Winding back flood insurance subsidies may lead consumers to cut cover and could cost people their homes, a US Senate inquiry has heard.

National Flood Insurance Program (NFIP) Co-ordinator for Oregon Christine Shirley told the Banking, Housing and Urban Affairs Committee insufficient attention was paid to affordability and mitigation when the National Flood Insurance Program (NFIP) was reformed a year ago.

The changes established subsidies for owners of homes and business properties built before the introduction of flood insurance rate maps.

About 20% of policyholders pay subsidised rates that will rise over time to reflect their risk.

But Ms Shirley says the reforms are likely to make her state less resilient, because people will drop out or not buy cover.

Phasing out subsidies has frozen the real estate market in some areas, and as prices have fallen properties have been bought by people who cannot afford cover.

Owners without flood cover have received notices from mortgage lenders saying they must buy it at full risk rates, while some must buy “elevation certificates” so their risk can be rated.

“These unexpected costs have the potential to force families from their homes and businesses to close,” Ms Shirley said.

There is a plan to research education and affordability, but it could take two years to complete because researchers need to obtain data on policyholders and their incomes, the inquiry heard.

Federal Emergency Management Authority Administrator Craig Fugate told the committee about 5.6% of the population lives in the highest-risk coastal and riverine areas, making flooding the most costly and prevalent natural risk in the US.

He says premiums in the Gulf Coast region may top $US10,000 ($10,600) in areas where homes are not easily elevated or bought out, and it will be a challenge to implement the real cost of insurance.

Under the reforms, all subsidised properties move to rates that reflect their risk if their policies lapse, they suffer severe, repeated flood losses or they are bought.