It's hard to believe, but it's been a decade since Hurricane Katrina roared ashore, causing mass devastation and catastrophic flooding to the Gulf Coast region of the United States. Pictures of people waiting on their roofs for rescue play over and over in my mind. Images of families using doors and coolers to float their loved ones to safety are still shown today to remind people of the impact the event had on the residents of the Gulf Coast.
Hurricane Katrina wasn't only the costliest hurricane in the US, but it was the costliest disaster in the history of insurance, with almost $80 billion in insured losses (in 2015 dollars).
Katrina not only forever changed the lives of hundreds of thousands of Americans, but it destabilized the National Flood Insurance Program (NFIP), which played a large role in the recovery of the Gulf Coast region.
The $16.1 billion in claims paid from Katrina as well as claims from the other storms of 2005, 2008 and 2012 have brought the well-intentioned NFIP to its knees. It now owes the US Treasury a staggering $24 billion.
So where do we go from here, and what’s in store for the NFIP?
At Swiss Re, we believe that the private market can help the NFIP become financially solvent and sustainable. We believe there's an opportunity to shift a larger share of flood risk to the private sector rather than the government and tax payer. When the NFIP was created in 1968, the overarching belief was that flood was an uninsurable risk. Due to advancements in technology and scientific knowledge, we'd like to challenge this historical belief.
Private insurers and reinsurers are risk management experts. It's what we've been doing for decades, if not even longer. Together with our clients, the private insurers, we have the expertise, global diversity and financial strength to deliver commercially attractive and viable products to consumers.
And while we’re at it, we can reduce the burden on the government and taxpayers. Flood's the most common disaster in the US, so by addressing the demand for flood insurance we can make a positive impact in closing the significant property insurance protection gap in this country.
Can the NFIP survive another event the size of Katrina? It's only a matter of time before we're challenged with responding to another large hurricane. Let's work together to ensure we don't relive history.
Category: Climate/natural disasters: Disaster risk, Floods/storms, Resilience
Location: New Orleans, LA, United States