Category Archives: Floods

Catastrophes, Disaster Preparedness, Disaster Resilience, Flood Insurance, Floods, Homeowners Insurance, Legal Environment, Regulation, Risk Management

Evolving Risks Demand Integrated Approaches

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Even as the Smokehouse Creek Fire – the largest wildfire ever to burn across Texas – was declared “nearly contained” this week, the Texas A&M Service warned that conditions are such that the remaining blazes could spread and even more might break out.

“Today, the fire environment will support the potential for multiple, high impact, large wildfires that are highly resistant to control” in the Texas Panhandle, the service said.

This year’s historic Texas fires – like the state’s 2021 anomalous winter storms, California’s recent flooding after years of drought, and a surge in insured losses due to severe convective storms across the United States – underscore the variability of climate-related perils and the need for insurers to be able to adapt their underwriting and pricing to reflect this dynamic environment. It also highlights the importance of using advanced data capabilities to help risk managers better understand the sources and behaviors of these events in order to predict and prevent losses.

For example, Whisker Labs – a company whose advanced sensor network helps monitor home fire perils, as well as tracking faults in the U.S. power grid – recorded about 50 such faults in Texas ahead of the Smokehouse Creek fires.

Bob Marshall, Whisker Labs founder and chief executive, told the Wall Street Journal that evidence suggests Xcel Energy’s equipment was not durable enough to withstand the kind of extreme weather the nation and world increasingly face. Xcel – a major utility with operations in Texas and other states — has acknowledged that its power lines and equipment “appear to have been involved in an ignition of the Smokehouse Creek fire.”

“We know from many recent wildfires that the consequences of poor grid resilience can be catastrophic,” said Marshall, noting that his company’s sensor network recorded similar malfunctions in Maui before last year’s deadly blaze that ripped across the town of Lahaina.

Role of government

Government has a critical role to play in addressing the risk crisis. Modernizing building and land-use codes; revising statutes that facilitate fraud and legal system abuse that drive up claim costs; investing in infrastructure to reduce costly damage related to storms – these and other avenues exist for state and federal government to aid disaster mitigation and resilience.

Too often, however, the public discussion frames the current situation as an “insurance crisis” – confusing cause with effect. Legislators, spurred by calls from their constituents for lower premiums, often propose measures that would tend to worsen the problem because they fail to reflect the importance of accurately valuing risk when pricing coverage.

The federal “reinsurance” proposal put forth in January by U.S. Rep. Adam Schiff of California is a case in point. If enacted, it would dismantle the National Flood Insurance Program (NFIP) and create a “catastrophic property loss reinsurance program” that, among other things, would set coverage thresholds and dictate rating factors based on input from a board in which the insurance industry is only nominally represented.

U.S. Rep. Maxine Waters (also of California) has proposed a Wildfire Insurance Coverage Study Act to research issues around insurance availability and affordability in wildfire-prone communities. During  House Financial Services Committee deliberations, Waters compared current challenges in these communities to conditions related to flood risk that led to the establishment of NFIP in 1968. She said there is a precedent for the federal government to step in when there is a “private market failure.”

However, flood risk in 1968 and wildfire risk in 2024 could not be more different. Before FEMA established the NFIP, private insurers were generally unwilling to underwrite flood risk because the peril was considered too unpredictable. The rise of sophisticated computer modeling has since given private insurers much greater confidence covering flood (see chart).

In California, some insurers have begun rethinking their appetite for writing homeowners insurance – not because wildfire losses make properties in the state uninsurable but because policy and regulatory decisions made over 30 years ago have made it hard to write the coverage profitably. Specifically, Proposition 103 and its regulatory implementation have blocked the use of modeling to inform underwriting and pricing and restricted insurers’ ability to incorporate reinsurance costs into their premium pricing.

California’s Insurance Commissioner Ricardo Lara last year announced a Sustainable Insurance Strategy for the state that includes allowing insurers to use forward-looking risk models that prioritize wildfire safety and mitigation and include reinsurance costs into their pricing. It is reasonable to expect that Lara’s modernization plan will lead to insurers increasing their business in the state.

