A coalition of big insurance companies, consumer groups, and environmental advocates are urging the United States to overhaul its disaster policies in the face of increasingly extreme weather due to human-caused climate change.
According to a report released Tuesday by the SmarterSafer coalition, the U.S. needs to increase how much it spends on pre-disaster mitigation efforts and infrastructure protection. That way, it asserts, the U.S. can stop wasting so much money on cleaning up after a disaster happens.
“Our current natural disaster policy framework focuses heavily on responding to disasters, rather than putting protective measures in place to reduce our vulnerability and limit a disaster’s impact,” the report reads. “This needlessly exposes Americans to greater risks to life and property and results in much higher costs to the federal government.”
The SmarterSafer coalition is made up of more than 30 different groups, including some of the biggest insurance companies in the world: Allianz, Liberty Mutual, SwissRe, and USAA, to name a few. Adequately dealing with the risks of climate change is inherently important to the insurance industry, as failure to prepare can lead to increased costs for insurance companies when storms wipe out basements and take out walls.
Making sure the government is prepared is important for private insurers too. Because if governments don’t fortify their infrastructure, the damage can fall onto the companies. A good example is Farmers Insurance Co., which sued local governments in the Chicago area last year for failing to prepare for climate change (the lawsuits have since been dropped). That lack of preparedness, the lawsuits said, caused sewers to burst into people’s homes and property values to decline — damage that Farmers had to pay for.
According to SmarterSafer’s report, states that are hit by disasters like extreme floods and fires rely too easily on monetary assistance from the Federal Emergency Management Agency (FEMA) after said disaster occurs. Under FEMA’s Stafford Act, states can easily apply for disaster assistance. When that assistance is granted, the federal government is accountable for at least 75 percent of the costs.
Because states know federal relief is available and easy to get, the report argues, states are unmotivated to significantly prepare for extreme weather events.
“With the federal government taking on such an enormous share of the financial burden and nearly all recovery responsibility, there is little incentive for disaster-prone states to take action to reduce risk,” the report says. “For example, disaster-prone states like Texas and Louisiana are among those spending the least of their state budget on emergency response and mitigation programs that can reduce disaster costs.”
The report suggested changing FEMA’s payment system so that states that have taken the most mitigation and preparation efforts are rewarded with more federal aid when disasters strike. “[R]ather than simply writing a blank check after every disaster,” it says, “disaster assistance must be provided on a sliding scale so that communities can get a full share of funding only if they have taken significant steps to protect its residents from harm.”
There’s little question that disaster costs have increased in the last several decades. Since the Stafford Act was passed in 1988, the report notes that disaster declaration have steadily escalated — from 16 declarations in 1988 to 242 declarations in 2011.
The reasons for those increased disaster costs are two-fold, the report says. For one, the economy has grown since 1980, and there’s been more development — meaning there are bigger and more expensive structures to be damaged when extreme events hit. The other reason, it asserts, is climate change, which is increasing the risks that bad storms will occur across the country.
One of the biggest climate risks is sea level rise, which has increased both the frequency and length of minor coastal flooding — also called “nuisance flooding.” Whereas nuisance flooding along the Atlantic, Gulf, and West Coasts only occurred less than once per year at any given location in the 1950s, it now occurs on average about once every three months, the report says.
In addition, periods of very heavy precipitation have increased in every region of the country except Hawaii since 1958, according to the National Climate Assessment. That’s been particularly bad in the Northeast and Midwest, which have seen 71 percent and 37 percent increases in very heavy precipitation, respectively.
While those projections may not be alarming to some, they are certainly red flags for the insurance industry — a business which is based almost solely on credible estimation of risk. And the risks are growing, the report notes — if global action on climate change is not taken, sea level rise is projected to increase anywhere from 8.4 inches to 6.6 feet above 1992 levels, according to the National Oceanographic and Atmospheric Administration. Risks of heavy precipitation, wildfires, and heat waves are also projected to increase.
“In short, we face a costlier and more unpredictable future,” the report says. “With the risks so apparent, action must be taken now to curb the harshest effects.”