In the News

Why flood insurance claims were so low after Hurricane Maria

Nov 3, 2017

issues: Finance and Trade, Flood Insurance, Insurance, Puerto Rico

originally published in Axios

As of Oct. 25, FEMA had paid $2.8 billion in federal assistance under the National Flood Insurance Program to people affected by Hurricane Harvey and $179 million to those in the path of Hurricane Irma — but just $121,000 to people in the areas devastated by Maria, per early estimates FEMA provided to Axios. That’s because FEMA received 180 times as many claims from Harvey victims as Maria victims.

The big picture: Flood insurance is not available to much of Puerto Rico. Buying flood insurance under the federal program requires municipalities and counties to maintain reasonable flood standards, which may pose too high a cost for most counties on the island, according to R.J. Lehmann, an expert on insurance and financial service policy at the R Street Institute, a free market think tank. “It really comes down to this: Puerto Rico doesn’t buy flood insurance because Puerto Rico is very poor,” Lehmann said.

By the numbers: In Puerto Rico, 5,267 properties are covered by the National Flood Insurance Program, compared to 1,725,394 properties in Florida, per FEMA data shared with Axios.

The details:

Hurricane Harvey

Landfall: Aug. 25, Texas

90,500 claims submitted, including 90,000 from Texas residents and 500 from Louisiana residents

586,758 Texas properties and 495,002 Louisiana properties insured under the NFIP

$2.8 billion paid for all claims.

Hurricane Irma

Landfall: Sept. 10, Florida

30,000 claims submitted, including 25,900 from Florida, 2,200 from South Carolina, 1,900 from Georgia, 73 from the Virgin Islands, 5 from Puerto Rico, 3 from Alabama

1,725,394 Florida properties and 1,383 Virgin Islands properties insured under the NFIP

$179 million paid for all claims, including $157 million to residents of Florida, $12 million to Georgia, $8 million to South Carolina

Hurricane Maria

Landfall: Sept. 20, Puerto Rico

500 claims received from Puerto Rico

5.267 Puerto Rico properties insured under the NFIP

$121,000 paid for all claims

It’s also a mortgage problem, Lehmann said. A significant portion of the properties that do have flood insurance are foreclosed, and homeowners who aren’t paying their mortgages are not eligible for the flood insurance that comes with it.

“There’s a lot that Puerto Rico is going to miss out on” under federal insurance programs like the NFIP, due to the stipulations that the aid comes with, Lehmann said. The island will be much more reliant on federal aid under the Stafford Act to fund its ongoing recovery.