It’s understandable that California legislators are eager to act on climate risk, given their long history with drought, fire, landslides and more recent experience with flooding due to “atmospheric rivers.” But it’s important that any such measures be well thought out and not exacerbate existing problems.

Partners in resilience

Insurers have been addressing climate-related risks for decades, using advanced data and analytical tools to inform underwriting and pricing to ensure sufficient funds exist to pay claims. They also have a natural stake in predicting and preventing losses, rather than just continuing to assess and pay for mounting claims.

As such, they are ideal partners for businesses, communities, governments, and nonprofits – anyone with a stake in climate risk and resilience. Triple-I is engaged in numerous projects aimed at uniting diverse parties in this effort. If you represent an organization that is working to address the risk crisis and your efforts would benefit from involvement with the insurance industry, we’d love to hear from you. Please contact us with a brief description of your work and how the insurance industry might help.

Learn More:

Triple-I “State of the Risk” Issues Brief: Wildfire

Triple-I “State of the Risk” Issues Brief: Flood

Triple-I “Trends and Insights” Issues Brief: California’s Risk Crisis

Triple-I “Trends and Insights” Issues Brief: Risk-Based Pricing of Insurance

Stemming a Rising Tide: How Insurers Can Close the Flood Protection Gap

Tamping Down Wildfire Threats

Auto Insurance, Catastrophes, Disaster Resilience, Earthquakes, Floods, Homeowners Insurance, Industry Financials, Insurers and the Economy

Calif. Risk/Regulatory Environment Highlights Role of Risk-Based Pricing

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Even as California moves to address regulatory obstacles to fair, actuarially sound insurance underwriting and pricing, the state’s risk profile continues to evolve in ways that underscore the importance of risk-based insurance pricing and investment in mitigation and resilience.

Triple-I’s latest “State of the Risk” Issues Brief discusses this changing risk environment and the impact of Proposition 103 – a three-decades-old measure that has made it hard for insurers to profitably write coverage in the state. In a dynamically evolving risk environment that includes earthquakes, drought, wildfire, landslides, and — in recent years, due to “atmospheric rivers” — damaging floods, Proposition 103 has prevented insurers from using the most current data and advanced modeling technologies. Instead, it has required them to price coverage based on historical data alone.

It also has restricted accurate underwriting and pricing by not allowing insurers to incorporate the cost of reinsurance into their pricing. Insurers use reinsurance to maximize their capacity to write coverage, and reinsurance rates have been rising for many of the same reasons as primary insurance rates. If insurers can’t reflect reinsurance costs in their pricing – particularly in catastrophe-prone areas – they must pay for these costs from policyholder surplus, reduce their market share in the state, or do both.

Proposition 103 also has impeded premium rate changes by allowing consumer advocacy groups to intervene in the rate-approval process. This makes it hard to respond quickly to changing market conditions, resulting in approval delays and rates that don’t accurately reflect current (let alone future) risk. It also drives up legal and administrative costs.

This has led, in some cases, to insurers deciding to limit or reduce their business in the state. With fewer private insurance options available, more Californians are resorting to the state’s FAIR Plan, which offers less coverage for a higher premium.

This isn’t a tenable situation.

In September 2023, California Insurance Commissioner Ricardo Lara announced a Sustainable Insurance Strategy for the state that includes allowing insurers to use forward-looking risk models that prioritize wildfire safety and mitigation and include reinsurance costs into their premium pricing. In exchange, insurers must cover homeowners in wildfire-prone parts of the state at 85 percent of their statewide coverage.

Issues around property insurance affordability are not confined to California. They’ve been a long time in the making, and they won’t be resolved overnight.

“Any sustainable solutions will have to rest on actuarially sound underwriting and pricing principles,” the Triple-I brief says. “Unfortunately, too often, the public discourse frames the risk crisis as an `insurance crisis’ – conflating cause with effect. Legislators, spurred by calls from their constituents for lower insurance premiums, often propose measures that would tend to worsen the problem because these proposals generally fail to reflect the importance of accurately valuing risk when pricing coverage.”

