Editor’s note: This article is part of Governing’s ongoing Q&A series “In the Weeds.” This series features experts with the knowledge to provide new insights and solutions to state and local officials across the country. Do you have an expert you think should be featured? Email web editor Natalie Delgadillo at ndelgadillo@governing.com.
Floods are the most common and costly natural disaster, but few homeowners have insurance that covers flood damage. Almost everyone with such coverage gets their insurance through a program administered by the Federal Emergency Management Agency (FEMA). Daniel Kaniwski, who oversaw the program, talks about the challenges faced by FEMA during his time at FEMA and the importance of local government investment in flood preparedness.
Two-thirds of the costs of natural disasters are due to flooding. Every hurricane revives the conversation about how long insurance companies can continue to provide disaster coverage to homeowners. The concern also comes from the increasing frequency of extreme rain events, with devastating flooding recently occurring in places once believed to be protected from the worst effects of a warming world, such as Asheville, North Carolina. is spurring on
Few households have flood insurance. The national average is between 4 and 6 percent. This percentage is higher in known risk areas, but even Florida’s flood-prone areas only cover about one-third. Homeowner’s insurance policies do not include flood coverage, but people often don’t realize that until they are affected by a flood.
Few homeowners who receive protection receive protection from private carriers. Currently, 95% of flood insurance policies are issued by the Federal Emergency Management Agency (FEMA)’s National Flood Insurance Program (NFIP).
NFIP has no long-term authority and must be continually reauthorized by Congress. In fact, Congress has enacted short-term extensions 30 times since 2017. FEMA has suggested steps that Congress could take to strengthen the NFIP, but these have not received attention as a priority.
As FEMA’s second-ranking official, Daniel Kanieweski oversaw this flood insurance program. While in this role, he created resiliency programs that have become integral to FEMA’s mission. He brought his experience as a firefighter and EMT, as well as his doctorate in public policy and administration, to the job.
Currently Managing Director of Public Sector at Marsh McClellan, Mr. Kaniweski continues to be involved in developing community resilience strategies. In his conversation with the Governor, he spoke about the challenges in the flood insurance market and the benefits to local governments from investing in risk mitigation. The transcript below has been edited for length and clarity.
How is flood insurance different from other coverages?
Homeowner’s insurance is primarily provided by private insurance companies. Private insurance is not available in some of the country’s most disaster-prone areas. Countries are stepping in and providing it. 95% of all flood insurance policies are written by the NFIP. The private market holds the remaining 5%.
With flood insurance, there are no availability issues. By law, FEMA and NFIP are required to provide flood insurance to those who request it.
How does this system work?
If survivors of Hurricanes Helen or Milton do not have flood insurance but are affected by a flood, they will be dependent on their savings, their families, their communities, and ultimately their governments, including the federal government. . To support them in their time of need.
Daniel Kaniwski: “The most common thing I hear is, ‘I never thought something like that would happen here.’ Unfortunately, disasters can happen anywhere at any time.”
Given that only 4% of Americans have flood insurance, the real challenge is to use simple facts like “Flood insurance is not included in your homeowner’s insurance policy.” to educate Americans about the need for Ensuring people know that insurance is available is the second step, and the third step is ensuring that insurance is affordable.
The reality is that everyone should have flood insurance, and if the chance of flooding is low where you live, your premiums will be set accordingly. Although not always the case with NFIP, flood insurance premiums now reflect risk. For homeowners who can’t afford flood insurance and are living without insurance because of it, we need to find a solution.
NFIP has long been hampered by the laws that shape it. This does not give FEMA the flexibility it needs to provide a more modern flood insurance program.
What do you wish FEMA could do that it hasn’t already done?
The simple answer is that we need to consider the 17 legislative proposals submitted by FEMA. None of them have been executed.
I’m not saying it has to be all 17, but more than one can go a long way.
Are there any priorities you consider?
The first step is to undergo multi-year reauthorization. Without a long-term reauthorization, FEMA cannot even think about the next few months or each deadline.
NFIP is unique in that it collects premiums. Even that will be difficult, as the company has more than $20 billion in debt. One proposal would eliminate future debt. Currently, FEMA, and by FEMA I mean American taxpayers, pays interest on that debt to the United States Treasury. Think about what could be done if that money was used for risk reduction programs for the community instead of paying interest.
What type of risk mitigation?
Risk mitigation can be done at the individual structure level. That might mean elevating your home. A more extreme example is FEMA’s takeover at the community level, called managed retreats. It involves acquiring land and any structures on it and turning them into parks and other community resources.
These are not cheap propositions, but there are grant programs that provide funding, especially for properties with recurring flood insurance payments. One of the nonprofits I work for, the National Institute of Building Sciences, has found that in the event of a disaster, every dollar of federal grant money invested in hazard mitigation saves an average of $6. did.
What can local governments do?
The Community Rating System (CRS) program, a voluntary program that provides lower NFIP premiums for communities that take certain steps to reduce flood risk, helps communities invest in community-wide resilience measures. Provide strong incentives. Local government officials can save policyholders money with up to 45% off. CRS protects homeowners, protects communities, and helps communities recover more quickly after disasters.
As more private insurance companies enter the flood insurance market, their uptake is expected to expand. One way our company, Marsh McLennan, has looked at expanding coverage is through something called area-based catastrophe insurance. This is insurance placed at the regional level rather than at the individual structure level.
This is of great interest, especially in low- to moderate-income areas where flood insurance coverage rates are particularly low. We are currently piloting it with a number of local communities. This is a product (covering multiple properties and purchased or promoted by a community entity) that provides instant payments after a trigger event if parameters are met. This is the model we developed, and other companies across the country are replicating it.
Perhaps the most difficult areas are those that rarely experience flooding, but when it does, it can be devastating. An example is the communities in North Carolina that were most affected (by Helen).
The most common phrase I hear is, “I never thought something like that would happen here.” Unfortunately, the possibility of a disaster occurring anytime and anywhere is not zero.
