As hurricane season approaches, flood insurance costs in CT may start to rise

Pedestrians stroll by flood barriers on Main Street in Westport, Conn., in August 2020 in advance of Tropical Storm Isaias.

Pedestrians stroll by flood barriers on Main Street in Westport, Conn., in August 2020 in advance of Tropical Storm Isaias.

Erik Trautmann / Hearst Connecticut Media

As the official start of hurricane season arrives in June, homeowners most at risk of flooding may get hit with higher bills on their insurance policies, as the federal government updates formulas it uses to determine rates.

The Federal Emergency Management Agency unveiled more details last month of its “Risk Rating 2.0” methodology for the National Flood Insurance Program, which the Congressional Research Office calls the biggest change to how rates are calculated since 1968 when NFIP was created.

More than 33,000 Connecticut residents and businesses get flood coverage through NFIP, paying $49 million in annual premiums and fees to cover $8.7 billion in real estate and other assets, according to FEMA’s most recent figures. NFIP will cover up to $250,000 in damage to a structure, with additional coverage costing more to replace damaged items of up to $100,000 in aggregate value.

Risk Rating 2.0 is designed to replace an existing reliance on floodplain maps that many criticize as inaccurate and incomplete. The new system analyzes structures for their resilience to flooding, including the elevation of buildings, their foundation design, and distances to bodies of water assigned varying classifications for risk of flooding.

Last year, the First Street Foundation estimated that 46,000 more Connecticut properties were at risk than calculated by FEMA, citing new studies on sea levels and hurricane activity. The nonprofit has an online database at FloodFactor.com where estimates are offered on the risk of communities to flooding damage, and historic flooding events.

FEMA says Risk Rating 2.0 allows for more pinpoint assessments of flood risks, while continuing to scale back subsidies for some property owners in high-risk areas. But some are complaining it will hike rates for too many homeowners past what they can afford, including U.S. Sen. John Kennedy, R-La., who voiced criticism last week during an online hearing of the U.S. Senate’s banking committee.

“You can pretty this up all you want to, but it just looks to me like a massive rating increase that they don’t want to explain to the policyholders,” Kennedy said. “I mean, what’s the point of a flood insurance program? The whole point is to strike a balance between solvency and affordability. ... What good is it to have a program that nobody can afford?”

Congress has yet to vote to extend NFIP beyond September when its current authorization expires a year after Congress last extended the program.

Active hurricane season for 2021

Between October 2020 and this past March, Florida and Louisiana accounted for more than half of all claims to the NFIP, which paid out $276 million over six months to more nearly 8,300 policyholders, averaging out to more than $33,750 for each claim.

Connecticut accounted for just five of those claims totaling $32,000, with NFIP closing five more claims cases with no payment and three remaining open as of April. While the state absorbed a direct hit from Tropical Storm Isaias last August, the storm’s main damage was in toppling trees statewide rather than catastrophic flooding.

Flood insurance is required for homes within designated flood plains that are carrying mortgages or home-equity loans backed by the federal government. Additional coverage is available from private insurance carriers that have entered the market as risk analysis has improved.

There is a 30-day waiting period for most flood insurance policies to take effect, preventing homeowners from getting a quickie policy in advance of any looming tropical storm or nor’easter that could generate catastrophic flooding. Meteorologists with the National Oceanic and Atmospheric Administration predicted last week that hurricane activity will be above normal this year, but not at the level of 2020.

FEMA maintains a searchable database of flood-plain maps at msc.fema.gov with general information online at www.floodsmart.gov along with lists of insurance agencies and underwriters selling policies.

Towns can earn discounts of up to 45 percent for residents by implementing flood mitigation measures. Fourteen Connecticut municipalities qualified for discounts as of April, with the highest-risk properties in New Haven, Stamford and Stonington getting the best discounts at 15 percent.

Roseville, Calif. was the only community nationally to qualify for the full 45 percent discount as of April; a decade ago, the city completed a $20 million program a decade ago that included purchasing properties prone to repeat flooding, elevating buildings and constructing berms.

In New Jersey, which implemented a Flood Hazard Area Control Act in 20017, Sea Isle City and Avalon have qualified for 35 percent NFIP discounts for their residents, the highest of any communities in the Northeast. Ocean City is just behind with a 30 percent discount; another 50 New Jersey communities are among 400 nationally that get discounts of 20 or 25 percent.

‘Not explained in plain English’

Connecticut towns and homeowners implemented a number of mitigation measures after Sandy, from flood walls to protect an Eversource substation in Stamford that was nearly inundated in the storm surge, to raising homes onto berms or stilts along vulnerable shorelines including in Norwalk, East Haven, Fairfield and Milford.

Milford leads all Connecticut communities today for flood insurance policies in effect; more than 2,600 in all have been filed as of April, according to FEMA records.

Stamford and Fairfield are the only other two municipalities with at least 2,000 active flood policies. Darien is the only Long Island Sound town between Greenwich and Milford not to place among the top 10 statewide. Old Saybrook leads all communities east of New Haven with about 1,200 policies, while East Hartford has the most of any inland municipality, at just over 330 in all.

The Risk Rating 2.0 system takes effect for new policies issued as of the start of October, with existing policyholders getting an extra year on the current rating system.

Speaking last week to the U.S. Senate banking committee, a New York City official invoked both the experience of Sandy and the COVID-19 pandemic in asking Congress to ensure that FEMA gets Risk Rating 2.0 right, including a financial assistance program for policyholders who can demonstrate premiums have gone beyond their ability to pay without cutting back on household necessities.

“We have not seen [Risk Rating 2.0] explained in plain English [and] we’ve not been consulted,” said Rebecca Kagan Sternhell, director of federal affairs under Mayor Bill DiBlasio. “I got the very helpful infographic on the New York state profile that said 93 percent of ratepayers ... in New York will see their rates either go up or down. What do I do with that?”

Luther Turmelle contributed to this report.

Alex.Soule@scni.com; 203-842-2545; @casoulman