Majority of Philadelphians with flood insurance to see rates increase

More than 70% of Philadelphians with flood insurance can expect to see their rates increase after the Federal Emergency Management Agency changed the way it prices the coverage this month.

Why it matters: Pennsylvania is already the fourth most expensive state in the U.S. for flood insurance, averaging around $1,326 a year, according to QuoteWizard/Lending Tree. That's compared to the national average of $958.

• Philadelphia's average, at $970, is also above the national line.

Meanwhile, climate studies show that extreme weather disaster events — such as heavier rainstorms — are worsening, Axios' Andrew Freedman reports.

• Philadelphia and its suburbs are still recovering from the Labor Day weekend flooding following Hurricane Ida that completely submerged the busy I-676. Five people died from the storm in neighboring Pennsylvania counties.

What's happening: FEMA's switch to a new flood insurance pricing system on Oct. 1 means that 65% of Philadelphia policyholders will likely have to pay an increase ranging from $1-10 per month, according to QuoteWizard analysts. Meanwhile, 6% will see even higher increases, ranging between $10-$100 per month.

• In nearby Montgomery County, 59% of policyholders will see an increase, along with 36% and 67% in Delaware and Bucks counties.

Context: Before Friday, the National Flood Insurance Program subsidized flood insurance based on a property’s elevation and location in a floodplain. And critics have long argued flood maps aren't updated enough to portray true risks.

• The program has historically undercharged in certain areas. More than 4 million properties across the country face major flood risk and pay too little in insurance.
• Communities of color disproportionately live in these more at-risk areas.

What's new: FEMA's new system, Risk Rating 2.0, is supposed to accurately reflect the present-day cost of flooding.

• It'll now incorporate factors like flood frequency, flood types and distance to water when calculating risk.

Between the lines: Most Pennsylvanians' costs will be relatively small. Only 7% of policyholders in the state will pay an extra $20 or more per month.

• Plus, premium increases will be limited to an 18% per year cap set by Congress for most policies.

Those with the most expensive homes and highest risk are likely to see the largest premium increases.

• "They're going to be paying the cost because it costs more to replace them," QuoteWizard/LendingTree senior research analyst Nick VinZant said.

Go deeper: FEMA released figures showing how policyholders in each state will be affected.