The Capitalisation of Flood Insurance Premiums Housing Market Segmentation under Risk Rating 2.0

Sammanfattning

This study investigates the relationship between Florida single-family homevalues and flood insurance premiums in 2016–2025, critically assessing thetransition of the National Flood Insurance Program (NFIP) to Risk Rating 2.0.Unlike prior literature focused on the legacy system, this analysis interpretsmarket reactions to the new household-specific risk-pricing framework. Theprimary finding reveals that for households in non-Special Flood Hazard Areas(non-SFHA) with only NFIP flood insurance policies, a $100 annual premiumincrease results in a 0.70% decrease in home value. Further, the majority of themarket undercapitalises these future premium obligations, indicating persistentunpriced climate risk within Florida’s housing market.