Hampton Roads has one of the highest rates of sea level rise and flooding on the East Coast.
One tool that people 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 that. The nonprofit provides funding to small groups to test environmental solutions – using Hampton Roads as a testing ground.
WHRO spoke to chief executive Paul Robinson about the upcoming crisis, which will focus on improving flood insurance.
This discussion has been edited for accuracy and clarity.
WHRO: Flood insurance is something that has been around for a long time. What challenges do you and RISE see with the way it works now?
Paul Robinson: What we have found in working with insurance companies and the general public is that there is a gap in flood insurance because the insurance programs that are available in the area are not paid enough to compensate the homeowners or property owners who are severely affected or property damaged by the flood.
Also, very few people are following the insurance policies. Many times, homeowners do not realize that they are not covered by flood insurance with their homeowner’s insurance. Not enough people have insurance, and not enough money coming out of insurance programs to pay for what’s out there. So there is a difference. And the current Flood Insurance Program administered by FEMA is trying to continue, but it is struggling.
I know that RISE has focused on flood insurance in its recent challenges. Can you explain how the competition works and what you hope to achieve with it?
It is a vast and complex place. 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 up the policy. So our challenge is to lower flood insurance costs and premiums by 50%.
We go to the problems and explain in detail the problem at hand and we are looking for solutions. We don’t define what should be, but we define areas of need. We pay businesses, we give them a starting point to do a trial run to demonstrate their potential.
Why is this area a good test bed – are there any flood insurance products that are unique to Hampton Roads, good or bad?
So there are a few big ones out there that raise eyebrows among people when you talk to them, both inside the industry and outside. And on the insurance side, not enough people are getting flood insurance, even though they should.
The second thing is the billions of dollars of damage that has been put in place – and we’re talking walls and pumps and gates and you name it. There is no clear correlation between infrastructure that protects the community or community from flood events and relief from the cost of flood insurance.
So this region has a unique opportunity here for a number of reasons. The City of Norfolk is upgrading flood barriers and implementing new flood control measures throughout the city. So we can get to the bottom of the implementation of a large solid infrastructure, and see how it will affect the prices of local insurance. To better understand how reducing risk can be seen in reducing insurance premiums.
What else should people know about flood insurance, whether they have a policy or not?
One way to think about the problem of flood insurance – if you look at car insurance, all drivers should have car insurance. And insurance companies like that, bring money to protect themselves and cover any claims.
However, only a small percentage of flood-affected property owners receive flood insurance. This makes it very difficult for insurance companies and FEMA to run a viable program. When the people who are paying are few, and the payment needs to be very big. If the only people who could get into car accidents were the insured, it would be a less expensive insurance program than spreading the accidents among all drivers. And it’s the same with flood insurance. And that is the problem it is facing.