How Do We Encourage Greater Flood Insurance Coverage in America? (EventID=115462)

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Connect with the House Financial Services Committee Get the latest news: https://democrats-financialservices.house.gov/ Follow us on Facebook: https://www.facebook.com/HouseFinancialCmte Follow us on Twitter: https://twitter.com/FSCDems ___________________________________ On Friday, March 10, 2023, at 9:00 a.m. (ET) Housing and Insurance Subcommittee Chairman Congressman Davidson and Ranking Member Congressman Cleaver will host a hearing entitled, “How Do We Encourage Greater Flood Insurance Coverage in America?." ___________________________________ Witnesses for this one-panel hearing will be: • Mr. Patrick Small, President, DUAL Specialty Flood, on behalf of the Wholesale & Specialty Insurance Association (WSIA) • Mr. Christopher W. Heidrick, Owner and Principal, Heidrick & Company Insurance and Risk Management Services, LLC, on behalf of the Independent Insurance Agents and Brokers of America (The Big I) • Mr. Julian A.P. Enoizi, Global Head of Public Sector, Guy Carpenter • Dr. Carlos E. Martín, David M. Rubenstein Fellow, Brookings Institution and Director of the Remodeling Futures Program, Harvard Joint Center for Housing Studies ___________________________________ The Use of and Need for Flood Insurance Floods are the most common, most expensive, and most deadly natural disaster that communities across the United States experience. It has been reported that approximately 90 percent of all U.S. natural disasters also involve flooding from any number of sources, inducing inland flooding, flash floods, and flooding from seasonal storms. While such events have long been a concern, recent experiences have shown that flooding has become both more frequent and severe. The Federal Emergency Management Agency’s (FEMA) 50+ year old National Flood Insurance Program (NFIP), which is by far the nation’s leading provider of flood insurance coverage, has experienced two of its top five, four of its top ten, and ten of its top 20 costliest flood events all in the last decade alone. The NFIP had only two $1+ billion flood events prior to its most costly flood, which was Hurricane Katrina in 2005. Since then, the NFIP has experienced eight $1+ billion flood events. The damage from flooding can be extremely costly to both human safety and property. The National Weather Service has reported an average of 98 deaths per year over the last decade due to flooding, including nearly 150 fatalities in 2021 alone. Additionally, according to FEMA, just one inch of flood water in a home can cause up to $25,000 in damage. In 2019, the average NFIP flood claim payout was over $32,000. As a result, the overall economic cost of flood damage in the U.S. was estimated to be approximately $17 billion per year from 2010-2018, more than quadruple from the $4 billion per year cost in the 1980s. The Flood Insurance Gap Despite the increase in the frequency and severity of flooding in the U.S., household purchases of flood insurance have not kept pace. Generally, flood insurance is not included under a standard homeowner’s or renter’s policy. Unless an individual specifically purchases flood coverage from the NFIP or a private flood provider, many losses due to flooding are not insured. Data from the Swiss Re Group, a leading provider of global reinsurance, has observed that “floods cost the global economy $82 billion in 2021 alone, only $20 billion of which was insured.” The difference between the number of households that have purchased flood insurance coverage and the number of uninsured households with elevated risk is commonly referred to as the “flood insurance gap.” Many households incorrectly believe that if they have never experienced flooding or if they live in an area where flood insurance is not legally mandated, they are not at risk. However, statistics show that 20 percent of all flood claims take place in areas deemed to be low- to moderate-risk. Research conducted by the Wharton Risk Center into this gap found: On average nationwide, only 30% of homes in the highest risk areas have flood coverage. Less than 25% of the buildings flooded by Hurricanes Harvey, Sandy, and Irma had insurance. Indeed, repeatedly after floods there is evidence of the United States’ large and persistent flood insurance gap. A critical step in strengthening our overall preparedness against devasting flooding is raising awareness. Policymakers should determine how to encourage more households to understand their flood risk and identify the public policy tools to help close the flood insurance gap. The NFIP: the Nation’s Dominant Flood Insurance Provider The NFIP, created by Congress in 1968, is by far the nation’s leading provider of flood insurance coverage. Homeowners and businesses can purchase flood insurance through the NFIP if they are located in one of 22,000 participating communities that have agreed to implement FEMA’s local... Hearing page: https://democrats-financialservices.house.gov/events/eventsingle.aspx?EventID=410200