As Hurricane Barry’s projected damage from flood and wind losses approaches between $500 million and $900 million, according to CoreLogic, some are saying that building in flood zones has become increasingly dangerous. According to Craig Poulton, CEO of private flood insurer Poulton Associates, continuing to build in flood risk zones is “insane.”
“As all of these named storms have proven in one way or another, we simply on a local level and a national level are not responding to the new reality,” said Poulton on Insurance Business. “We need to recognize that we have to stop putting lives and values in the way of storms, and in the way of flooding in particular.”
According to Poulton, the National Flood Insurance Program (NFIP) is a failed system that doesn’t address the risk faced by millions of Americans.
“The insurance is too inexpensive, and the NFIP and federal government don’t mandate that municipal governments take the right steps” Poulton told Insurance Business. “The problem with that is folks in any given locality believe they will never be flooded, hence they don’t buy flood insurance unless they’re forced to because they have a mortgage.”
Lawmakers are taking some steps to update the NFIP. For example, Senator Cindy Hyde-Smith is proposing an update to the Program which aims to address the multiple extensions the NFIP has undergone with a long-term extension plan.
In her letter to Senate Banking Committee Chairman Michael Crapo and Ranking Member Sherrod Brown, Hyde-Smith puts forth several options to address affordability issues among low and middle-income policy holders and debt issues within the NFIP.
“We’re trying to flip the script on mitigation projects, from being reactionary to being proactive. This is the first bill that provides a significant amount of real money for pre-disaster mitigation, which would give taxpayers a better return on investment. It is far more expensive to rebuild after a disaster than it is to do everything you can to protect yourself beforehand,” Hyde-Smith said in a statement.