Former FEMA director promotes state, federal disaster mediation

Federal and state governments need to work with insurance companies to sponsor disaster mediation programs before something happens, before people who have worked all their lives for everything they have, then all of a sudden, within minutes, they lose all their hopes and dreams, according to James Lee Witt, president of James Lee Witt Assoc. and former director of the Federal Emergency Management Agency, who was responsible for FEMA’s overhaul, said in Orlando, Fla. In 1996, Witt became the first FEMA head to be elevated to a Cabinet position.

“It’s important that local communities recover much faster than ever before, simply because if you can not get that community back up and running right away it is devastating,” Witt, a keynote speaker during the June 15-17 Florida Association of Insurance Agents Conference and Exposition explained. “We did a survey over the years that I was with FEMA and found that 25 to 30 percent of the businesses that are affected by a hurricane or similar catastrophe never reopen.

“That’s the heart and soul of the community, that’s the largest employer,” he said. “We are not only losing jobs, we are losing tax revenues.

He used Louisiana as an example:

“FEMA’s program for local and state governments will only refund reimbursable costs, particularly for police, fire, paramedics and city workers, but only overtime, not straight time,” Witt said. “In a lot of parishes they do not have any revenue, their tax base is gone. In St. Bernard Parish, with 70,000 population they have only one drug store and one grocery store open.

“The parish president has zero tax revenue coming in. How are they going to pay for their police, fire and teachers.

Witt said the Stafford Act needs to be rewritten because there was a scale in which $85 per capita costs could get up to 75 percent in federal sharing, local and state 25 percent. The Northridge earthquake was $110 per capita cost; 9/11 in New York was $400 per capita cost, and President Bush gave them 100 percent.

“Hurricanes Katrina and Rita, in Louisiana the per capita cost is $6,000 and they gave them a 90/10 cost share.

“Can you imagine Louisiana matching 10 percent of $100 billion? And they lost $1.5 billion in taxable revenue.

“What you do is important, the insurance you sell is important,” Witt said. “We have to make insurance more available, more affordable, with a lower deductible, so we can get more people insured.”

Witt and Admiral James M. Loy are national co-chairs of www.protectingamerica.org, a coalition whose goal is to establishing catastrophe funds in each state, and a federal fund as a backstop.

CAT funds inadequate
He pointed out that Florida’s CAT fund was almost wiped out after the four hurricanes. In California, the Earthquake Authority has a $6 billion fund.

In 1906, 6,000 people lost their lives and 225,000 homeless, with a total population of 250,000. The cost in 1906 of that earthquake was $6 billion.

“You know what, if the same earthquake occurred today, with the same intensity the damages would cost $400 billion,” Witt said. “And only one out of seven people in California has earthquake insurance because although it is available, it is not affordable with a deductible of $25,000 to $30,000–and the average damage to a home during an average earthquake is $25,000.

Witt said his goal is to open a CAT fund for each state, managed by the state that would be a backstop for what you can not reinsure.

“We need reinsurance and we need insurance,” Witt said, “but take 10 to 20 percent of that fund as it grows each year and make grants to communities for mitigation prevention, public awareness and public education.”

Devastating events
Witt pointed out that as he looks across Florida, the Gulf coast states and America, he has recently seen more devastating events than have ever been witnessed in the history of the nation. He said that in today’s world and with the risks, it’s even more critical to have viable and strong insurance companies.

“We are facing another hurricane season this year that potentially could be as devastating as last year with Katrina and Wilma,” he said. “The storms that they forecast could be another $100 billion event. How are we going to survive and recover? How are we going to keep your industry strong and make it viable so people are able to have insurance on their homes and belongings?”

Witt said in the eight years he spent at FEMA he went through the 1993 Mississippi flood, the 1994 earthquake in California, then in 1995 dealt with the bombing in Oklahoma, and numerous hurricanes, tornadoes and floods.

“In eight years I went to all 50 states for a disaster declaration, and three territories, Witt said. “One of the things that we believe in and started at FEMA, and I was at FEMA when people worked–was to put in a division of mitigation prevention with a strong base and foundation to work with governments and individuals to identify the risks they faced and started to mitigate that risk.

“Our goal was to eliminate the risk, cut the cost to the federal budget and taxpayers and support the insurance industry in way that would not only given them an opportunity to do better, because if the industry does better, insurance is more affordable, with a lower deductible.”

Flood insurance changes
Witt said in Washington they are now thinking about cutting the commission agents make from flood in-surance from 33 to 25 percent.

“I told them if they do that, they had better hire some more federal employees, because they aren’t going to have anyone to write it for you,” he said.

The National Flood Insurance Program was spending $200 million a year on repetitive flood claims.

Witt said, “lets go back and look at how many claims have been filed on individual properties over the last 10 years.”

He said they found 10,000 properties that had three or more claims filed over a 10-year period.

“I put together a proposal for Congress and went up to meet with the chairman of the committee and proposed that over a four-year period we either buy out or elevate that property on a voluntary basis to eliminate that $200 million annually,” Witt explained. “We can do it for $400 million.

“One congressman who represents a state on the Gulf coast told me, ‘James Lee, if you go mucking with my fishing camps and I’ll have you mounted on that wall.'”

Then we were subsidizing secondary and vacation homes. Witt said, lets get rid of them. It was the right thing to do, but he was turned down every time he went up on the Hill.

Witt said he saw lots of people that did not have flood insurance hit by Katrina and Rita.

“They were even in areas that FEMA told them they didn’t need flood insurance,” Witt explained. “Here you are sitting six feet below sea level and FEMA says you don’t need flood insurance. That really makes sense.”

“So in today’s world how do we get people to change? How can we put in better practices?” Witt asked.

Project Impact
He described a plan called Project Impact. It involved a public and private partnership of businesses and corporations in local communities to minimize their risks during a catastrophe. It had 250 communities participating.

“We had communities join just because they thought it was a good idea,” Witt explained. “They didn’t want any money, they just liked the concept of building a partnership and doing it themselves.

“I’ll never forget after we left office, Seattle, Wash., was celebrating its third year anniversary in Project Impact,” he said. “They took it seriously, retrofitting everything, schools, hospitals, nursing homes, low rent housing and bridges.”

Witt said on the evening of the anniversary they had a 7.0 earthquake.

“The next morning the mayor of Seattle was interviewed on CNN. They asked him, ‘Seattle had a major earthquake and you only had one death and it was a heart attack, and very little damages, to that do you attribute this?’

“Guess what, that very same day the government cut that program,” Witt said.

We tried to use disaster costs to increase mitigation funding to state and local governments after a disaster to go back there and save.

“We used HUD, CDC dollars and FEMA mitigation dollars and were able in Missouri alone to buy up 4,000 pieces of property, take that land, put deed restrictions on it and give it back to cities and counties for open green space.

In 1995 they had another flood and not one dollar was spent on response.

Witt said the federal government needs to focus its energy and money to help people help themselves by taking the lead in building a partnership to build better, safer communities.

“I don’t want to continue to see people lose their hopes and dreams that they have worked for all their lives,” Witt concluded.