California’s Proposition 103 and the federal flood insurance program prior to its Risk Rating 2.0 reforms are just two examples, according to Triple-I.

Learn More:

Triple-I Issues Brief: Wildfire

Triple-I Issues Brief: Flood

Triple-I Issues Brief: Risk-Based Pricing of Insurance

How Proposition 103 Worsens Risk Crisis in California

Is California Serious About Wildfire Risk?

Dear California: As You Prep for Wildfire, Don’t Neglect Quake Risk

Flood Insurance, Floods

Miami-Dade, Fla., Sees Flood-Insurance
Rate Cuts, Thanks to Resilience Investment

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Miami-Dade County, Fla., has become the latest jurisdiction in the hurricane- and flood-prone state to benefit from participation in FEMA’s Community Rating System (CRS) – an incentive program that recognizes and encourages  floodplain management practices that exceed the minimum requirements of FEMA’s National Flood Insurance Program (NFIP).

The county’s new Class 3 rating will result in an estimated $12 million savings annually by giving qualifying residents and business owners in unincorporated parts of the county a 35 percent discount on flood insurance premiums.  

“This is a huge step forward in resilience for our county,” Miami-Dade County Mayor Daniella Levine Cava said after FEMA announced that Miami Dade had leaped ahead two rankings in the flood-risk rating. “It indicates that we have been able to demonstrate that we can create more resilience, more protection for our community.”

Miami-Dade County has invested $1 billion in stormwater infrastructure over the past 33 years since the inception of the county’s stormwater utility. Under Mayor Levine Cava’s administration, the county has planned to invest an additional $1 billion in stormwater infrastructure. In the past two years, the county has accelerated projects to upgrade Miami-Dade’s infrastructure and implement critical flood mitigation activities. 

Last year, 17 Florida jurisdictions achieved Class 3 ratings. In Cutler Bay – a town on Miami’s southern flank with about 45,000 residents – the average premium dropped by $338. Citywide, that represented a savings of $2.3 million.

Over 1,500 communities nationwide participate in the CRS program, but only Tulsa, Okla., and Roseville, Calif., have taken sufficient steps to achieve Class 1 status and have their citizens receive the greatest premium discount of 45 percent. Both of these communities previously experienced disastrous flooding. Tulsa spent decades developing and implementing stormwater management improvements before receiving its Class 1 designation in 2022.

About 90 percent of all U.S. natural disasters involve flooding. Whether related to coastal and inland inundation due to hurricanes, extreme rainfall, snowmelt, mudflows, or other events, floods cause billions of dollars in losses each year.

As reported in a recent Triple-I “State of the Risk” Issues Brief, flood is no longer an “untouchable” risk for private insurers. For decades, the federally run NFIP was the only place where homeowners could buy flood insurance. But improved data, analysis, and modeling have helped drive private-sector interest in flood risk.

That’s good news for homeowners who understand the evolving nature of this peril, especially as FEMA’s new pricing methodology – Risk Rating 2.0 – applies more actuarially sound pricing to make NFIP’s premium rates more equitable. As NFIP rates become more aligned with principles of risk-based pricing, some policyholders’ prices are expected to fall, while many are going to rise.

CRS provides one avenue for communities to help their citizens get lower rates while proactively reducing flood risk.

Disaster Resilience, Floods

Milwaukee District Eyes Expanding Nature-Based Flood-Mitigation Plan

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The Milwaukee Metropolitan Sewerage District (MMSD) is mitigating flood risks using reforestation, wetlands restoration, and other nature-based solutions. MMSD has developed a roadmap for scaling up the project. Triple-I – in an analysis requested by the district – has determined such an effort would increase resilience across all the metrics it considered.

In a recent report – A Blueprint to Scale Up Urban Reforestation and Wetland Restoration in Underserved Communities Across the Greater Milwaukee Area – MMSD outlines its plan for the next decade, which includes:

  • Planting 6 million trees;
  • Restoring 4,000 acres of wetlands;
  • Capturing an estimated 350 million gallons of stormwater with trees; and
  • Storing up to an estimated 1.5 million gallons of floodwater in every acre of wetland.

