Mar 27, 2017
This report examines flood insurance cost in New York City and homeowners' ability to afford it. It makes projections for how changes in flood maps and pricing practices of the National Flood Insurance Program might increase premiums, analyzes the potential consequences of those increases on households and communities, and develops and evaluates several different approaches for assisting households that have difficulty affording flood insurance.
This report examines the cost of flood insurance in New York City and the ability of homeowners to afford it. It develops projections for how changes in flood maps and the pricing practices of the National Flood Insurance Program might increase premiums and analyzes the potential consequences of those increases on households and communities. It also develops and evaluates several different approaches for assisting households that have difficulty affording flood insurance. These include financial payments to households to offset the cost of flood insurance as well as mitigation grants and loans that reduce flood insurance premiums by making the home less susceptible to flood risk. This report builds on a previous work by the RAND Corporation on flood insurance in New York City, Flood Insurance in New York City Following Hurricane Sandy.
In addition to informing New York City's efforts to make its communities more resilient to flood risk, this work is also relevant at the national level. Congress instructed the Federal Emergency Management Agency (FEMA) to develop an affordability framework in light of legislation that directs FEMA to gradually eliminate certain program subsidies and to collect additional program fees. This report provides data and analysis that also inform that effort.
Policymakers should weigh the advantages and disadvantages of the different approaches for a flood insurance affordability program. In addition, moving forward requires addressing a number of questions.
The Affordability of Flood Insurance in New York City
Flood Insurance Premium Scenarios
Flood Insurance Affordability in Five Vulnerable Subareas
Effects of Flood Insurance Premium Increases on Households and Neighborhoods
Flood Insurance Affordability Program Options
Development of the Project Geodatabase
AMI-Based Income Categories and the Correlation Between Household Income and Net Worth
Components of Housing Costs and Relationship Between Amount of Flood Coverage, Structure Replacement Cost, and Mortgage Balance
Flood Insurance Premium Model
Eligibility Requirements for Pre-FIRM and Grandfathered Rates
Economic Effects Model