Whitepaper Climate Change and Flooding

Critical Steps to Prepare and Recover from the Effects of Climate Change
Summary: Changing climate patterns have increased the risk of flooding and other disasters, as evidenced by extreme weather across the US and the globe in the past few years.  The traditional approach to recovery from catastrophic events has been government bail outs and financial assistance to rebuild, which requires deep government coffers and efficient federal and state resource deployment.  An alternative outlined in this paper is for a much higher percentage of the populace to have adequate flood insurance.  This would funnel recovery funds directly to the businesses and homeowners who can immediately put the funds to use in a recovery effort, and would result in a speedier recovery than vague government bail outs. Climate change has ushered in an opportunity for homeowners, business owners, and insurance agents to take action to mitigate the potential effects of future sea level rise and flooding.  The changing climate has put every property owner at risk.  The best solution combines effective government-driven building and mitigation standards coupled with a much broader, even to the point of mandated, adoption of flood insurance.
Climate change has spawned historical catastrophes
Something extreme is definitely happening with the weather.  Throughout 2019, the Missouri and Mississippi Rivers experienced historical flooding, a Category 5 hurricane formed in the Atlantic for a record-breaking fourth year in a row, Texas had a one in 500-year flood for the fifth year in a row, and the 12 months ending April 2019 earned the title of “wettest on record” in US history. Recently there were floods in the Arizona desert, and February 2020 produced both record rains in the southeast and record dryness in the west.
Add to that the king tides in Florida, which are especially high tides that can cause tidal flooding. According to the South Florida Sun Sentinel, “For scientists, researchers and climate change activists, it’s a crystal ball of sorts: a brief, physical realization of South Florida’s perilous future if nothing is done to combat rising seas and global temperatures.” King tides are now occurring monthly along the entire Atlantic seaboard, rather than once or twice a year in South Florida, as was historically the case.  The average annual sea level rise between 1900 and 1990 was between 1.2-1.7 mm.  Since 2000, that number has accelerated to 3.4 mm per year, meaning that the seas have risen by as much as 5”- 9” since 1900.
Much of this — or at least the intensity and increased volume of flooding events — is being attributed to climate change. In fact, the two wettest storms in the past 70 years occurred in 2017 and 2018: Hurricanes Harvey and Florence. According to the National Resources Defense Council, storms are 10% more intense due to climate change, as a warmer atmosphere stores more water vapor. Increased coastal development and increased urbanization (think asphalt roads, parking lots, buildings, etc.) exacerbate the impact of these flooding events.
The implications for coastal communities are severe.  According to FEMA, 40%-60% of small businesses permanently close following a disaster.  A 2020 USC study estimates that 13 million people in the US will move inland as a result of climate change by 2100.  As a historical example, Galveston Texas was at one time the largest city in Texas and one of the largest ports in the US, until the hurricane of 1900 struck.  As a direct result of the hurricane, the city population did not recover for over 10 years, and permanently lost its status as both a port and a population center.
What action can we take now?
Flooding is the number one most common disaster in the US, yet it is the least covered of the major perils. The “coverage gap” — the difference between those that have flood insurance and those that need it — is on the order of 50 million homes. Only one in 10 homes that are at moderate to extreme risk of flooding actually have coverage.  Small businesses are estimated to be in a similar status, largely uninsured and unprepared.
Using Pinellas County, Florida as an example highlights the risk to cities and counties around the coasts.  Pinellas County is home to St Petersburg, Clearwater, and numerous towns on a peninsula bounded by the Gulf of Mexico on one side and Tampa Bay on the other.  Of the 2.8M people living in the Tampa Bay area, 970,000 reside in Pinellas County.  The Tampa Bay area is on many lists as one of the most vulnerable areas of the world related to climate change and severe weather.   A major hurricane, for example, that tracked up Tampa Bay could create a 26-foot wall of tidal surge and inundate hundreds of square miles of homes and businesses.  A Tampa Bay Regional Planning Council simulation shows the extent of the tidal surge.

The planning council simulation projects that in a storm of this scale, nearly half a million buildings would be destroyed,  843,000 households displaced, and $250B in economic losses would occur.  This theoretical but highly realistic storm would be a catastrophe.
Much of the focus and discussion about climate change has been on steps that can be taken to mitigate sea level rise and storm damage, such as creating living shorelines, living seawalls, retention ponds, higher building elevation standards, and more restrictive building codes.  While building code updates are part of the solution, many areas such as Pinellas County are largely built out, so adding government assistance to mitigation solutions such as flood venting or raising foundations would have significant benefits.  However, a larger aspect of resilience and recovery from storms is having an adequate tax base with sufficient capital to rebuild (where appropriate).
The finances of a county such as Pinellas are heavily dependent on home and building property taxes.  If homeowners and businesses do not have the financial ability to recover, then the county loses a significant portion of its funds.  This situation would dramatically restrict the local government’s ability to provide essential services to the residents and businesses that remain.  The result is a downward spiral which, as estimated by the Planning Council, could take up to 10 years to recover from.
An alternative example of proactive planning that can and should be done is for all at-risk residents and businesses to purchase flood insurance.  The weather experts and catastrophe modelers overwhelmingly say that a storm as outlined above is inevitable, it’s just a question of when.  Homeowners can get flood insurance coverage on their home for as little as $350 per year.  The online shopping experience is transparent, fast, informative, and efficient, and does not require any invasive inspections or time-consuming delay.   According to Mike Twitty, Pinellas County Property Appraiser, insurance claims payments represent an invaluable source of capital for a municipality to rebuild and recover from a catastrophic event.  He says, “Some of the steps on climate change resilience will take 10, 20, or even 50 years to have an effect.  Buying home or business flood insurance is a key step we all can take right now in order to protect our assets and way of life.”
Insurance agencies can be leaders in helping their clients get the coverages they need, and at the same time protecting their businesses from risk, as the agents are trusted advocates for their clients, providing important advice and guidance.
At the consumer level, there is a huge lack of understanding when it comes to knowing that homeowners policies do not cover flooding. There are many opportunities for agents, government, and insurance carriers to be part of the solution, however, such as:

1. Educate homeowners that their homeowners policy does not cover such events.
2. To make it real for the policyholder, it’s helpful to have local, recent examples for the policyholder. For example, South Florida agents could talk about the threat of king tides, or St. Louis agents could explain the sustained rains and the unique height of the Mississippi River and the Missouri River flooding last year.
3. Recommend flood insurance along with every homeowners and business policy. There is a major lack of awareness about flood zones and the risk of flooding even miles away from the coast or a major river.
4. Agents can get a quick quote to put a real number in front of their clients. Via Neptune’s website, agents can get a bindable quote in under two minutes without referral, delay or need for trailing documents like an elevation certificate.

The changing climate is putting an increasing number of homes and businesses at risk of flooding. Safe, affordable flood insurance, backed by some of the largest and most financially stable reinsurers in the world, is an important part of homeowners and businesses risk management plans.  It not only benefits those who have suffered losses in a storm, it also improves the quality of services for everyone by enabling more rapid recovery and less negative financial impact to homeowners and businesses.

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