There’s an old saying that a recession is when you lose your job and a depression is when I lose mine. A similar logic applies to floods. Hurricane Helene brought a flooding disaster to southern Appalachia unlike anything seen since Katrina. But getting just an inch of water in your house could be life-changing in its own way.
It shouldn’t have to be. A heating planet has made torrential downfalls more common and destructive, meaning Americans everywhere must be better prepared for the possibilities of catastrophic flooding. Fixing the country’s busted flood insurance system is a good place to start. The Federal Emergency Management Agency, which administers the National Flood Insurance Program, is running out of money after multiple disasters and a quadrupling of properties receiving repeated disaster payouts in the past 20 years.
Helene’s destruction puts the insurance problem into stark relief. The storm may do up to $250 billion in damage and economic loss, according to the latest estimate from AccuWeather. That would make it the second-most destructive storm in history after Katrina. It’s also the deadliest storm since Katrina, taking at least 230 lives so far.
But Standard & Poor’s estimates the insured losses from the storm will be just $5 billion to $15 billion. That’s a drop in the bucket compared with the $97 billion in profit the insurance industry netted in the first half of the year. What a relief for the insurance industry.
How did insurers get so lucky and homeowners so unlucky? It mostly comes down to flood insurance — or the lack thereof. Less than 2.5 percent of homes in Helene’s path were insured against rising waters, Bloomberg News reported. In fact, only about 4 percent of all U.S. homeowners have flood insurance, according to FEMA.
Physics in action
Homeowners are taking a lot of risk by passing up on flood insurance. According to FEMA, 99 percent of U.S. counties have flooded at one point or another since 1996, and 40 percent of its flood claims come from outside of high-risk zones. And all it takes is 1 inch of water in your house to do $25,000 worth of damage, the agency suggests.
But forget that number salad. All you need to know is that a heating climate means ordinary rainstorms now dump more water because hotter air holds more moisture. If you live in a place where it rains, then you probably need flood insurance.
Making flood insurance cheaper would make it more appealing. And the magic of insurance is that, when more people buy into it, costs fall. A recent working paper from the Climate & Community Institute think tank and several universities proposed creating Housing Resilience Agencies on national or regional levels to both pool and reduce risk.
Overhauling insurance regulation could be another approach. Kenneth Klein, a professor at the California Western School of Law, has suggested that insurers should be forced to include all perils in homeowners’ policies.
FEMA’s flood program needs other long-term fixes, including curbing subsidies for wealthy people rebuilding in risky areas. None of these will be easy. But as with so much involving climate change, making some difficult but necessary choices now will prevent far more expensive and painful choices in the future.
Mark Gongloff is a Bloomberg Opinion editor and columntist covering climate change.
