The advancing El Nino is promising record-breaking precipitation for California and the Southwestern US this winter, and state Insurance Commissioner Dave Jones is taking the opportunity to remind agents and consumers to get insured before the rain starts to fall.
Flood is among the most uninsured natural disasters in the United States, with 10% fewer home and business owners carrying a policy in 2015 than in 2014. Now, a whopping 86% of Americans lack flood insurance.
It’s a large fall, but in the opinion of Robert Hartwig, economist and president of the Insurance Information Institute, it is one that’s only going to get larger.
“It’s sad to say, but that gap is going to increase,” Hartwig said during a recent webinar on uninsured risk with
Swiss Re. “People are reacting to price increases that have been put in place because [NFIP] is broke.”
Reacting to price increases enacted through the Biggert-Waters Act, policyholders have been dropping coverage in an attempt to save money on insurance they deem non-essential.
Also contributing to consumer reticence toward insurance is a lack of significant flood damage, said Hartwig.
“Memories are short,” he said. “It’s been nearly 10 years since the last major hurricane in Florida – the longest span in history. And it does not take long for a gap between events for people to start questioning why they need this coverage.”
Unfortunately, those dropping their NFIP policies are not turning to the private market either.
However, as Jones says, “Flood insurance may be all that stands between you and devastating financial losses.”
And the time to act is now, as National Flood Insurance Program policies must be in force for 30 days prior to claim events.
Southern and Central California are expected to experience the heaviest rain in coming months, with the National Oceanic and Atmospheric Administration projections suggesting anywhere between a 33 and 50 percent chance of increased rainfall this year.
The first round of storms is predicted to start November 1, climatologists are reporting.