The report included Triple-I’s analysis, based on its Community Resilience Ratings’ quantitative methodology.  Triple-I also stressed the benefits of community-based catastrophe insurance programs incorporating parametric insurance – policies that pay out a fixed dollar amount, no matter the property damage incurred – for mitigating flood risks.

“Community-based programs can incorporate a combination of parametric insurance and traditional indemnity coverage,” the report stated. “Unlike indemnity insurance, parametric structures cover risks without the complications of sending adjusters to assess damage after an event. Instead of paying for damage that has occurred, parametric insurance pays out if certain agreed-upon conditions are met. If coverage is triggered, a payment is made.”

MMSD serves 28 communities in the Greater Milwaukee area and has already committed substantial resources to reforestation, wetlands restoration, and other nature-based solutions, including green stormwater infrastructure projects.

“This commitment has positioned MMSD to build upon its past work to implement integrated nature-based solutions for stormwater management on a large scale,” the report says. “To keep up with growing flood risk, MMSD has committed to investing $294 million in watercourse and flood management projects over the next ten years…. This is a substantial increase and will likely require MMSD to find new ways to generate funding to pay for these projects.”

The report outlines avenues that include federal and state funding sources, as well as public-private partnerships and instruments like environmental impact bonds (EIB) that can help cities pay for innovative projects where traditional sources of financing may be harder to access. EIBs use private capital for investments in environmental projects and are repaid based on the project’s success in achieving its goals.

Catastrophes, Coastal Property, Disaster Preparedness, Disaster Resilience, ESG, Floods, Homeowners Insurance, Risk Management

CSAA: When It Comes
to Fighting Climate Risk, We’re All On the Same Side

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By Max Dorfman, Research Writer, Triple-I

CSAA Insurance Group – a AAA insurer – is spurring innovation in the insurance industry through several initiatives tackling the dangers of climate risk.

“We’ve been on a journey to reduce our environmental footprint for a long time,” said Debbie Brackeen, Chief Strategy & Innovation Officer with CSAA, in a recent executive exchange with Triple-I CEO Sean Kevelighan. “We are seeking to reduce our carbon footprint by 50 percent by 2025. We view this work as aligned with our mission: to help our members prepare for and recover from climate risk.”

CSAA has taken several steps to help achieve its goals, including:

  • Leading the first-ever Innovation Challenge on climate resilience with IDEO and Aon, along with several other sponsors;
  • Working on the California Innovation Fund in partnership with Blue Forest, a $50 million fund that CSAA contributed half that capital, focused on forest restoration and reducing fuel in a smart and sustainable way; and
  • Supporting the Wildfire Interdisciplinary Research Center at San Jose State University, which conducts work around predictive modeling, among other endeavors.

While this may seem like a new development, Kevelighan noted that insurers have long worked toward these goals.

“We’ve seen the ESG movement take a hold in the past few years, but it’s been in the DNA of the Triple-I and the insurance industry generally for a long time,” Kevelighan said. “More than half the battle is recognizing that the risk is increasing, while identifying solutions.”

Still, with the increasing consequences associated with climate risk, more work needs to be done.

“There were billion-dollar wildfire losses at CSAA in my first two years in the industry,” Brackeen said. “I wondered if this was normal. It ignited in me that, whatever we do in innovation, it will have to do with wildfire risk. However, what concerns me the most is that risks are becoming uninsurable. This is from the cumulative effects of several different types of losses, including convective storms.”

“We have to seek different types of innovative partnerships to address these issues,” Brackeen concluded. “In this fight for our industry, there are no competitors. We have to be on the same side of the table.”

