Flood Insurance Costs More For Inland States

Ohio, W.Va. Rates Higher Than Hurricane-Prone States

Wheeling Intelligencer
30 March 2014
By Ian Hicks, Staff Writer
WHEELING - Inland states such as West Virginia and Ohio are getting significantly less bang for their buck out of the National Flood Insurance Program than many coastal states where flooding is much more frequent and severe.

A review of FEMA claims data indicates the average NFIP policyholder pays $689 per year for $233,755 worth of coverage. But in Florida - responsible for $3.7 billion of the $50.5 billion in claims paid through the federal flood program over the last 36 years - residents pay the lowest average premium in the nation at about $524 per policy, for about $234,000 worth of coverage.

Meanwhile, West Virginians - who have sustained $284 million in losses since 1978, less than 0.6 percent of the nationwide total - pay $897 annually for about $130,000 per policy in coverage. That's the 14th-highest average premium for the nation's lowest per-policy coverage amount.

The situation in Ohio is little better, where property owners in flood zones pay the 17th-highest average premium in the nation, $871, despite being 46th in average policy value at about $167,000. The Buckeye State has received about the same amount in claims, $292 million, as West Virginia.

At about $1,000 each, New York and New Jersey residents pay a higher average annual premium than other states with comparable losses, but property values there are much higher, as well. That $1,000 will buy a New Yorker almost twice the coverage, on average, than $900 will buy in West Virginia.

The flood insurance program has come under scrutiny in recent months after policyholders began experiencing shocking premium increases as the result of a federal law, the Biggert-Waters Flood Insurance Reform and Modernization Act. Earlier this month, President Barack Obama signed into law a bipartisan bill to amend the law that capped annual premium increases at 18 percent and allows those covered to pass on their subsidized rates when they sell their property.

Fact Box

FLORIDA: Residents pay $524 per policy for $234,000 worth of coverage
LOUISIANA: Residents pay $760 per year for $236,000 worth of flood insurance coverage
WEST VIRGINIA: Residents pay $897 annually for $130,000 per policy in coverage

The law also directs FEMA to complete an affordability study within 18 months and improve flood mapping procedures to better reflect true risk. The agency's own data suggests that will be a daunting task, however.

Five states - Louisiana, New Jersey, Texas, New York and Florida - collectively have sustained 72 percent of losses paid by the program since 1978, with Louisiana leading the way at 33 percent, or almost $16.7 billion. The devastation of Hurricane Katrina in 2005 is largely responsible for that, but almost nine years later Louisiana ranks just 31st in average premium cost, paying $760 per year for $236,000 worth of flood insurance coverage.

Texas boasts the nation's third-lowest average premium at $610 - only Florida and the District of Columbia are lower - as well as the second-highest average policy value, at $256,000, despite sustaining 11 percent of all historic NFIP losses.

New York and New Jersey make the top five thanks largely to Superstorm Sandy. The nearly $3.8 billion in claims paid to each state last fiscal year represent more than 70 percent of those states' collective historic losses, and more than 90 percent of the $8 billion in claims paid between Oct. 1, 2012 and Sept. 30, 2013.

Policyholders nationwide paid only $3.8 billion during that period, leaving taxpayers to foot the additional $4.2 billion bill and added to an overall program deficit that now stands around $24 billion.