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NFIP restructuring needed as sea levels rise

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Rising sea levels of 3 feet or more will make the United States more vulnerable to large property losses, necessitating major changes to the National Flood Insurance Program, according to a new report, as a separate legislative analysis shows NFIP claim and other costs surpassing premiums. 

High-end scenarios for sea level rise project an additional 6 or 7 feet by 2100, according to Washington-based American Association for the Advancement of Science.

“Of all the changes that may or may not be occurring in the global climate, the prospect of rising sea levels is the one that is the hardest to overlook,” the Washington-based American Academy of Actuaries said in its “National Flood Insurance Program: Challenges and Solutions” report released on Wednesday. 

Increased flooding due to higher sea levels can only increase losses from storms, absent expensive investment in coastal defenses, particularly because of the amount of valuable property in at-risk coastal areas, according to the report. 

“In the face of rising sea levels and increased losses, it will be impossible to maintain current premiums, coverage and eligibility without severe limits on building, strong mitigation requirements or exposure to enormous program losses and additional U.S. debt,” the report said. 

The NFIP is in debt to the tune of $24.6 billion.

A Congressional Budget Office analysis of five million NFIP policies active in August 2016 found that the program’s expected costs totaled $5.7 billion, which exceeded the $4.3 billion in premiums collected for those policies, according to the preliminary analysis released on Wednesday. 

“CBO expects that premiums would be higher in the future for the same set of policies because (U.S. Federal Emergency Management Agency) is obligated under current law to phase out a large share of its subsidies, namely those for properties that predate a community’s first flood map,” the analysis said. “That phaseout will occur over a number of years: some subsidized policies that are relatively low risk will reach their full-risk rates in a few years while others that are very high risk may take 25 or more years to do so.”