NAMIC applauds recent disaster policy reforms
Recent disaster mitigation changes represent a massive shift in federal policy. But the work is far from over.
With just weeks left in the 2019 hurricane season, we’re entering what could be the most important time for resiliency in the history of our nation. Years of effort by the National Association of Mutual Insurance Companies (NAMIC), its partners in the BuildStrong Coalition, and numerous other stakeholders in insurance, building and environmental advocacy efforts have begun to pay off with a dramatic change in how our government views natural disasters.
When it comes to extreme weather, much of the debate in Washington and elsewhere is focused on climate change and its potential or actual causes. But the policy for actually addressing how we deal with disasters has been largely unchanged: Communities build and develop; they get hit by a disaster; Congress or state legislatures pass aid packages to help the victims rebuild, which in many cases is to the same outdated standards that contributed to a home’s destruction; and the cycle starts anew.
Turning the tide
Those of us in the insurance industry, however, are more focused on the effects that natural disasters can have on individuals and families. We are on the front lines of dealing with natural disasters like agents informing policyholders, adjusters assessing damage and companies helping their policyholders return to a sense of normalcy from a catastrophic loss.
That’s why it’s been the insurance industry as the loudest voice for change when it comes to disaster policy. We’ve seen the effects, and we know that much of the damage can be prevented if communities have the tools to act before disaster strikes.
We know the benefits of resiliency. A 2018 National Institute of Building Sciences study found every $1 spent in pre-disaster hazard mitigation and more resilient construction can save as much as $11 in future losses. Given advances in building science, something as simple as adopting modern building codes can have an enormous impact without raising building costs significantly.
Policies to watch
Whatever their stance on the politics of climate change, policymakers in Washington have finally recognized that the effects of extreme weather — including a run of historic hurricanes, as well as devastating wildfires and inland flooding — cannot be ignored.
The past two years have seen a monumental shift in federal policy when it comes to disasters, a shift that carries the promise of breaking the cycle of destruction and rebuilding once and for all.
Two laws, passed in 2018 with far too little fanfare given their importance for all Americans, will for the first time give state and local governments a clear incentive to undertake mitigation projects and the means to complete them. The first of these was passed through one of the many spending agreements negotiated between the Trump administration and Congress. It establishes a system allowing the President to raise the percentage of post-disaster costs borne by the federal government rather than affected states, provided those states have worked proactively to reduce their disaster losses through mitigation and actions like adopting and enforcing modern building codes.
To help implement this law, the Federal Emergency Management Agency is crafting regulations with input from NAMIC and other stakeholders through which states will be able to demonstrate what they’ve done to become more resilient and effectively make their case for the greater federal cost-share. These regulations will provide a clear road map for states to show they’ve done their part to mitigate potential losses, which also will reduce the amount of funding needed for rebuilding and aid, and justify the federal government bearing a greater share of the recovery.
The second new law, known as the Disaster Recovery Reform Act, will help provide the much-needed funding for states and local governments to engage in mitigation projects that will help them earn the greatest federal cost-share. Signed into law in 2018, the DRRA will arm states and communities with new resources to mitigate against the risk of flooding, wind damage, wildfires and other catastrophic events.
And perhaps most importantly, the law provides for the new funding by putting an amount equal to 6% of federal disaster aid spending into the federal pre-disaster mitigation fund, named the Building Resilient Infrastructure and Communities Program, to provide grants to states and local governments for mitigation projects.
So, in a short time, states will have the opportunity to tap into a new and significant amount of federal funding for projects that could help them earn additional federal help in the event of a natural disaster. For instance, in years of major disasters, the BRIC Program could be funded with more than $1 billion for states to use on mitigation. By comparison, in fiscal year 2015, FEMA’s current program that helps fund state’s pre-disaster mitigation efforts was allocated just $30 million.
Better policy, stronger communities
Even if the investments will more than pay for themselves in the long run, the challenge of mitigation policy is that it asks lawmakers to invest money upfront when the return may not be obvious.
To that end, FEMA recently issued its National Mitigation Investment Strategy, with the goal of establishing the most effective mitigation practices to ensure that the nation’s shift from “wait and rebuild” to loss prevention will be at its most effective and cost-efficient.
The National Mitigation Investment Strategy echoes many of the arguments voiced by NAMIC and others in recommendations that governments work together to emphasize the benefits of mitigation and more effectively connect the goals of mitigation to local risk issues to aid understanding of what mitigation projects can accomplish.
Importantly, the strategy emphasizes the need for information sharing to help ensure communities have relevant data to assess mitigation strategies and plot the best course to protect themselves.
These changes represent a massive shift in federal policy. But the work is far from over. While the federal government is starting to provide funding, it will be up to state and local governments to ensure that the money is put to the best possible use. As these projects demonstrate their value in saving lives and reducing losses, they will stand to make disaster mitigation even more attractive and possibly create a new cycle. Instead of destruction and rebuilding, we can focus on reinforcing and fortifying communities.
Looking to the future
It will be up to those of us in the insurance industry to continue advocating for sound disaster policy and championing mitigation and loss prevention at all levels of government.
To that end, NAMIC and its partners in the BuildStrong Coalition have been working to promote mitigation with state and local government leaders as the key to protecting citizens and preserving communities.
There may be only weeks left in the 2019 hurricane season, but as we all know, these final weeks are often the most perilous. This serves as a reminder that while we have begun to lay the groundwork for a wholesale change in our approach to disasters, the most important work is still ahead.
Andrew Huff (ahuff@namic.org) is director of Federal Affairs for the National Association of Mutual Insurance Companies.
NAMIC’s 124th Annual Convention is Sept. 22-25, 2019 at National Harbor in Maryland.
See also: