Hurricane season is upon us, and the insurance industry is watching. We already have two tropical systems hitting the southeast on the books, and more predicted to be on the way.
This past April, severe flooding in Houston damaged over 1,000 homes and led to more than 1,200 high water rescues.
Exacerbating this, climate change is now amplifying the severity of storms and other extreme weather events, and exacerbating the flooding risks faced by millions of Americans.
Protective measures that can prevent devastating damage
The insurance industry invests significant time and resources to prepare risk models and provide insureds with the most sophisticated crisis response plans all based on critical lessons learned from major events such as Hurricane Katrina, Hurricane Ike and Superstorm Sandy. However, with the increasing exposure, is the insurance industry doing enough to encourage protective measures that can prevent devastating damage?
Let’s first look at the ways our nation deals with these risks — building hardened flood control structures, offering subsidized federal flood insurance, and providing disaster relief after major storms and floods — are increasingly inadequate and in some cases can even be counterproductive.
Structural barriers, like levees and seawalls are costly to build and maintain and often ineffective or simply push floodwaters downstream to adjacent communities. In addition, federally subsidized flood insurance has led to a $24 billion debt to the treasury and encouraged the building and rebuilding of countless structures in hazard-prone and environmentally sensitive areas.
Game changing alternative
As the CEOs of one of America’s largest conservation organizations and a leading provider of insurance and reinsurance around the globe, we’ve teamed up to call to attention to a game changing alternative: restoring, protecting, and enhancing natural systems as a major way to reduce storm and flood risk for communities, save taxpayers money, and help revitalize fish and wildlife populations.
A new report from the National Wildlife Federation and Allied World, Natural Defenses in Action, highlights a dozen of the best examples from around the country of where natural or nature-based features, such as shoreline and wetlands restoration, are already being used today to better protect communities against flooding and other natural disasters. For example:
- In Cape May County, New Jersey, local communities are protecting and restoring dune systems and installing “living shorelines” to enhance protection from coastal storm surges, erosion, and accelerating sea-level rise;
- In the Tualatin River basin of Oregon, watershed managers are using beavers to help restore streamside wetlands and reduce flooding to downstream communities; and
- Along Alabama’s Gulf Coast, environmentally sensitive portions of Dauphin Island are being kept intact and housing development out of harm’s way through limiting a broad array of federal subsidies.
Nature-based risk reduction
We hope that the insurance industry community will consider these encouraging examples and policymakers will move to utilize similar nature-based risk reduction at scale, all across the country. One huge step in this direction would be for Congress to both reduce National Flood Insurance Program (NFIP) subsides that incentivize development and re-development in high risk, environmentally sensitive areas, as well as reward communities that deploy nature-based risk reduction with lower NFIP rates.
Further, funding for voluntary relocations and land conservation programs, such as the Land and Water Conservation Fund and North American Wetland Conservation Act should be significantly increased. In addition, federal agencies like the U.S. Army Corps of Engineers should modernize rules that often favor hard structures, like bulkheads and seawalls, over “living shorelines.”
We urge the insurance industry to join us in this discussion and explore the options called for in our report. Together, we can work with policymakers to not only decrease risk to local communities and save taxpayers money, but also create enduring benefits for fish and wildlife, outdoor recreation and clean drinking water. In an era too often paralyzed by gridlock this is one area where Republicans, Democrats, the insurance community, businesses and conservationists should all agree.
Collin O’Mara is president and CEO of the National Wildlife Federation. Scott Carmilani is president and CEO of Allied World Assurance Company Holdings, AG. Opinions expressed in this article are the authors' own.