Flood events during the past fortnight in the U.S. and U.K. illustrate the scale and impact of this type of disaster and also underscore the point that flooding is not just a coastal issue. In central Texas more than 18 inches of rain have fallen in the space of two days in the Marble Falls area northwest of Austin. In fact record rains in Texas and Oklahoma in the course of the past two weeks have resulted in 11 fatalities. Meanwhile, severe floods in England and Wales have caused at least four fatalities and left more than 600 injured. We note that among the most seriously affected areas are the inland counties of Cambridgeshire, Derbyshire, Gloucestershire, Nottinghamshire, Shropshire and Staffordshire. Of course a key difference is that homeowners and business insurance policies in the U.K. do cover flood damage, while in the U.S. flood insurance is available mainly through the National Flood Insurance Program (NFIP). That said, the Association of British Insurers (ABI) has made clear that U.K. insurers will only continue to be able to offer flood insurance if defenses are adequately maintained. With that in mind, we leave the final word to the head of the U.K.’s Environment Agency, Baroness Young. Describing the U.K. floods as Ã¢â‚¬Å“a one in 150-year eventÃ¢â‚¬ , Baroness Young called for more investment in flood defenses and for people to think hard about building on flood plains. Hear, hear. Check out I.I.I.Ã¢â‚¬â„¢s flood statistics for more information.
A busy day on Capitol Hill tomorrow as a joint public hearing titled Ã¢â‚¬Å“National Flood Insurance Program: Issues Exposed by the 2005 HurricanesÃ¢â‚¬ will be held before the Financial Services and Homeland Security Oversight Subcommittees. The hearing is expected to explore public and private sector insurance practices in the wake of the 2005 hurricanes. Specifically, the interaction between the National Flood Insurance Program (NFIP) and private insurers and the allocation of wind vs. water insurance claims will be examined. Later in the day, a hearing before the U.S. Senate Judiciary committee will focus on Ã¢â‚¬Å“Rising violent crime in the aftermath of Hurricane KatrinaÃ¢â‚¬ . Check out I.I.I.Ã¢â‚¬â„¢s flood insurance stats and hurricane insurance facts.
So, the 2007 hurricane season is upon us. And on the eve of the official start, Colorado State UniversityÃ¢â‚¬â„¢s Tropical Meteorology Project released its latest forecast. Similar to its earlier prediction, the call is still for 17 named storms, 9 hurricanes, 5 of which will be intense (Category 3-4-5). The probability of a major hurricane hitting the U.S. coastline is at 74 percent, while there is a 50 percent probability of a major hurricane hitting the East Coast, including the Florida Peninsula, and a 49 percent chance of the same for the Gulf Coast. All these figures are well above the long-term averages. As the season progresses, check out I.I.I.’s catastrophe update and flood insurance facts for further information. The vital role played by the industry in defraying the cost of catastrophes is also detailed in the InstituteÃ¢â‚¬â„¢s online publication Ã¢â‚¬Å“A Firm FoundationÃ¢â‚¬ .Ã‚ The I.I.I.’s disaster information Web site is another useful resource.
