Category Archives: Flood Insurance

Flood Insurance Necessity

So the official countdown to the start of the 2008 hurricane season has begun. We’re now just 29 days away, but there’s a 30-day waiting period before a flood insurance policy takes effect, so no time like present to underscore the importance of buying flood insurance. This reminds us, the Web site of the National Flood Insurance Program has a neat interactive tool showing the real cost of flood to a home, inch by inch. Just two inches of water can cost a homeowner $7,800, according to the NFIP. Check out further I.I.I. facts & stats on flood insurance.

Online Flood Monitoring

As the 2008 hurricane season approaches, we’re seeing the launch of a number of Web-based initiatives designed to enhance flood monitoring and assessment for forecasters, emergency managers, scientists and the general public. For example, a new online map that tracks flood conditions has been developed by the U.S. Geological Survey (USGS). The new system incorporates real-time water data collected by USGS crews out in the field and is part of the USGS WaterWatch suite of Web-based streamflow products. It can be accessed at the map of flood and high flow conditions Web site. In another development, just a couple of weeks ago, the National Hurricane Center said that it is working with Google to develop a tool that will allow residents in hurricane danger zones to enter their location and see their exposure to storm surge resulting from various hurricanes. We expect to hear more on these initiatives as the hurricane season gets underway. Presumably  these tools  may help people make a better-informed decision  about whether to purchase flood insurance. Check out further I.I.I. info on flood risk.

NV Levee Rupture

Pictures of the extensive flooding in Fernley, Nevada, after a canal levee ruptured due to heavy rainfall gave us pause for thought. Hundreds of homes are reported damaged and while many homeowners were expected to be able to return to their properties, up to 8 feet of flooding was reported in some areas. The canal rupture came amid a winter storm system that hit the West hard over the weekend. Last February (see our February 1, 2007, posting) we cited a list from the Army Corp of Engineers showing that 127 levees across the U.S. are at risk of failing. The ill-maintained levees are spread across 26 states, the District of Columbia and Puerto Rico. The weekend’s events underscore the importance of flood insurance. Check out I.I.I.’s flood statistics for more information.  

Coastal Flooding Exposure

Hot on the heels of yesterday’s posting about modeling and as the UN Climate Change Conference continues in Bali, the release of a global study on coastal flooding by the OECD, RMS and the University of Southampton is timely. The study makes a first estimate of the exposure of the world’s largest port cities to coastal flooding due to storm surge and damage due to high winds. It also investigates how climate change is likely to impact each port city’s exposure to coastal flooding by the 2070s, alongside subsidence and population growth and urbanization. The upshot is that the total population  reliant on flood defenses  could more than triple from 40 million today to around 150 million people by 2070. In the same period, total assets exposed will grow even more dramatically, more than 10 times current levels reaching $35,000 billion. The findings are ominous for a number of U.S. cities, with Miami topping the list in terms of assets exposed to coastal flooding ($416.3 billion today and increasing to $3,513 billion by the 2070s). New York-Newark places third with exposed assets of $320.2 billion, rising to $2,147 billion by the 2070s. New Orleans ranks 12th, with $233.7 billion in exposed assets, rising to $1,013 billion by the 2070s, while Virginia Beach ranks 19th, with $84.6 billion in current exposed assets, increasing to $581.7 billion by the 2070s. How to put in place effective climate change policies and disaster management strategies are just some of the challenges the study highlights. Check out I.I.I. facts & stats on flood insurance.

Tsunami Factor

Look back at a list of major earthquakes through the years and you’ll see a number of related tsunami events. Perhaps the most memorable in recent history was the December 26, 2004, magnitude 9.0 earthquake in the Indian Ocean, that triggered a series of tsunami (tidal waves) and left some 220,000 people dead. In an I.I.I.  chart of the 10 deadliest world catastrophes between 1970 and 2006, that event ranks third. So yesterday’s announcement by the National Oceanic and Atmospheric Administration (NOAA) that it has completed high-resolution digital elevation models to prepare three east coast communities for tsunami and storm-driven flood threats is a welcome step. The latest models for Long Island, Atlantic City and Daytona Beach provide the framework to accurately forecast the magnitude and extent of coastal flooding during a tsunami or storm surge event. They add to models already in place for some 20 U.S. coastal communities and NOAA expects to build 50 more models in the coming years. Check out further I.I.I. info on flood insurance.  

On The Hill Update

A quick update on the terrorism and flood measures in the Senate. The bill to further extend the federal terrorism risk insurance program passed the Senate Banking Committee by a vote of 20-1 yesterday. The Senate bill would extend the program for a further seven years from its upcoming expiry December 31. Undoubtedly this is a positive step, as a continued federal terrorism risk insurance program is critical to ensuring that terrorism insurance remains available to those businesses that want and need the coverage. The White House also said it would back the Senate version, another positive development. While the bill does not expand the program to cover chemical, nuclear, biological and radiological (CNBR) terrorism, it does require a study into the existing insurance market for CNBR by the Government Accountability Office (GAO). On what was a busy day, the same Senate Committee also approved legislation to reform the National Flood Insurance Program (NFIP). The contentious issue of adding windstorm coverage to the flood program was not included in this measure. For more on the risks posed by expanding the NFIP to include windstorm, check out I.I.I. president Dr. Robert Hartwig’s testimony delivered before the U.S. House subcommittee on Housing and Community Opportunity earlier in July.  

Flood Accumulations

A month ago we blogged about flood events in the U.S. and U.K. (see June 28 posting) and pointed to the fact that flooding is not just a coastal issue. Now severe flooding of major rivers in England, including the Thames and Severn, has re-flooded some of the previously-hit areas, resulting in what has been described as the worst flooding to hit Britain in 60 years. In early July, the Association of British Insurers (ABI) estimated the insured losses from the June floods at  £1.5 billion ($3.1 billion). Taking into account the fresh floods, that total could now reach  £3 billion ($6.2 billion). The event illustrates how critical it is for insurers to identify and manage accumulation risk. With that in mind, we note that Guy Carpenter has announced the development of a new London flood catastrophe model for insurers. As GC’s press release states: “For insurers and reinsurers, London represents the greatest accumulation of exposure and thus the ability to accurately determine maximum potential flood loss has become an imperative for risk managers.† Check out further I.I.I. info on catastrophe modeling and flood insurance in the U.S.  Ã‚  

NFIP Hearing

A bill (H.R. 920) that would amend the National Flood Insurance Act of 1968 to allow the National Flood Insurance Program (NFIP) to cover wind-related losses will be the focus of a hearing on Capitol Hill tomorrow before the House Financial Services Subcommittee on Housing and Community Opportunity. Otherwise known as the Multiple Peril Insurance Act of 2007, H.R. 920 was introduced earlier this year by Rep. Gene Taylor, D-Miss. Among those testifying tomorrow will be I.I.I. president and chief economist Dr. Robert Hartwig. Check the I.I.I. site for further  facts on the NFIP and for copies of Dr. Hartwig’s testimony.

Flood Risk Defenses

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 “a one in 150-year event†, 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.’s flood statistics for more information.

Hurricane Hearings

A busy day on Capitol Hill tomorrow as a joint public hearing titled “National Flood Insurance Program: Issues Exposed by the 2005 Hurricanes† 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 “Rising violent crime in the aftermath of Hurricane Katrina†. Check out I.I.I.’s flood insurance stats and hurricane insurance facts.