Catastrophes, Disaster Preparedness, Disaster Resilience, Earthquakes, Emerging Risks, ESG, Flood Insurance, Floods, Insurers and the Economy, Legal Environment, Regulation, Risk Management

Triple-I Town Hall Amplified Calls
to Attack Climate Risk

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By Jeff Dunsavage, Senior Research Analyst, Triple-I

I’m pleased and proud to have been part of Triple-I’s Town Hall — “Attacking the Risk Crisis” — in Washington, D.C. In an intimate setting at the Mayflower Hotel on November 30, 120-plus attendees got to hear from experts representing insurance, government, academia, nonprofits, and other stakeholder groups on climate risk, what’s being done to address it, and what remains to be done.  

Triple-I’s first-ever Town Hall was designed as a logical step in its multi-disciplinary, action-oriented effort to change behavior to drive resilience. Capping a year in which headlines about “insurance crises” in several states garnered major media attention, Triple-I and its members and partners recognized the need for clarification.

“What we’re seeing is not an ‘insurance crisis’,” Triple-I CEO Sean Kevelighan told the standing-room-only audience. “We’re in the midst of a risk crisis. Rising insurance premium rates and availability difficulties are not the cause but a symptom of this crisis.”

Whisker Labs CEO Bob Marshall discusses innovation with moderator Jennifer Kyung, Vice President and Chief Underwriter at USAA.

While the insurance industry has a critical role to play and is uniquely well equipped to lead the attack, simply transferring risk is not enough. A recurring theme at the Town Hall was the need to shift from a focus on assessing and repairing damage to one of predicting and preventing losses.

Three moderated discussions – examining the nature of climate risk and its costs; highlighting the need of strategic innovation in mitigating those risks and building resilience; and exploring the role and impact of government policy – gave panelists the opportunity to share their insights with a diverse audience focused on collaborative action.

The agenda was:

Climate Risk Is Spiraling: What Can Be Done?

Moderator: David Wessel, Senior Fellow and Director at the Brookings Institution and former Economics Editor for The Wall Street Journal.

Panelists:

Dr. Philip Klotzbach, Colorado State University, researcher and Triple-I non-resident scholar.

Dan Kaniewski, Managing Director, Public Sector at Marsh McLennan, Former FEMA Deputy Administrator.

Jacqueline Higgins, Head, North America & Senior Vice President, Public Sector Solutions, Swiss Re

Jim Boccher, Chief Development Officer, ServiceMaster.

Jeff Huebner, Chief Risk Officer, CSAA.

Innovation, High- and Low-Tech: How Insurers Are Driving Solutions

Moderator: Jennifer Kyung, VP, Chief Underwriter, USAA.

Panelists:

Partha Srinivasa, EVP, CIO, Erie Insurance.

Sam Krishnamurthy, CTO, Digital Solutions, Crawford.

Bob Marshall, CEO, Whisker Labs.

Stephen DiCenso, Principal,Milliman.

Charlie Sidoti, Executive Director, InnSure.

Outdated Regs to Legal System Abuse: It Will Take Villages to Fix This

Moderator: Zach Warmbrodt, financial services editor, Politico.

Panelists:

Parr Schoolman, SVP and Chief Risk Officer, Allstate.

Tim Judge, SVP, Head Modeler, Chief Climate Officer, Fannie Mae.

Dan Coates, Deputy Director, DRS, Federal Housing Finance Agency.

Fred Karlinsky, Co-Chair of Greenberg Traurig’s Global Insurance Regulatory & Transactions Practice Group.

Panelists and participants alike appreciated the compact, action-focused, conversational nature of the single-afternoon event, as well as the opportunity to discuss areas in which their diverse industry- or sector-specific priorities and efforts overlapped.

If you weren’t able to join us in Washington, don’t worry. In his closing remarks, Kevelighan announced plans to take the program on the road with a local and regional focus, so stay tuned. You can contact us if you’re interested in participating in future Town Halls or other Triple-I events. You also can join the “Attacking the Risk Crisis” LinkedIn Group to be part of the ongoing conversation.

Disaster Resilience, Floods

Attacking the Risk Crisis: Roadmap to Investment
in Flood Resilience

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As part of its attack on the risk crisis, Triple-I recently participated in a project led by the National Institute of Building Sciences (NIBS) to develop a roadmap for mitigation investment incentives. The Resilience Incentivization Roadmap 2.0 builds off research NIBS published in 2019 and focuses on urban pluvial flooding, though many of the principles can be applied to riverine and coastal flooding, as well as non-flood perils.

