U.S. Disaster Aid Must Be Overhauled to Deal with Climate Threats, Insurers Warn

A coalition of insurance companies and environmental organizations is calling for a "complete overhaul" of the nation's disaster policies, which it says encourage dangerous development and wasteful spending after catastrophes strike.

The SmarterSafer coalition urges policymakers in a 21-page report released today to increase pre-disaster spending on mitigation efforts, like raising homes and restoring oyster beds, to tackle climbing losses from floods and other perils exacerbated by climate change.

The group also says that, as it stands, the Stafford Act can leave states unmotivated to prepare for landfall hurricanes because they anticipate that the federal government will shoulder most of the reconstruction costs.  In that sense, states that do the least to avoid damage may receive the largest amount of federal help.

The fix might be to make federal payments contingent on state mitigation efforts.  The report says disaster aid should be dispensed on a "sliding scale" so that communities can get "a full share of funding only if they have taken significant steps to protect its residents from harm."

"With the federal government taking on such an enormous share of the financial burden and nearly all recovery responsibility, there is little incentive for disaster-prone states to take action to reduce risk," the report says.  "For example, disaster-prone states like Texas and Louisiana are among those spending the least of their state budget on emergency response and mitigation programs that can reduce disaster costs."

The report coincides with the spring season for thunderstorms, which insurers say have become more damaging over the last 30 years.  It's now common for a series of storms with strong winds, hail and tornadoes to cause as much damage as a hurricane.  Over a five-day period last May, severe storms created $3.9 billion in economic damages, according to Munich Re.

One reason for that is additional development.  More structures are there to be damaged. Another reason is climate change, says Megan Linkin, a vice president with Swiss Re, a member of SmarterSafer.

She said a combination of increased mitigation spending at all levels of government, stronger land-use rules and the purchase of private insurance by governments could address some of the nation's rising exposure to loss.

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