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Flood insurance rates are skyrocketing in inland locations

AYESHA RASCOE, HOST:

Flood insurance rates are changing across the country, and some policyholders who don't live near the beach are seeing their rates skyrocket. That includes one city in Massachusetts, 15 miles inland, where residents are seeing some of the biggest premium increases in the state. From member station WBUR, Simon Rios reports.

EVAN SILVERIO: One second.

SIMON RIOS, BYLINE: Insurance agent Evan Silverio says it's long been common for homeowners in Lawrence to pay several thousand dollars a year for flood coverage. The city has three rivers running through its center. But on October 1, the premiums seemed to go haywire. Silverio says one customer, who used to pay $300 a year, just got a quote for nearly 6,000.

SILVERIO: This is a real case. This is probably one of the first ones that I started thinking I was doing something wrong. I've done this for years, and I said, wait a minute.

RIOS: But it wasn't a bug. The National Flood Insurance Program was launched in 1968 to help homeowners where insurance was either unavailable or too expensive. Critics said the old system for setting premiums was badly underestimating the risk of floods and encouraging people to rebuild in disaster-prone areas.

So last month, the government switched to a more sophisticated system - Risk Rating 2.0. That means flood insurance rates for millions of homeowners are changing, including in places like the immigrant-majority city of Lawrence, far from the sea.

JEREMY PORTER: Lawrence is going to be an example of what's going to happen all over the country.

RIOS: Demographer Jeremy Porter studies the implications of flood insurance premiums. He's with First Street Foundation, a nonprofit that's been calling for flood insurance rates to reflect real risk. But Porter says low-income communities like Lawrence could feel the brunt of more accurate flood premiums.

PORTER: So there's this added insurance burden all of a sudden that comes out of nowhere that is almost an unintended consequence of trying to get the program to price risk appropriately.

RIOS: The government says most U.S. homeowners will actually see rate cuts or only modest increases under the new flood insurance system. And the Biden administration is asking Congress to help subsidize rates for low-income homeowners. That kind of help could be badly needed in Lawrence, which has the lowest per capita income in Massachusetts.

Floods aren't at the top of people's list of concerns, but there's a history of flooding here. The area saw Hurricane Katrina-like flooding in 1938, and in 2006, disaster struck again.

(SOUNDBITE OF ARCHIVED RECORDING)

UNIDENTIFIED PERSON #1: See there's still people in these homes, and it's not safe condition.

RIOS: NBC Boston captured emergency responders during the so-called Mother's Day Floods.

(SOUNDBITE OF ARCHIVED RECORDING)

UNIDENTIFIED PERSON #2: Why don't you take the dog with you? You shouldn't leave it.

RIOS: The floods left entire Lawrence neighborhoods underwater. And some advocates say that's an example of why insurance premiums needed to change. Still, homeowners in other parts of the city say the risk is not as great as the modeling suggests.

Rodelfy Seifer's three-family sits a hundred yards from a brook. He's in a flood zone, but the house was untouched by the flooding 15 years ago. Now, rising premiums pushed him to sell. But the buyers didn't have an easy time.

RODELFY SEIFER: They put an offer on the house. When they went in to do the numbers, to get the insurance and all of that, the bank said, hey, you cannot afford this house with this flood insurance.

RIOS: Seifer was finally able to sell, but he's worried about what rising flood rates will mean for his neighbors. Now advocates are waiting for Congress to make sure the new flood rates don't put owners in working-class areas underwater.

For NPR News, I'm Simon Rios in Boston.

(SOUNDBITE OF TOMMY GUERRERO'S "AT THE CIRCLE'S EDGE") Transcript provided by NPR, Copyright NPR.