Coastwide
NFIP insurance premiums compared to economic risk for residential properties with substantial flood risk, 2021

USA - First Street Foundation publishes report on economic loss from flooding

A new report, “The Cost of Climate”, quantifies the financial impact of flood risk carried by American homeowners and how those risks, and their associated costs, are growing as flood risks worsen due to a changing climate.

The report builds upon the First National Flood Flood Risk Assessment released in June 2020, deriving average annual loss (AAL) statistics for each residential property in the contiguous United States.

The report provides a new context for researchers and home owners alike to understand the nature and extent of flood risk by presenting it in concrete dollar terms, and demonstrating how it will change as the climate changes over the life of a 30 year mortgage. It’s findings have implications for the study of flood risk, home mortgage, insurance and reinsurance markets, and current and future homeowners.

The Foundation’s peer reviewed, climate adjusted, property-specific flood model was applied to depth damage functions from the U.S. Army Corps of Engineers and home value data from ComeHome by HouseCanary and Lightbox in order to estimate the financial cost of flood risk.

5.7 million homes have risk of damage

Over 5.7 million residential homes (1-4 units) across the country with flood risk that would result in financial losses from flooding. While total expected annual loss for properties across the U.S. is over $20 billion this year, it grows to nearly $34 billion a year in 30 years—an increase of nearly 67%—due to the impact of a changing climate. Patterns vary across the country, but show an underestimation of economic flood risk in both coastal and inland regions.Total estimated residential structural flood damage by county, 2021

Total estimated residential structural flood damage by county, 2021


Over 4 million homes have inadequate coverage

In a comparison of expected financial costs from flood damage and estimated insurance premiums through the National Flood Insurance Program, it was found that many homes carrying risk of financial loss from flooding are not sufficiently covered by existing premium estimates. Across the country it finds nearly 4.3 million residential homes with substantial flood risk that would result in financial losses from flooding that are 4.5 times the cost of their estimated NFIP premiums today.

NFIP insurance premiums compared to economic risk for residential properties with substantial flood risk, 2021

NFIP insurance premiums compared to economic risk for residential properties with substantial flood risk, 2021

Abstract

New research from First Street Foundation quantifies the financial impact of flood risk carried by American homeowners and how those dangers are growing as flood risks worsen due to a rapidly changing climate. First Street Foundation found that there are nearly 4.3 million residential homes (1–4 units) across the country with substantial flood risk (1% annual) that would result in economic damage. The research allows for the calculation of an average annual loss (AAL) statistic for each residential property in the contiguous United States, a key metric used to estimate the dollar value of damage associated with flood risk on an annualized basis. The Foundation found that while total expected annual loss for these properties across the U.S. is $20.0 billion this year, it grows to nearly $32.2 billion a year in 30 years—an increase of 61%—due to the impact of a changing climate. Furthermore, the analysis demonstrates that if all of these homes were to insure against flood risk through the National Flood Insurance Program (NFIP) current pricing structure, those rates would need to increase 4.5 times to cover the risk. These patterns vary across the country, but consistently show an underestimation of economic flood risk in both coastal and inland regions.

Learn about your flood risk on Flood Factor, Realtor.com and RedfinThe new data will be integrated as dollar estimates of flood damage for individual residential homes on Flood Factor®, providing current and prospective homeowners with flood damage cost estimates and demonstrating how these costs will change over time due to a changing climate.

View & Read the First Street Report

Read also Redfin to publicize flood risk data for all listings -- Brokerage released data on flooding for 94M homes this week / The Real Deal