As New York City’s coastal residents and businesses struggle to recover from one of the most destructive storms in U.S. history, they are also confronting changes in the flood insurance landscape that will pose other challenges in the future. These changes include revisions to the flood map drawn by the Federal Emergency Management Agency (FEMA) that defines areas at greatest risk of flooding during a storm, and reforms to the government-backed National Flood Insurance Program (NFIP), which has been operating at a loss in recent years. These developments will provide a more accurate basis for assessing flood risk and setting...

This chapter discusses the number of structures in New York City in different building classes, the number of structures in high-risk flood zones, and the take-up rate for flood insurance for both residences and businesses on the eve of Hurricane Sandy. It also examines the typical prices of flood insurance in New York City pre–Hurricane Sandy.

FEMA issues a map that identifies areas of flood risk across the country. The first flood insurance rate map (FIRM) issued for New York City became effective on November 16, 1983. Additional revised FIRMs were issued in February 1991, May 1992, July 1994,...

This chapter describes the insurance payments on claims related to Hurricane Sandy and provides an overview of the performance of the insurance system in paying losses. It also examines gaps in insurance coverage that were exposed by Hurricane Sandy and examines the storm’s effects on general insurance market conditions and on insurance rates in New York City. We used quantitative data when available. When quantitative data were not available, we relied on the observations of the insurance industry experts interviewed.

Data on individual NFIP claims for New York City are used to analyze claims and payments due to Hurricane Sandy....

In this chapter, we consider the effects of recent NFIP legislative reforms and flood-map updates for the residents and businesses of New York City. Both of these changes are independent of Hurricane Sandy and will have major effects on the premiums charged on NFIP policies. We begin by describing provisions in BW-12 to reduce insurance-rate subsidies in the NFIP and the likely effect of these changes on the price of flood insurance. We then describe the revisions to the FIRM for New York City. We discuss changes in the number of properties in high-risk flood zones and the number of...

Chapter Four shows that the elimination of NFIP subsidies and updates in the FIRM to more accurately reflect risk may lead to large increases in flood insurance premiums for households in New York City. The increases will depend on the location and characteristics of the structure and, in some cases, whether there is flood insurance already in place. The increases will also depend on decisions FEMA has yet to make on implementing BW-12. In this chapter, we examine how the rate changes might affect different categories of households. More specifically, we examine potential impacts on

households in owner-occupied housing units...

The analysis in the preceding chapters has shown that many New Yorkers will face substantially higher flood insurance premiums moving forward. Many more structures will be in areas considered high-risk than in the past, and premiums for many structures already in high-risk areas will be based on considerably higher flood levels. These changes are caused by updates of the FEMA-issued FIRM for the city, changes in BW-12 that remove many of the subsidies embedded in the NFIP, and a general understanding that flood risk is greater in New York City than previously thought. We have also documented gaps in the...