Posted November 26, 2014
Climate change could increase losses in flood and crop
insurance programs significantly in coming decades, according to a USA Today
article available here.
Agri-Pulse also published an article available here
and Insurance News here.
The
Government Accountability Office’s (GAO) report
found that exposure to losses for property insured under the two programs grew from
8 percent to $1.4 trillion over the past six years due to population growth and
increased property values in hazard-prone areas.
The GAO
study says climate change “may substantially increase losses by 2040 and
increases losses from about 50 to 100 percent by 2100,” according to Agri-Pulse.
“(FEMA and
RMA) face challenges that may limit their ability to minimize long-term federal
exposure to climate change,” the report summary said. “For example, because of
the short-term nature of insurance (i.e., contracts typically estimate and
communicate risk of property losses for the 1-year term of a policy), FEMA and
RMA face a challenge in encouraging policyholders to reduce their long-term
exposure to climate change risks.”
FEMA is currently
$24 billion in debt because of extreme weather events, and in 2006 the GAO labeled
the National Flood Insurance Program as "high risk" for long-term
insolvency, according to Insurance
News.
The GAO
made two recommendations for FEMA and USDA to better manage the risk to
taxpayers:
FEMA
should update building standards for floodplain management, including
additional flood-proofing for resilience to sea-level rise and extreme weather
events.
USDA
should incorporate climate change resilient agricultural practices into their
"good farming practices" guidance, such as conservation tillage,
water conservation, and modified crop planting dates to sustain long-term
production in a changing climate.
For more information on crop insurance programs, please
visit the National Agricultural Law Center’s website here.
