Texas Residents Face Rising Federal Flood Insurance Rates

The cost of federal flood insurance is expected to rise for thousands of Houston, Texas, homeowners as Congress looks to overhaul a program that’s billions of dollars in debt.

The National Flood Insurance Program provides coverage to more than 300,000 homes in Harris and Galveston counties. But it’s $24.6 billion in debt and Congress has a September deadline to change and renew it, the Houston Chronicle reports.

The program was created because private insurers alone couldn’t bear the risk of catastrophic losses.

The U.S. Government Accountability Office notes in a recent report, however, that the federal initiative “offers rates that do not fully reflect the risk of flooding.”

Ed Schreiber, Houston region president for Bancorp South GEM Insurance Services, which sells federal flood policies, said changes need to be adopted quickly.

“We have a product whose pricing hasn’t been able to support the losses,” he said.

Ruth Escamilla, a sales executive for Bancorp South GEM, said homeowners outside a flood plain can pay about $450 for full coverage, getting $250,000 for structural damage and $100,000 for contents.

A Harris County homeowner living inside a 100-year flood plain without some protective measures – such as a raised foundation – can pay about $3,200 a year for flood insurance. A person living near the coast in Galveston can pay up to $8,000.

“The rates are only going to get worse as time goes on,” Escamilla said. “They’re taking away more of the subsidies, so that we’re going to be more and more responsible for the floods.”

One priority for reforming flood insurance is to deal with properties that flood repeatedly.

Harris County has 9,700 “repetitive loss” properties, or homes for which two or more flood insurance claims of more than $1,000 have been filed within 10 years.

There are an additional 1,965 “severe repetitive loss” properties – ones that have claimed more than $5,000 of flood insurance on at least four separate occasions, or has filed at least two claims that amount to more than the structure’s worth.

“A small percentage of structures are responsible for a large percentage of claims (statewide),” Texas Floodplain Management Association executive director Roy Sedwick said.