Superstorm Sandy in October 2012 was, to put it exceedingly mildly, a humdinger of a storm, racking up millions and millions of dollars in insurance claims.
Yet, forgetting Sandy for a moment, the number and the cost of natural disasters throughout the U.S. increased considerably in the previous two decades, with the federal government spending almost $1 trillion on rebuilding and disaster recovery.
The damage has been so massive, the Congressional Research Service reports that between 1989 and 2010, Congress appropriated supplemental disaster funds in 17 of those years.
An executive at Nationwide Insurance recommends intervention in the form of incentives to help mitigate the cost. These interventions, according to Nationwide’s Mark Pizzi, could come from private and public partnerships. They also could come about via incentives crafted to boost mitigation tools among consumers.
Incentives could include tax incentives at the state level, building permit rebates, federal and state grants to create more resilient communities (to lower rebuilding costs), and more.
Pizzi said that studies have shown that losses occurring from natural disasters are “considerably reduced” when effective mitigation takes place. Yet, he added, most disaster aid is spent on responding to the disaster afterwards, not on mitigation before.
The Z Zurich Foundation has reported that about $9 of every $10 of aid in the U.S. was spent on responding to emergencies, rehabilitation and reconstruction, with $1 of the $10 going to mitigation.
Most mitigation now occurs at the local level, but funding for these local mitigation projects tends to come via federal monies.
BuildStrong, a national group of consumer and business organizations, emergency managers, building professionals, firefighters, and insurance groups, is advocating an incentive-based approach to spur the growth of statewide building codes. They note that about 12 states don’t have statewide building codes, while others have them but don’t enforce the codes universally. What’s more, in some states with a statewide building code, the code doesn’t address natural hazards/disasters.
What’s your take on this? Do you think mitigation incentives could work in keeping homes and businesses standing during and after a natural disaster? Let us know your thoughts.
Meanwhile, if you’re looking for insurance pros who can help your company when natural disasters strike your region, contact the recruiters at Insurance Relief™. We look forward to hearing how we may be of service.