Norfolk nonprofit 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 distributes money to small groups to try out environmental solutions — using Hampton Roads as a testing ground.

WHRO spoke with Executive Director Paul Robinson about the nonprofit’s upcoming 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 functions?

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 because the flood insurance programs that are generally available to the community are not funded well enough to fully reimburse those homeowners or those property owners who are severely affected or have properties destroyed by flooding.

Also, too few people actually accept the insurance policies. In many cases, homeowners do not realize that they are not covered for flooding by their homeowner’s insurance policy. There are not enough people getting insurance and not enough money coming out of the insurance programs to cover the claims that exist. So there is a gap. And the current National Flood Insurance Program, which is run by FEMA, is trying to cope, but it’s really struggling.

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

This is a very vast and complex 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 the problem and look for solutions. We do not specify what those solutions should be, but we specify in which areas these solutions are needed. We finance businesses, give them a start to do a pilot project to demonstrate their capabilities.

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

So there are a few big nuggets that raise eyebrows among people when you talk to them, both in and out of the industry. And on the insurance premium side, it’s that not enough people get flood insurance policies even though they should.

The second thing is the billions of dollars of resilience infrastructure that’s been put in place – and we’re talking about walls and pumps and gates and whatever. There’s no clear correlation between the resilience of the infrastructure protecting a region or community from flooding and the relief of insurance costs against floods.

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 resilience improvements throughout the city. So we can get to the bottom of this major infrastructure deployment for sustainability, with a view to how it might affect local insurance rates. To better understand how risk reduction can translate into lower insurance costs.

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

One way to think about the flood insurance problem – if you look at auto insurance, all drivers are required to have auto insurance. And insurance companies like that, it brings in money to defend themselves and cover any claims.

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 operate a viable program. When the people who pay are so few and the payouts are required to be so large. If the only people likely to get into car accidents were those who got insurance, that would make it a much less attractive insurance program than by spreading the risk across all drivers. The same goes for flood insurance. And that is the problem we face.

Read the original story on the WHRO website.

Leave a Comment