The roadmap draws heavily from voluntary programs that have seen success in the context of other risks – such as the Insurance Institute for Business & Home Safety (IBHS) FORTIFIED Home™ Standard and the California Earthquake Authority’s Brace + Bolt retrofit program.

“Pluvial urban flooding” refers to rainwater that can’t flow downhill fast enough to reach streams and stormwater systems and therefore backs up into buildings. Much of the inland flooding caused by Hurricane Ida (2021), Hurricane Ian (2022), and more recent flooding in California due to “atmospheric rivers” and in the Northeast would fall under this category. Common low-cost measures exist to protect buildings from such flooding, and the relative ease and affordability of such mitigations made pluvial urban flooding an appropriate initial target.

This project was a collaboration representing stakeholders in the built environment – lenders, developers, insurers, engineers, agencies, policymakers – with the goal of helping communities develop layered mitigation investment packages. Triple-I’s role was to represent the property/casualty insurance industry as a stakeholder and co-beneficiary of investment in advance mitigation and resilience.

Insurers have strong incentives to encourage policyholders to make improvements that reduce the risk of costly claims. In the case of flood risk – an increasingly expensive peril outside FEMA-designated flood zones – encouraging such improvements is preceded by a different challenge: persuading homeowners to obtain flood insurance.

About 90 percent of U.S. natural disasters involve flooding. Estimates of size of the “flood protection gap” vary widely among experts, but illustrations worth noting include:

  • Less than 25 percent of buildings inundated by Hurricanes Harvey, Sandy, and Irma had flood coverage;
  • Inland areas hardest hit by the remnants of Hurricane Ida in 2021 were in areas in which less than 2 percent of properties had federal flood insurance;
  • In 2022, historic flooding in and around Yellowstone National Park affected areas in which only 3 percent of residents have federal flood insurance; and
  • More recently, precipitation from atmospheric rivers affecting the U.S. West Coast has resulted in an unparalleled weather event not experienced in several decades, with much of the activity affecting areas with low flood-insurance purchase rates.

For decades, U.S. insurers considered flood risk “untouchable” because of how hard it is to quantify their risk. As a result, flood is excluded under standard homeowners and renters policies, but coverage is available from FEMA’s National Flood Insurance Program (NFIP) and a growing number of private insurers that have gained confidence in recent years in their ability to underwrite this risk using sophisticated risk modeling.

Consumer research has consistently shown that some of the most common reasons for not buying flood insurance include:

  • An erroneous belief that flood risk is covered under standard homeowners insurance;
  • If the mortgage lender doesn’t require flood insurance, it must not be necessary; and
  • The coverage is too expensive.

The roadmap provides findings and specific recommendations developed by its multidisciplinary team of authors in collaboration with broad and diverse participation of stakeholder group members. The NIBS Committee on Finance, Insurance, and Real Estate (CFIRE) will host a webinar on October 18 to go over these findings and recommendations. In addition, CFIRE chair Dan Kaniewski will be a participant in Triple-I’s November 30 Town Hall: Attacking the Risk Crisis in Washington, D.C.

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Learn More:

Triple-I “State of the Risk” Issues Brief: Flood

Shutdown Threat Looms Over U.S. Flood Insurance

FEMA Incentive Program Helps Communities Reduce Flood Insurance Rates for Their Citizens

More Private Insurers Writing Flood Coverage; Consumer Demand Continues to Lag

NAIC Seeks Granular Data From Insurers to Help Fill Local Protection Gaps

Kentucky Flood Woes Highlight Inland Protection Gap

Inland Flooding Adds a Wrinkle to Protection Gap

Cyber Risk, Disaster Resilience, Earthquakes, Floods, Highway Safety, Insurers and the Economy, Terrorism Risk

It’s Not an “Insurance Crisis” — It’s a Risk Crisis

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Ten states – Louisiana, Florida, Idaho, Kentucky, Mississippi, Montana, North Dakota, South Carolina, Texas, and Virginia – as well as additional plaintiffs, are suing the Federal Emergency Management Agency (FEMA) over its new methodology for pricing flood insurance, Risk Rating 2.0. On Sept. 14, a federal hearing lasted six hours as the plaintiffs sought a preliminary injunction to halt the new pricing regime while the lawsuit plays out.

