With modern flood risk assessment tools (e.g. updated flood zones) and modeling capabilities, the risk in flood peril is reduced relative to the late 1960s when NFIP was created. So, it should be possible to include the flood peril in a multi-peril property coverage policy with no substantial increase in risk.
I would go beyond the measures suggested in step 2, by eliminating those high and moderate risks by migration away from flood plains over a 50 year period. Local government purchase of such land, to transform it into parks, etc. would slowly transform the risk profile to a few moderate risks in each locality. In that scenario, the flood perils premium component would be small relative to other multi-peril property perils, thus insurable commercially.
“it should be possible to include the flood peril in a multi-peril property coverage policy with no substantial increase in risk.” I don’t agree with this statement. If carriers start writing for flood, there is an obvious increase in risk – namely from, uh, yup, you guessed it, floods.
Can’t tell you how many carriers deny flood claims now because it’s excluded. If they had to start paying out for flood losses, you’d see (1) a DRAMATIC increase in premiums and (2) a significant reduction in locations insured in an area as carriers try to spread out their risk.
With all due respect, what you are suggesting sounds like a government take over of affected towns and properties. Floods are a complicated issue for many reasons, but in particular from living, working, and insuring properties within flood plains in the Mid-west, I want to stress the notion that these recent floods are not “natural occurring cycles”. The related institutions you are suggesting facilitate a mitigation, or more over a “migration” of towns located near rivers and streams have created and exasperated this crisis through an extension or levees and river channeling. Much of what those levees are protecting used to be wetlands and have been used for row crops since the 1950’s, with levee heights increasing when needed. For those in affected areas, it has the appearance of trading their history, town, and way of life, in exchange for the profits of grain. 5 Steps to Reform is a worthy title of an article, but for policy, I think we more closer to 15 steps to have long-term, meaningful improvement of the situation. And in my humble opinion, levee construction and height must be part of the policy. I’ll conclude with stating that your suggestions sound well-meaning, but I have seen first-hand the approach of turning parcels of land into small parks and green spaces for river towns. Unfortunately, the parks and similar approaches I have seen, appear to be a net loss for the town. Parks do require a fair amount of regular maintenance and the park doesn’t pay any property or sales tax. While it may be enjoyed by local citizens, tourists tend not to travel to a town to explore its small park(s). Thus, the revenue it possibly produces is relatively small at best. Furthermore, there are only so many parks a local town needs, therefore it is not a repeatable formula on any scale. Regardless, Mr. Poulton and the invisible hand offer more attainable solutions that our past and current approach.
Doubling the size of the pool sounds like a good idea, but. I have a client living on hills 3 miles from salt water who literally have a stream running near a corner of their house who has been forced to secure coverage. Insurance people are very conservative, but I would bet all I have that his foundation will never get wet. I would drive to Los Vegas to bet 100 times that that his house would never be damaged by the stream that he had to point out to me.
How can the maps be accurate when they are altered every time a flood occurs?
With modern flood risk assessment tools (e.g. updated flood zones) and modeling capabilities, the risk in flood peril is reduced relative to the late 1960s when NFIP was created. So, it should be possible to include the flood peril in a multi-peril property coverage policy with no substantial increase in risk.
I would go beyond the measures suggested in step 2, by eliminating those high and moderate risks by migration away from flood plains over a 50 year period. Local government purchase of such land, to transform it into parks, etc. would slowly transform the risk profile to a few moderate risks in each locality. In that scenario, the flood perils premium component would be small relative to other multi-peril property perils, thus insurable commercially.
“it should be possible to include the flood peril in a multi-peril property coverage policy with no substantial increase in risk.” I don’t agree with this statement. If carriers start writing for flood, there is an obvious increase in risk – namely from, uh, yup, you guessed it, floods.
Can’t tell you how many carriers deny flood claims now because it’s excluded. If they had to start paying out for flood losses, you’d see (1) a DRAMATIC increase in premiums and (2) a significant reduction in locations insured in an area as carriers try to spread out their risk.
With all due respect, what you are suggesting sounds like a government take over of affected towns and properties. Floods are a complicated issue for many reasons, but in particular from living, working, and insuring properties within flood plains in the Mid-west, I want to stress the notion that these recent floods are not “natural occurring cycles”. The related institutions you are suggesting facilitate a mitigation, or more over a “migration” of towns located near rivers and streams have created and exasperated this crisis through an extension or levees and river channeling. Much of what those levees are protecting used to be wetlands and have been used for row crops since the 1950’s, with levee heights increasing when needed. For those in affected areas, it has the appearance of trading their history, town, and way of life, in exchange for the profits of grain. 5 Steps to Reform is a worthy title of an article, but for policy, I think we more closer to 15 steps to have long-term, meaningful improvement of the situation. And in my humble opinion, levee construction and height must be part of the policy. I’ll conclude with stating that your suggestions sound well-meaning, but I have seen first-hand the approach of turning parcels of land into small parks and green spaces for river towns. Unfortunately, the parks and similar approaches I have seen, appear to be a net loss for the town. Parks do require a fair amount of regular maintenance and the park doesn’t pay any property or sales tax. While it may be enjoyed by local citizens, tourists tend not to travel to a town to explore its small park(s). Thus, the revenue it possibly produces is relatively small at best. Furthermore, there are only so many parks a local town needs, therefore it is not a repeatable formula on any scale. Regardless, Mr. Poulton and the invisible hand offer more attainable solutions that our past and current approach.
Spot on article. I hope folks in Congress will head your advice. The problems are easily defined and the solutions are pretty straight forward.
Doubling the size of the pool sounds like a good idea, but. I have a client living on hills 3 miles from salt water who literally have a stream running near a corner of their house who has been forced to secure coverage. Insurance people are very conservative, but I would bet all I have that his foundation will never get wet. I would drive to Los Vegas to bet 100 times that that his house would never be damaged by the stream that he had to point out to me.
How can the maps be accurate when they are altered every time a flood occurs?