Insurance Department and University of GeorgiaHe said the intensity of the storm and the flooding, more than ever, are important considerations for insurers and will hit budget Georgians.

“One of the important things to understand is that over the years, the catastrophes that have affected the insurance industry have increased, caused losses, and increased the number of people exposed to those events. It’s definitely there,” Hoyt said.

according to National Oceanic and Atmospheric Administrationalready nationwide in 2022 $15 billion disaster. As a result, the insurance industry is rethinking how dangerous weather events really are for homeowners.

When a company insures a home, it takes on the financial risk of paying out in the event of flooding, Hoyt said.

A few Georgia Homeowners may not realize that flooding is not covered by regular home insurance and is an extra purchase that they need to budget for.

Hoyt said another important part of price equilibrium is reinsurance. In reinsurance, the company itself purchases the insurance and creates an insurance policy to transfer some of the risk to another company. Reinsurance is good in that it spreads and spreads the risk and makes the insurer less likely to fail. But in the long run insurance premiums will be higher for Georgians.

rising price

In the past, FEMA subsidized flood insurance, said Tom McDonald,city savannah Floodplain manager. For coastal residents and those in special flood-prone areas, McDonald said flood insurance rates were relatively low and did not deter construction in some high-risk areas.

“The flood insurance program has been in a hole for years … because of all these disasters,” McDonald said.

He said the adjusted risk rating of 2.0 will move agents from subsidized insurance to real premium rates, with prices increasing by 18% annually until Georgians reach real premium rates.

With these price increases, McDonald’s shares concern that some homeowners will cancel their flood insurance. It only takes one hard blow to inflict devastating damage.

If the homeowner has a federally secured mortgage and is in a high-risk flood area, they also need flood insurance as part of that loan. Private lenders can also provide flood insurance.

McDonald said it’s important when buying a home to find out if the building has been flooded in the past and call the city’s floodplain manager’s office to learn more about the risks. rice field. Homeowners should check with their insurance agent or company for details before purchasing insurance.

For homeowners struggling with recurring floods, McDonald said the city has several options. FEMA Grant. He said the city will evaluate homes and offer offers to buy out homeowners who are looking to move out of repeatedly flooded properties. FEMA Subsidies are available and housing is prioritized based on the severity of each case.

worth the investment

It may seem obvious, but McDonald said flooding is costly, far more than miscalculating the need for flood insurance.Every time a house is flooded, the NFIP can be up to $40,000, the cost borne by the taxpayer. However, homeowners should not expect insurance to solve all of the financial impact of flooding.

FEMA We can’t get out of this problem,” McDonald said.FEMA I might take out a low interest loan to fix the building, but now I have a home loan and a low interest loan. ”

Marisa Mecke I am an environmental journalist.she can be reached at [email protected] Or call (912) 328-4411.

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