Many residents of these states are understandably upset about seeing their flood insurance premium rates rise under the new approach. There may not be much comfort for them in knowing that the current system is much fairer than the previous one, in which higher-risk homeowners subsidized those with lower risks. Similarly, policyholders who have had their premium rates reduced under Risk Rating 2.0 are unlikely to take to the streets in celebration.

These homeowners aren’t alone in seeing insurance rates rise – or even having to struggle to obtain insurance. And these difficulties aren’t confined to holders of flood insurance policies. Florida and California are two states in which insurers have been forced to rethink their risk appetite – due in part to rising natural catastrophe losses and in part to regulatory and litigation environments that make it increasingly difficult for insurers to profitably write coverage.

Even before the COVID-19 pandemic and Russia’s invasion of Ukraine – and the supply-chain and inflationary pressures they created – the property/casualty insurance market was hardening as insurers adjusted their pricing and their risk appetites to keep pace with conditions that were driving losses up and eroding underwriting profitability – topics Triple-I has written about extensively (see a partial list below).

“Rising insurance rates are not the problem,” says Dale Porfilio, chief insurance officer at Triple-I. “They are a symptom of rising losses related to a range of factors, from climate and population trends to post-pandemic driving behaviors and surging cybercrime to antiquated policies, outdated building codes, fraud, and legal system abuse.”

In short, we are not experiencing an “insurance crisis,” as many media outlets tend to describe the current state of the market; we are experiencing a risk crisis. And even as the states referenced above push back against much-needed flood insurance reform, legislators in several states have been pushing measures that would restrict insurers’ ability to price coverage accurately and fairly – rather than addressing the underlying perils and forces aggravating them.  

Triple-I, its members, and a range of partners are working to educate stakeholders and decisionmakers and promote pre-emptive risk mitigation and investment in resilience. We are using our position as thought leaders and our unique non-lobbying role in the insurance industry to reach across sector boundaries and drive constructive action. You will be hearing more about these efforts over the next few months.

The success of these efforts will require a collective understanding among stakeholders and decisionmakers that for insurance to be available and affordable frequency and severity of risk must be measurably reduced. This will require highly focused, integrated projects and programs – many of them at the community level – in which all stakeholders (co-beneficiaries of these efforts) will share responsibility.

Want to know more about the risk crisis and how insurers are working to address it? Check out Triple-I’s upcoming Town Hall, “Attacking the Risk Crisis,” which will be held Nov. 30 in Washington, D.C.

Learn More:

Shutdown Threat Looms Over U.S. Flood Insurance

FEMA Incentive Program Helps Communities Reduce Flood Insurance Rates for Their Citizens

More Private Insurers Writing Flood Coverage; Consumer Demand Continues to Lag

Shift in Hurricane Season’s Predicted Severity Highlights Need for Prospective Cat Risk Pricing

California Needs to Make Changes to Address Its Climate Risk Crisis

Illinois Bill Highlights Need for Education on Risk-based Pricing of Insurance Coverage

IRC Outlines Florida’s Auto Insurance Affordability Problems

Education Can Overcome Doubts on Credit-Based Insurance Scores, IRC Survey Suggests

Matching Price to Peril Helps Keep Insurance Available & Affordable

Triple-I “State of the Risk” Issues Brief: Flood

Triple-I “State of the Risk” Issues Brief: Hurricanes

Triple-I Issues “Trends and Insights” Brief: Risk-Based Pricing of Insurance

Disaster Resilience, Floods, Insurers and the Economy

Shutdown Threat Looms Over U.S. Flood Insurance

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Even as the 2023 Atlantic hurricane season proves to be more intense than originally predicted, federal funding for the National Flood Insurance Program (NFIP) is threatened by a potential government shutdown. Funding for NFIP will expire after September 30 if lawmakers don’t reach a deal.

