31% of homeowners in Dorian’s path had dropped flood insurance
R.J. Lehmann, who analyzes financial services at the R Street Institute, a libertarian think tank, said rising insurance premiums under the NFIP have driven policyholders away. A federal law enacted in 2012 led to substantial premium hikes as Congress sought to reduce the number of policyholders that received discounts.
The Federal Emergency Management Agency runs the NFIP. In a news briefing yesterday about Dorian, FEMA Associate Administrator Jeffrey Byard declined to speculate about what caused a decline in flood coverage when asked by E&E News.
“We’re dealing with human interest and human decisions,” Byard said. “What our job is is to continue to push the insurance message. Whether our citizens take that, that is a personal choice. … Flood insurance is one of the best ways to recover after a disaster.”
FEMA has set a goal of doubling the number of people with flood insurance by 2023, and it hopes to encourage companies to enter the market. Private insurers have long eschewed flood coverage because the damage is so unpredictable, but Lehmann believes that major insurers such as Allstate Corp. and State Farm could make a difference.
“I do think there’s something to be said for the private insurance industry’s talent at marketing,” Lehmann said. “They are willing to spend money to market it if they had incentive to do so.”