Yesterday marked the official countdown to the start of the 2007 hurricane season. ItÃ¢â‚¬â„¢s now just 29 days away, but as we know thereÃ¢â‚¬â„¢s a 30-day wait before a flood insurance policy takes effect, so this is a good time to remind people of the importance of flood insurance. By the way, if you were wondering, Sacramento voters have agreed to pay a higher assessment tax to finance municipal flood protection initiatives that will eventually provide a 200-year level of protection to the region (see ourÃ‚ April 26 posting). All well and good, but weÃ¢â‚¬â„¢re curious as to how this will affect the purchase of flood insurance? Communicating the riskÃ‚ remains crucial, according to a new report from the Water Policy Collaborative at the University of Maryland. It makes clear that levees in urban areas should provide protection to at least a 500-year flood standard. In fact for homes outside of the 100-year floodplain but within the 500-year floodplain there is still a six percent chance of at least one 500-year flood event during a 30-year mortgage. The study recommends that FEMA seek legislative authority to require mandatory purchase of flood insurance by those living in the 500-year floodplain and those living behind levees. So letÃ¢â‚¬â„¢s get the message out there.Ã‚
WeÃ¢â‚¬â„¢re going west today to Sacramento, California, where the results of the Sacramento Area Flood Control AgencyÃ¢â‚¬â„¢s (SAFCA) special assessment election are due. Ballots were mailed in March to approximately 140,000 property owners in Sacramento and Sutter counties asking whether they would be willing to pay a higher assessment tax to finance municipal flood protection initiatives. Why is this important? In our Feb 1 posting we cited the list from the Army Corp of Engineers showing that 127 levees across the U.S. are at risk of failing. Well, of those 127, some 36 are located in the district of Sacramento Ã¢â‚¬“ thatÃ¢â‚¬â„¢s nearly one third. If voted in, the assessment would raise $326 million over 30 years and help pay for $2.7 billion in flood improvements, including raising and strengthening levees on the Sacramento and American rivers.Ã‚ The improvementsÃ‚ would bring the region up to 200-year flood protection.Ã‚ Check outÃ‚ further information from the I.I.I. on flood riskÃ‚ and flood insurance, and also from the Insurance Information Network of CaliforniaÃ‚ (IINC).Ã‚ Ã‚
There are 45 days to go until the start of the 2007 hurricane season, but just so weÃ¢â‚¬â„¢re clear, norÃ¢â‚¬â„¢easters are not like hurricanes. This is not to say that norÃ¢â‚¬â„¢easters do not have the capacity to cause substantial damage to property and life. In fact, norÃ¢â‚¬â„¢easters get their names from the continuously strong northeasterly winds blowing in from the ocean ahead of the storm and over coastal areas. The National Weather Service defines a norÃ¢â‚¬â„¢easter as a strong low pressure system that affects the Mid Atlantic and New England states and can form over land or over coastal waters. It points out that these winter weather (mid-April?!) events are notorious for producing heavy snow, rain, and tremendous waves that crash onto Atlantic beaches, often causing beach erosion and structural damage. Interestingly, it also notes that wind gusts associated with these storms can exceed hurricane force intensity. After spending the last 24 hours mopping water, I for one, will be asking my agent about flood insurance at this yearÃ¢â‚¬â„¢s renewal. For more information see the I.I.I.Ã¢â‚¬â„¢s flood factsÃ‚ and catastrophe statistics.
As the issue of flood insurance continues to be in the news, we note that flood risk is also a hot topic across the pond in the U.K. The Association of British Insurers (ABI) has just announced that government spending on flood defenses needs to increase by 10 percent annually to approximately $1.5 billion by 2011 to counter an increased risk of flood. Nearly 600,000 U.K. homes are now estimated to be at risk of flood, compared to an estimated 220,000 homes back in 2002. One key difference: while standard homeowners policies in the U.S. do not cover flood damage, U.K. homeowners policies do. However, the ABI notes that U.K. insurers will only continue to be able to offer flood insurance if defenses are kept up to an adequate standard. Maintenance of levees and barriers is obviously important, but flood defenses can take many forms. Preservation of wetlands and saltmarshes is just as important a part of any flood risk management plan. Check out I.I.I.’s flood statistics for more information.
Some 127 levees across the U.S. are at risk of failing, according to a list released today by the Army Corp of Engineers. We note that the ill-maintained levees are spread across 26 states, the District of Columbia and Puerto Rico. From California, to Florida, to Massachusetts the listed levee projects have beenÃ‚ given an unacceptable maintenance rating meaning that one or more deficient conditions could prevent them from functioning as designed. Animal burrows, erosion, tree growth, movement of floodwalls or faulty culvert conditions are just some examples of the deficiencies. We have two words on this:Ã‚ flood insurance. View I.I.I.Ã¢â‚¬â„¢s latest statistics on the National Flood Insurance Program (NFIP) at http://www.iii.org/media/hottopics/insurance/xxx/Ã‚ Ã‚ Ã‚