Non-profit Norfolk wants to change the way we approach flood insurance

Hampton Roads has one of the highest rates of sea level rise and flood risk on the East Coast.

One tool residents can use to protect themselves financially is flood insurance, but there are many problems with the current system.

Norfolk’s RISE Resilience Innovations hopes to help address them. The nonprofit gives money to small groups to try environmental solutions — using Hampton Roads as a testing ground.

WHRO spoke with executive director Paul Robinson about the nonprofit’s next challenge, which will focus on improving local flood insurance.

This conversation has been edited for length and clarity.

WHRO: Flood insurance is something that has been around for a long time. What are the problems you and RISE see with the way it currently works?

Paul Robinson: What we have found in working with the insurance industry and the general public is that there is a gap in flood insurance in that the flood insurance programs that are generally available to the community are not funded enough to fully recover those homeowners or those property owners who have been badly affected or have properties destroyed by floods.

Plus, very few people are actually taking out insurance policies. In many cases, homeowners do not realize that they are not covered for flood events by their homeowner’s insurance policy. There are not enough people being insured and not enough money coming out of the insurance programs to cover the claims that are out there. So there is a gap. And the current National Flood Insurance Program run by FEMA is trying to keep up, but it’s really struggling.

I know that RISE is focused on flood insurance for its latest upcoming challenge. Can you explain how the contest works and what you hope to achieve with it?

It is a very broad and complicated field. But what we find is that there are two sides to the equation. On the premium side, premiums are high and not enough people are taking out policies. So our challenge goal is to reduce flood insurance premiums and payouts by 50%.

We enter the challenge with a detailed description of what the problem is and we are looking for a solution. We do not specify what those solutions should be, but we do specify which fields are needed. We fund businesses, give them a head start to do a pilot project to demonstrate their capabilities.

Why is this area a good test bed – are there aspects of flood insurance that are unique to Hampton Roads, good or bad?

So there are some big points out there that raise eyebrows among people when you talk to them, inside and outside the industry. And on the insurance premium side, it’s that not enough people are getting flood insurance policies, even though they should.

The second thing is the billions of dollars of resilient infrastructure that’s been put in place – and we’re talking about walls and pumps and gates and you name it. There is no clear link between resilience infrastructure that protects a region or community from a flood event and easing the cost of flood insurance.

So this area is actually a unique opportunity here for a number of reasons. The City of Norfolk is planning a new flood wall and several new flood resistance improvements throughout the city. So we can get in on the ground floor of this major resilience infrastructure implementation, with a view to how it might affect local insurance rates. To better understand how risk reduction can be recognized in a reduction in insurance costs.

What else should people know about flood insurance, whether they already have a policy or not?

One way to think about the problem with flood insurance – if you look at car insurance, all drivers should have car insurance. And insurance companies like this, bring money to protect themselves and cover any damage.

However, only a small percentage of flood-affected property owners obtain flood insurance. This makes it very, very difficult for insurance companies and FEMA to run a viable program. When the paying people are so few, and the payments demanded are so large. If the only people who were likely to get into car accidents were the ones who got insurance, it would make it a much less attractive insurance program than spreading the risk among all drivers. And it’s exactly the same with flood insurance. And that is the problem he is facing.

Read the original story on the WHRO website.

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