How the USA can benefit from risk-based premiums combined with flood protection

Lars T. de Ruig, Toon Haer, Hans de Moel, Samuel D. Brody, W. J. Wouter Botzen, Jeffrey Czajkowski, Jeroen C. J. H. Aerts

Research output: Contribution to journalArticleAcademicpeer-review


Flood risk management in the USA is largely embedded in the National Flood Insurance Program (NFIP). Climate change and increasing exposure in flood plains pose a challenge to flood risk managers and make it vital to reduce risk in the future. The proposed reforms are steering the NFIP to risk-based premiums, but it is uncertain if the reforms will result in unaffordability and incentivize risk-reduction investments or how the NFIP is affected by large-scale adaptation efforts. Using an agent-based model approach for current and future scenarios, we demonstrate that risk-based premiums will yield a positive societal benefit (US$10 billion) because they will incentivize household risk-reduction investments. Moreover, our results show that proactive investment in large-scale adaptation measures complements a transition to risk-based premiums to yield a higher overall societal benefit (US$26 billion). We suggest that transitioning the NFIP to risk-based premiums can only be secured by additional investments in large-scale flood protection infrastructure.The National Flood Insurance Program is a key tool for managing growing flood risk in the USA. This research shows that premiums based on local risk, rather than national averages, will generate large societal benefits, and investments in large-scale adaptation infrastructure will enhance these impacts.
Original languageEnglish
Pages (from-to)995-998
Number of pages11
JournalNature Climate Change
Issue number11
Early online dateOct 2022
Publication statusPublished - Nov 2022


  • Climate-change
  • Insurance
  • Adaptation
  • Behavior
  • Cost
  • Framework
  • Pathways
  • Losses
  • Level


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