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Triple-I Blog | Study supports cases of flood defenses warming the world



Intensifying climate-driven precipitation over the past 30 years has caused nearly $ 75 billion in flood damage in the United States, according to a study by Stanford University researchers.

The results, published in the journal Proceedings of the National Academy of Sciences highlight the rising costs of floods and the increased risk faced by homeowners, builders, banks and insurance companies as the planet warms. Losses due to worsening extreme rainfall accounted for almost a third of the total economic cost of floods in the United States between 1

988 and 2017, according to the report, which analyzed climate and socio-economic data to quantify the link between changing historical precipitation trends and historical flood costs

90 percent of natural disasters in the United States involve floods, and much has been written about the flood protection gap.

"On average nationwide, only 30 percent of homes in high-risk areas have flood coverage," according to the Risk Management and Decision Processes Center at Wharton School at the University of Pennsylvania, a Triple-I Resilience Accelerator partner. "Less than 25 percent of the buildings flooded by Hurricanes Harvey, Sandy and Irma had insurance. In fact, there are repeated evidences after floods of evidence of the United States' large and persistent river insurance gap.

To make matters worse, a recent analysis by the nonprofit First Street Foundation found that the United States was deplorably prepared for flood damage. The foundation identifies "approximately 1.7 times the number of properties as a significant risk" compared to the Federal Emergency Management Agency's (FEMA) flood designation.

Flood coverage is not included in most homeowners insurance policies, so many may not know they do not have it if their bank did not require them to purchase it before giving a mortgage. Until recently, flood insurance was considered an insurmountable risk for private insurance companies to write, so FEMA's National Flood Insurance Program (NFIP) was the only game in town.

In recent years, however, Congress passed new laws to support the emergence of a robust domestic private flood insurance market. Last year, regulators issued rules that enabled private carriers to offer flood policies outside the NFIP and to qualify for the requirement for mortgage river insurance. Carriers and reinsurance companies are expanding their use of sophisticated models to guarantee flood risk, driving the growth of private sector flood insurance.

Triple-I has more information about flood insurance in our Spotlight at: Flood insurance article.


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