Natural Disasters--The Road Home and the Path Forward on Property Insurance….and Hopefully a Little Help from Our Political Friends
With Super Storm Sandy’s anniversary at hand, not surprisingly, the national media is running a lot of stories on this Frankenstorm Halloween weather event. Having been there with our firm’s troops, we can bear witness to the awful devastation and impact on the communities and their residents lives from Sandy’s furry.
Sandy has now been reported to be this country’s second largest natural disaster, second only to Hurricane Katrina in 2005. Having made this comparison, I was curious as to what we learned from Katrina eight years ago. To my surprise the answer was right in front of me on the New York Times website on October 28, 2013.
This video titled In the Shadow of Katrina details the recovery effort following Hurricane Katrina’s massive damages in New Orleans. It goes on to show the process still under way in the Super Storm Sandy recovery. In the former, the then Louisiana Governor took the blame for an inept federal government grant program, which was to be administered by the state called the Road Home. In the latter, people are still struggling with FEMA/ NFIP rules and regulations.
How about the conflicting rules that apply? For example; if you did not file an appeal of your flood damage claim within sixty days of claim denial you are finished with your FEMA/NFIP claim. On the other hand, you have one year from the date of your claim denial to file a law suit. But then they extended the time to file a proof of loss for another six months from the date of Sandy’s anniversary. Confused yet? Watch the video.
It looks like the Sandy recovery has some of the same DNA of the Road Home debacle in Louisiana. And remember, this Road Home was a “Grant program,” if you had no insurance, i.e., did not pay for federal flood insurance (NFIP) the U.S. Government would give you up to $150,000 free money! They did have a requirement that if you bought some insurance, the free money would only start after your insurance was paid out. Despite what was claimed to be anti-fraud protections, the program was anecdotally rife with fraud.
So how does the story of two of this country’s largest natural disaster lighten the path ahead? Consider the Biggert-Waters 2012 Flood legislation that no one except congress who voted on it apparently knew anything about. My suspicions are that thousands with flood insurance will not renew their policies because of massive increases in flood insurance premiums. When the next big disaster comes, they’ll look for another bail out from the government. Will it work? Take a look at the last two storms, which brings me to my point in this blog.
Don’t you think it’s time for a real national natural disaster insurance program, one that everyone pays into that really covers the policyholders for all of their losses when these catastrophic events occur? One that is actuarially sound from the beginning? Some of the best minds in the recovery business have long been an advocate for this type of program. After all, the political types in Washington got us into a national health care program. Why not a national disaster insurance program? Think about it--or do you want another Road Home give away? Let me know what you think.