Giving Compass' Take:

• Peace Gwam, Ananya Hariharan, and Carlos Martín highlight the shortcomings of existing federal disaster policy and urges improvements that incorporate racial and economic equity. 

• What role can you play in ensuring equitable disaster recovery efforts? 

• Read about improving disaster recovery in the face of stronger storms. 

New program laws are transforming the NFIP over time (PDF) to be based on actuarial risks of flooding—eliminating the costs to the program from older, lower rates and effectively discouraging living in flood-prone places.

The NFIP’s long-term solvency is still uncertain, given the increase in flood events and populations in harm’s way. Homeowner premiums may not fully match risk or accurately account for the projected risks from climate change’s effects. Currently, premiums do not fully account for current public works for flood mitigation or a variety of property-level interventions hat could mitigate flood risks.  And, importantly, neither the NFIP nor the broader federal flood management policy addresses the disproportionate burdens on low-income policyholders and households of color living in exposed communities.

Several proposals suggest improvements to NFIP affordability challenges—including subsidies for low- and moderate-income homeowners living in flood zones—and discourage new development and purchases of existing homes in high-risk areas.

But solutions to incorporate racial and wealth equity in NFIP reforms must go beyond the affordability of accessing a policy and explore possible disparities in the treatment of households after purchasing policies.

Urban Institute staff recently explored whether residents of the greater New Orleans region have equal access to the benefits of NFIP-issued flood insurance by examining claim payment amounts and nonpayment rates across census tracts by race and income.  We found that claims from homeowners who filed for property and content damages were distributed fairly evenly across racial and income lines, though disproportionately more claims came from census tracts within flood zones with higher average incomes than tracts with lower average incomes.

Yet, when we explored the value of awards from claims and rates of nonpayment, we found significant disparities. On average, households in census tracts where more than 50 percent of the homeowners are white receive more on their NFIP claims and encounter a lower rate of unpaid claims than households in tracts where more than 50 percent of homeowners are people of color. This was true across the region for all claims and for households within flood zones tracts only.

Read the full article about federal disaster policy by Peace Gwam, Ananya Hariharan, and Carlos Martín at Urban Institute.