Wesley Miller

​​​​​​​​​​​​​​Editor’s note: This post is part of a new series about the impacts natural disasters have on a region’s public health, economic activity, and individual decision-making. While the papers cited in the posts extend beyond natural disasters in Texas, the results will be contextualized to the state’s population. For more about this series, click here​.

This month’s post on “When Disaster Strikes”​ explores the extent of the National Flood Insurance Program (NFIP) in Texas. The NFIP is administered by the Federal Emergency Management Agency (FEMA) and has been the primary source of flood insurance since its inception in 1968.

Communities may select into the NFIP after adopting and enforcing federal floodplain standards. In return, property owners in participating communities have access to flood insurance through the NFIP (which is often offered below market rate). Single-family homeowners account for the majority of NFIP policies, and a total of $250,000 of building coverage and $100,000 of content coverage is available. The map shows Texas’ NFIP participation as of 2022.

Texas Communities in NFIP, 2022
Map of Texas NFIP participation

Note: Municipal utility and levee improvement districts are dropped due to insufficient geospatial data, but census-designed places (CDPs) are included.
Source: FEMA Community Status Book Report

Although there is broad community-level participation across the state, less than 10 percent of Texas residences are insured through the NFIP, more than one-third of which reside in Harris County. Harris County also struggles with low take-up rates, and approximately 85 percent of its population was uninsured during Hurricane Harvey in 2017.

In addition to offering flood insurance, the NFIP is tasked with modeling and communicating flood risk to the general public. This communication is conducted through Flood Insurance Rate Maps (FIRMs) that are periodically updated to reflect changes in flood hazard. FIRMs delineate areas into different flood zones based on their annual chance of flooding. For example, Zone A (or the 100-year floodplain) is classified as the area where there exists a 1 percent chance of flooding in any given year.

Since 1973, properties with federally backed mortgages that lie in the 100-year floodplain have been required to purchase flood insurance. This mandate, however, has failed to induce widespread coverage even in high-risk areas amid challenges with enforcement.

There are concerns that disaster relief from other government agencies may discourage at-risk residents from insuring against flood damage. This strategic substitution may play a role, but disaster relief is largely insufficient to fully restore properties after a major flooding event. The average NFIP payout in Texas due to Hurricane Harvey was roughly $121,000—about four times more than the high-end of FEMA’s Individuals and Households Program that offers cash assistance for uninsured disasters.

Additional concerns surrounding the NFIP include its impact on the private insurance market as well as its increasingly negative fiscal balance. Significant legislative attention has focused on reforming the program through improved accuracy in terms of both flood modeling and establishing actuarially fair premiums.

Texas’ mandatory flood disclosure of residential properties is aimed at increasing hazard awareness, and municipalities have implemented a patchwork of policies to mitigate the risk of flooding. As the frequency and intensity of storms increases, so will the need for accurate information and education of flood risk as well as the availability of flood insurance.