Flood Insurance Policies Likely To Have a Premium Surge in 2022
A flood insurance policy is set to have a premium surge in 2022, according to research from MoneySuperMarket, with flood claims expected to hit an all-time high by 2035. With global warming and climate policy dominating news coverage across the globe, the surge in weather-related catastrophes is putting a large strain on carriers in the United States.
Risk of Flooding from Hurricanes and Tropical Storms Grows as Temperatures Rise
The risk of flood damage from hurricanes and tropical storms is on the rise, as average global temperatures continue to climb. According to a new study published in the journal Nature Climate Change on Feb. 25, 2018, this heightened flood threat will be most evident along United States coasts and in densely populated areas throughout Texas and Florida.
The frequency of flood events has already been rising over the past few decades, and the shape of rainfall patterns around the world is changing as well: some regions are seeing more precipitation than they used to receive, while others are experiencing less rain or snow. A warmer climate causes oceans to evaporate more quickly; these excess vapors then become heavy precipitation that falls over land instead of back into the oceans after coming ashore. The result is a flood where there once was a drought.
Two of the most flood-prone countries in the world, the United States and China, have both been affected by these changes: according to NASA, more than 4 billion people worldwide live in floodplains along coastlines or rivers; those global flood zones makeup only 2.3 percent of Earth's land surface but include some 9.8 million square miles (25 million square kilometers) of densely inhabited cities and communities.
Since 1980, coastal flooding has caused $1 trillion in damages every year on average —more damage than from any other natural hazard except hurricanes —and that cost is expected to increase as sea levels continue to rise and intense storms become more frequent. Many American homes located in floodplains have flood insurance policies, but there is a good chance that these premiums will continue to grow as flood risks increase.
In the United States, flood insurance is underwritten by the government through the National Flood Insurance Program (NFIP), which was established in 1968 to provide affordable flood protection for homeowners and business owners. The NFIP currently insures more than 5 million homes and businesses across the nation; claims from flooding represented almost two-thirds of all payouts made between 1978 and 2012. More people are now turning to flood insurance: according to The Washington Post, some 20 million U.S. homes —roughly equivalent to 10 percent of all residential properties in the country—are located in flood-prone areas where they are not required to have flood insurance.
As global temperatures continue to rise, resulting in an increase of extreme weather events all over the world, damage from floods will only get worse if steps are not taken to manage greenhouse gas emissions. If NCAR's projections hold true, flood claims in the United States could reach $35 billion by 2035. This would be a dramatic uptick from 2010 when flood disasters cost the economy around $19 billion combined.