The Volokh Conspiracy

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Climate Change

Senator Schumer Protects Wealthy Landowners from Paying Risk-Based Flood Insurance Premiums

Effective climate adaptation depends upon effective price signals. So why is the Senate Majority Leader standing in the way?


The New York Times reported last week that Senate Majority Leader Charles Schumer discouraged the Federal Emergency Management Administration from rolling out new policies that would ensure coastal landowners pay risk-related flood insurance premiums. This policy change would have been particularly worthwhile given the threat of climate change and would have helped address concerns that the federal government is subsidizing construction in harm's way. But apparently it would also have increased insurance rates for a small percentage of affected property owners with outsized political influence, so Senator Schumer swung into action.

From the NYT report:

Senator Schumer objected to the flood-insurance overhaul when it was first announced in 2019, citing its potential to raise costs for people on Long Island. The new system would mean steeper rates for some high-value homes, and the southern shore of Long Island includes the Hamptons, which have some of the most expensive real estate in the country.

Senator Schumer's office told FEMA that the new rates could have a "severe impact" on some communities in New York, according to a person familiar with the conversation. . . .

As detailed in the NYT story, the policy change would actually save money for some homeowners, but would also have a significant effect on a small percentage of "higher-cost homes" in places like the Hamptons. In other words, Senator Schumer seems to oppose those climate policies that might impose greater costs on the rich.

Under the new approach, 23 percent of households with flood insurance would see their rates fall right away, by an average of $86 a month, according to data provided by FEMA, because the updated formula shows they have been overpaying based on their risk. Another 73 percent would see either no change or an increase of no more than $20 a month.

But for some of the remaining households, costs would go up significantly, according to others briefed on the changes.

Congress prevents FEMA from increasing a household's flood insurance premiums by more than 18 percent a year. Under the new system, some households would face that maximum annual increase for 10 years or more. As a result, their rates could increase at least fivefold over that time.

Those big rate increases would mostly apply to higher-cost homes, which under the current formula tend to underpay for insurance. Many of the people that would see a decrease live in lower-cost homes.

Senatorial hypocrisy on flood insurance and climate change is nothing new. Back in 2014, most members of the Senate Climate Caucus voted to gut changes to the National Flood Insurance Program that would have reduced subsidies for coastal development.

Climate change is a serious problem, but it's hard to take politicians seriously on the issue when they behave like this.