NEW YORK CITY, New York: According to a study released by financial services provider LendingTree on Tuesday, updates to the main flood insurance program in the U.S. will increase rates for 77 percent of policyholders, even as premiums decrease for some property owners in poorer areas.
The study by LendingTree's QuoteWizard unit reviewed price changes that could affect the some 5 million members of the National Flood Insurance Program, which was established in 1968.
Under the U.S. Federal Emergency Management Agency's (FEMA) new "Risk Rating 2.0" system, which will be in force on 1st October, new premiums will be based on a property's value, flood risk and various other factors, instead on an evaluation.
In an interview, Nick VinZant, senior research analyst at QuoteWizard, said the new updates will also make the program more equitable and consider climate-change-driven factors, such as the increasing likelihood of floods.
"Now, smaller and lower-value homes and neighborhoods are not going to be funding the mansions anymore," he added, as quoted by Reuters.
With climate change leading to worsening weather, losses from flooding are expected to increase, especially after recent major storms, such as Hurricane Ida.
Through the changes, FEMA stressed it aims to "equitably distribute premiums across all policyholders."
VinZant noted that some 3.3 million out of the program's roughly 5 million policyholders will see their monthly payments increase by $10, and 3,199 will see a monthly increase of $100 or more, while 196,000 people will see their monthly premiums fall by $100 or more.
As of April, FEMA's flood insurance program, which is currently registering losses, has provided coverage worth $1.3 trillion.
Concerned U.S. Congress members, including representatives from Louisiana and Texas, requested FEMA to delay the adoption of the new rates to prevent some policyholders from paying higher bills.