Tag Archives: Flood Prevention

Mangroves and Reefs: Insurance Can Help Protect Our Protectors

Hurricanes and storm-related flooding are responsible for the bulk of damage from disasters in the United States, accounting for annual economic losses of about $54 billion, according to the Congressional Budget Office (CBO).  

These losses have been on the rise, due, in large part, to increased coastal development. More, bigger homes, more valuables inside them, more cars and infrastructure – these all can contribute to bigger losses. The CBO estimates that a combination of private insurance for wind damage, federal flood insurance, and federal disaster assistance would cover about 50 percent of losses to the residential sector and 40 percent of  commercial sector losses. 

Recent research illustrates the benefits provided by mangroves, barrier islands, and coral reefs – natural features that frequently fall victim to development – in terms of limiting storm damage. In many places, mangroves are the first line of defense, their aerial roots helping to reduce erosion and dissipate storm surge. A healthy coral reef can reduce up to 97 percent of a wave’s energy before it hits the shore. Reefs — especially those that have been weakened by pollution, disease, overfishing, and ocean acidification — can be damaged by severe storms, reducing the protection they offer for coastal communities. 

In Florida, a recent study found, mangroves alone prevented $1.5 billion in direct flood damages and protected over half a million people during Hurricane Irma in 2017, reducing damages by nearly 25% in counties with mangroves. Another study found that mangroves actively prevent more than $65 billion in property damage and protect over 15 million people every year worldwide.  

A separate study quantified the global flood-prevention benefits of coral reefs at $4.3 billion.  

Such estimates invite debate, but even if these endangered systems provided a fraction of the loss prevention estimated, wouldn’t you think coastal communities and the insurance industry would be investing in protecting them? 

Well, they’re beginning to.  

The Mexican state of Quintana Roo has partnered with hotel owners, the Nature Conservancy, and the National Parks Commission to pilot a conservation strategy that involves coral reef insurance. The insurance component – a one-year parametric policy – pays out if wind speeds in excess of 100 knots hit a predefined area. Unlike traditional insurance, which pays for damage if it occurs, parametric insurance pays claims when specific conditions are met – regardless of whether damage is incurred. Without the need for claims adjustment, policyholders quickly get their benefit and can begin their recovery. In the case of the coral reef coverage, the swift payout will allow for quick damage assessments, debris removal, and initial repairs to be carried out.  

Similar approaches could be applied to protecting mangroves, commercial fish stocks that can be harmed by overfishing or habitat loss, or other intrinsically valuable assets that are hard to insure with traditional approaches.  

Flooding Events May Shift Prevention Strategies

Hurricane season has yet to begin and already record-setting flooding in parts of the central United States will likely become the country’s sixth billion-dollar disaster event of 2017.

While Missouri and Arkansas have been hit the hardest, recent flooding in the central U.S. has been widespread and it will likely take weeks before the full extent of flood damages is known.

So far, 2017 has seen five billion-dollar disaster events, including one flooding event, one freeze event, and 3 severe storm events, according to NOAA.

KSGF.com: “This year is off to a quick start for the number of billion-dollar weather disasters, similar to 2016 and 2011, which each had 15 and 16 disasters, respectively.”

Climate Central reports that many communities across the U.S. are not prepared for massive rain events and living behind a levee is not an absolute guarantee of protection.

“The growing realization of the lingering risk from levees is causing some rethinking of flood protection strategies in riverfront communities. This can include simply setting levees back from the risk and installing parkland that is intended to flood and provide rain-swollen rivers some breathing space, as well as preventing development in flood-prone areas.”

Last week’s breach of the local levee system in Pocahontas, Arkansas is a good example. Check out these aerial pics via the Capital Weather Gang.

Flood damage is excluded under standard homeowners and renters insurance policies. However, flood coverage is available in the form of a separate policy both from the National Flood Insurance Program (NFIP) and from a few private insurers.

I.I.I. facts and statistics on flood insurance has additional information.