Claims on existing policies would still get paid if NFIP isn’t reauthorized. But the program would be unable to issue new policies and would face other funding constraints. If it can’t issue new policies, thousands of real estate transactions requiring flood coverage could be derailed. 

Insured losses from hurricanes have risen over just the past 15 years. When adjusted for inflation, nine of the 10 costliest hurricanes in U.S. history have struck since 2005. This is due in large part to the fact that more people have been moving into harm’s way since the 1940s, and Census Bureau data show that homes being built are bigger and more expensive than before. Bigger homes filled with more valuables means bigger claims when a flood occurs – a situation exacerbated by continuing replacement cost inflation.

Flooding isn’t just a problem for East and Gulf Coast communities. Inland flooding also is on the rise. In August 2021, Hurricane Ida brought heavy flooding to the Louisiana coast before delivering so much water to the northeast that Philadelphia and New York City saw flooded subway stations days after the storm passed. Floods in Eastern Kentucky in 2022 further underscored the need for more comprehensive planning on how to deal with these disasters and reduce the nationwide flood protection gap. California and the Pacific Northwest have been hit in recent years by drenching “atmospheric rivers” and, most recently, Hurricane Hilary, which slammed Southern California and neighboring Nevada, where it turned the Burning Man festival in the state’s northern desert into a dangerous mess of foot-deep mud and limited supplies.

Flood insurance is provided by NFIP and a small but growing number of private insurers, who have become increasingly comfortable writing the coverage since the advent of sophisticated modeling and analytical tools. Between 2016 and 2022, the total flood market grew 24 percent – from $3.29 billion in direct premiums written (DPW) to $4.09 billion – with 77 private companies writing 32.1 percent of the business.

Flood risk was long considered untouchable by private insurers, which is a large part of the reason the federally run NFIP exists. While private participation in the flood market is growing, NFIP remains a critical source of protection for this growing and underinsured peril.

Want to know more about the risk crisis and how insurers are working to address it? Check out Triple-I’s upcoming Town Hall, “Attacking the Risk Crisis,” which will be held Nov. 30 in Washington, D.C.

Learn More:

FEMA Incentive Program Helps Communities Reduce Flood Insurance Rates for Their Citizens

More Private Insurers Writing Flood Coverage; Consumer Demand Continues to Lag

Stemming a Rising Tide: How Insurers Can Close the Flood Protection Gap

Kentucky Flood Woes Highlight Inland Protection Gap

Inland Flooding Adds a Wrinkle to Protection Gap

State of the Risk Issues Brief: Flood

State of the Risk Issues Brief: Hurricanes

Catastrophes, Disaster Resilience, Floods

IICF Starts Ian Relief Fund

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The insurance industry’s efforts on behalf of people struggling in the wake of disasters doesn’t end with paying policyholder claims.

The nonprofit Insurance Industry Charitable Foundation (IICF) has launched the IICF Hurricane Ian Relief Fund to support those in need in the wake of Hurricane Ian. Funds will benefit Team Rubicon, a nonprofit providing emergency response and relief throughout affected areas, and SW FL Emergency Relief Fund, which provides critical support to nonprofits and people in areas experiencing immediate need.

Through these nonprofits, IICF will provide funds for recovery support, temporary shelter and basic necessities, along with non-perishable food, toiletry items and diapers for children impacted by the storm.

“The insurance industry is rooted in helping others at their time of need,” said Bill Ross, CEO of IICF. “As tens of thousands of Floridians struggle to recover from the devastation of Hurricane Ian, we as an industry are moved to support those impacted through charitable giving.”

With the help of the insurance industry, IICF has been able to raise $2.3 million over the past few years to benefit nonprofits responding to disaster and pandemic needs across the United States and the United Kingdom. To donate to the current effort, please visit https://give.iicf.org/campaigns/23664-iicf-hurricane-ian-relief-fund.