WASHINGTON — Despite years of devastating flooding and hurricanes, the number of Americans with flood insurance remains well below its level a decade ago, undermining the nation’s ability to cope with disasters just as climate change makes them more frequent and severe. In some of the states hardest-hit by the recent brutal flooding in the Midwest, the number of federal flood insurance policies has dropped by at least one-third since 2011. As a result, in Nebraska, Illinois and Missouri, the share of homes in floodplains that have flood insurance is now 15 percent or less.
The declines have persisted despite a two-year campaign by the Trump administration aimed at doubling the number of Americans insured against floods, which standard home insurance policies typically don’t cover. That effort has faltered, and officials are now beginning to worry about the disaster after the disaster: What happens as the water recedes, and many people can’t afford to rebuild?
“They think they can gamble and avoid buying flood insurance,’’ said Paul Osman, chief of state floodplain programs for Illinois. “Low-income folks without a flood policy will likely be forced just to walk away from the damaged home.’’
The reasons are complex. Despite the recent onslaught of disasters, people tend to underestimate the odds of something bad happening to them, behavioral economists say. Add to that the escalating cost of coverage, spurred by rising risk levels and changes to the federal flood insurance program, and the result is a persistent hole in the country’s defenses against climate change.
“Flood insurance is the best recovery tool that individuals can have,’’ said Daniel Kaniewski, deputy administrator for resilience at the Federal Emergency Management Agency. “It’s so important that the American public understand this.’’
For 50 years, the federal government has offered subsidized flood coverage through the National Flood Insurance Program, which is run by FEMA and provides about 95 percent of all residential flood policies in the United States. But earlier this decade, Congress instructed the agency to let rates rise so they more closely reflect the true risk of flooding.
As a result, average premiums have been rising between 5 and 9 percent a year, and the increase can be as high as 18 percent for individual homeowners. When increases started, “people started dropping policies,’’ said Karen McHugh, Missouri’s coordinator of the flood insurance program.
Rates can vary widely from place to place based on a home’s location and elevation. But inside the floodplain, average annual premiums in 2015 were $1,098, with costs several times that much for homes facing the greatest risk, according to data released by FEMA in 2018.
For many people, that financial burden can be considerable. Of the households in the floodplain that have flood insurance, about one-quarter are low-income, the data show.
Dick Thomas, 69, a retired laborer in Craig, Mo., who now collects Social Security and is on a limited income, stopped buying flood insurance years ago. After this year’s floods destroyed his house, he and his wife, Annette, moved into a trailer. Now they are trying to decide what to do next. “We’re in limbo right now,’’ Thomas said. “That’s home. It’s where we brought our boys home to. It’s where the graduations were, and the first dates.’’ Thomas said he knew the risk of not being insured, but said he couldn’t afford coverage. “We wouldn’t be able to eat,’’ he said. “You’ve got to do what you’ve got to do. We took a chance, and it bit us.’’
Even as the Trump administration has cut programs and regulations designed to curb climate change, it has tried to make flood insurance a priority, with little success. Faced with a series of historic floods and hurricanes, FEMA has warned ever more loudly that its disaster programs aren’t designed to take the place of insurance coverage.
Nationwide, only about a third of all homes in the floodplain have flood insurance, according to Kaniewski. In 2017, after eight years of falling flood insurance purchases, the agency announced a goal of doubling the number of flood policies by 2023.
That remains a distant target. The number of federal flood insurance contracts had increased just 3.4 percent by March compared with when the goal was announced two years ago, according to FEMA. (The agency estimates the increase during that period is 5 percent if private flood policies are included.) The number of total policies had fallen from a peak of 5.7 million in 2009 to 5.1 million.
“People are reluctant to spend money for a problem that they are convinced won’t happen to them,’’ said Roy Wright, who ran the flood-insurance program for FEMA until 2018 and spearheaded the initiative. “That’s financial planning based on hope, not facts.’’
This past fall, Carolyn Kousky, executive director at the Wharton Risk Management and Decision Processes Center at the University of Pennsylvania, convened FEMA staff, along with insurance representatives and state officials, to talk about ways to get more Americans to buy flood insurance. The proposals included: automatically enrolling all homeowners in flood insurance when they get a mortgage, getting local governments to buy flood insurance for homeowners that is paid for through property taxes, and making it harder for homeowners to drop flood insurance once they first buy it.
But each of those ideas presented new obstacles, whether practical, legal, or political. “I don’t think they’re ready to run with any of those things,’’ Kousky said of FEMA.
Kousky agrees that a major factor that keeps more Americans from buying flood coverage is that price increases are far outpacing inflation, which has hovered at about 2 percent for years. “As you move up the price scale, people start dealing with immediate trade-offs,’’ said Wright, who is now president of the Insurance Institute for Business & Home Safety, an industry-backed research group. “You look at any American’s budget, and you ask, ‘Well, where will that money come from?’’’
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