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US - National Flood Insurance Program leaves out communities of color, lower-income Americans, report finds

FEMA’s risk-analysis methodology should be updated, report argues

Less than 10% of the flood risk to single-family homes in America is actually insured by the national program designed to offer such protection, with communities of color and lower-income areas disproportionately less likely to be covered.

That analysis, described as “a toxin sitting in the residential real estate market that will only worsen with climate change,” is from a new report from risQ, a Boston-based provider of climate-change analytics for the municipal-bond market.

The report, Economic and Racial Inequality in FEMA SFHA Flood Zone Designations, addresses the National Flood Insurance Program, which is administered by the Federal Emergency Management Agency.

The NFIP offers insurance policies for homeowners in areas prone to flooding. In most cases, there is no private market alternative for flood insurance, and such coverage is required for all mortgages with backing from government entities like Fannie Mae and Freddie Mac. The NFIP policies are heavily subsidized by taxpayers.

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