Premiums Under the National Flood Insurance Program as a Share of Household Income

In September 2017, CBO published The National Flood Insurance Program: Financial Soundness and Affordability.

A section of that report compares premiums under the National Flood Insurance Program (NFIP) with household income, illustrating the finding that for most census tracts included in the analysis, the median premium for a policy on a primary single-family home was between 0.5 percent and 1.5 percent of the median household income in that census tract. (CBO did not have access to data on household income for individual NFIP policyholders, so the agency relied on median household income by census tract.)

In response to a request for additional information, CBO compared actual premiums for 2.5 million policies covering primary single-family homes with the median income of single-family households in the census tracts in which insured homes were located. For most policies in the analysis, CBO found that the actual premium was between 0.45 percent and 1.70 percent of the median household income for single-family households within the same census tract. (The median was 0.75 percent.) Roughly 8 percent of premiums were below 0.35 percent of the relevant median household income, 14 percent of premiums were above 2.0 percent of that income, and 6 percent of premiums were above 3.0 percent of that income. (Those income values are reported to the nearest 0.05 percent.)