Finding A Better Course to Navigate Disasters

By Tom Santos | July 2, 2018

Despite the last several hurricane seasons, not nearly enough has been done to improve our country’s resilience against future storms. As a nation, we continue to spend the vast majority of disaster aid on recovery, rather than preparing our communities ahead of time to better weather a storm.

Last year alone, Congress spent $132 billion to cover disaster aid requests. While we should of course assist people and communities in need, this approach is not cost-effective, it certainly is not sustainable, and it is often not reliable. Something has got to give, and the 2018 hurricane season is as good a time as ever for us to rethink how the nation deals with natural disasters.

We first need to be more proactive with things like improved mitigation and better resiliency. The National Institute of Building Sciences recently released a study that found every $1 spent on mitigation could save $6 in future disaster relief. At the individual level, mitigation efforts could include preparing a home and property before a storm or purchasing flood insurance. At the community level, it should include better land use planning, stronger building codes, and disaster-resilient infrastructure.

As we shift our thinking to focus on preparedness, we will need to better communicate the risks that communities and property owners face. Americans routinely underestimate the likelihood that they’ll experience a natural disaster, and it shows every time one happens.

In 2016, flooding caused an estimated $15 billion worth of damage, but just $4 billion of that damage was insured. Protection for all the other hurricane damage wasn’t much better — Munich Re estimates that North America’s 2017 hurricane season caused $215 billion of damage, but only $92 billion was insured. As a nation, we need to change our mindset and do a better job of evaluating our communities’ risk levels in advance, so that we can focus on new and creative ways to limit the damage a disaster can cause.

Secondly, more thought needs to be given to the role that private insurers can play. Risk analysis and modeling technologies have vastly improved since the National Flood Insurance Program (NFIP) began. Because of these advancements, private insurers are better able to manage some of these risks. In many cases, private insurers could provide better, more affordable coverages than the NFIP. This would lead to more choices for consumers, reduce the burden on taxpayers, and allow families to access crucial funding to rebuild their homes much more quickly.

There are programs we can look to as examples of how to approach these risks more effectively. After Superstorm Sandy, for example, New Jersey’s voluntary Blue Acres buyback program used $300 million in federal funds to buy flood-prone homes and convert them into open space, which was designed to absorb flood waters and serve as a natural buffer to surrounding neighborhoods. This allowed residents to sell their homes and move elsewhere after seeing their streets flood repeatedly and stop worrying about the cost of rebuilding over and over again.

Another example is Florida, which enacted strict building standards after Hurricane Andrew. Last year, properties that adopted these new standards sustained far less storm damage during Hurricane Irma than homes that had not been updated. These are just two examples of communities that are proactively developing their own unique approach to disaster preparation.

If we can continue to be more proactive with our mitigation efforts, find opportunities to spread the risk more efficiently, and be more transparent about general flood risks, then we can limit the harm that storms cause. Instead of continuing to play clean up after a disaster strikes, this year needs to serve as the catalyst for a new era of proactive disaster preparation.

About Tom Santos

Santos is the vice president of federal afairs of the American Insurance Association. Phone: (202) 828-7100; Email:

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Insurance Journal West July 2, 2018
July 2, 2018
Insurance Journal West Magazine

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