The federal National Flood Insurance Program helps provide flood coverage to residents and businesses, but it has also been plagued with debt and financing issues.
An ASU professor has co-authored new research showing the financial issues are related to outdated flood maps.
FEMA develops maps based on historical data of river and coastal flooding and analyzes the probability of floods. If a location has a 1% chance of a flood, it is deemed high risk.
Upmanu Lall is director of ASU’s Water Institute and study author says the data that informed those maps came with problems. Notably the weather that leads to floods is not isolated and can spread throughout regions.
“That means that instead of the payout happening, you know, once in a 100 years on average at each point, which it may still be true, but because all of them happened simultaneously, there's now a big draw on the insurance pool," Lall said.
This so-called hyperclustering is the largest driver of debt for the program.
"When much of that work was done to design the flood protection works and flood control and flood insurance programs in the '50s and '60s. There simply wasn't enough data," Lall said.
Lall’s research recommends regions at risk of hyperclustered events to create high interest catastrophe bonds to cover disaster payments and to use updated climate data to inform maps.
