2018 needs to be the year Congress changes the way we respond to disasters

After a record year of natural catastrophes, Congress is considering an additional $80 billion in disaster aid in response. If approved, this would bring the total supplemental disaster spending for the year to more than $132 billion — including wildfire relief and National Flood Insurance Program (NFIP) debt forgiveness. For context, this amount is more than double what was allocated for the deadly and destructive Hurricane Sandy in 2013. 

Fiscally, it is no secret that we cannot afford to continue down this path. As a nation, we need to rethink the way we address natural catastrophes. With the imminent need to reauthorize the flood insurance program, we urge lawmakers to use this opportunity as the catalyst for serious natural catastrophe reforms in 2018.

{mosads}With the program tethered to the continuing resolution, a lapse likely would cause serious disruption to the flood insurance market. Going forward, the uncertainty could delay the development of the burgeoning private market. Once there is an assurance that the program will continue without interruption, lawmakers need to come together to advance reasonable, commonsense reforms. This includes ways to incentivize the private market to take on some of this risk.

Unlike when NFIP began, risk analysis and modeling are vastly improved. Because of these improvements and enhanced technology, private insurers are better able to manage some of this risk. In many cases, private insurers likely will be able to provide better, more affordable coverages than the NFIP. This would lead to more choices for consumers and property owners and would reduce the burden on taxpayers. That’s a win for everyone.

A key component to addressing the NFIP shortcomings and natural catastrophe funding is creating an environment that would promote greater private sector offerings. Specifically, we need to focus our efforts on improved mitigation and resiliency — shifting away from reactive responses (though certainly not eliminating them) to more proactive measures that limit, and potentially prevent, losses in the future.

For example, policymakers could learn from the situation in Gurnee, Illinois. After years of flooding, the city recently starting buying up high-risk buildings from its residents, in an effort to help people move their businesses to smarter locations away from risky areas. There is also the example of Florida enacting stringent building standards following Hurricane Andrew in 1992. When Hurricane Irma struck the Sunshine State in September, properties that were built with the upgraded building codes sustained far less storm damage than homes that had not been updated.

To date, these programs and others have been successful — the areas are better equipped to manage disasters when they strike, which results in spending less time and money to clean up properties after a storm hits.

The National Institute of Building Sciences released a report last week that found mitigation funding can save the nation $6 in future disaster costs for every $1 spent on hazard mitigation. The report notes that mitigation strategies could include adding hurricane shutters, tornado safe rooms and other measures for wind resistance; strengthening various structural and nonstructural components for earthquake resistance; and replacing roofs, managing vegetation to reduce fuels and replacing wooden water tanks for fire resistance. These are just some of the ways that Americans can better protect themselves when natural disasters strike.

In 2018, if we can agree to greater market stability, better mitigation and resiliency efforts, and more robust education of the general public about the real risks they face, lawmakers can leverage private sector expertise and capital to limit the harm that natural catastrophes cause. In the past, as disasters battered the country, we often played clean-up, then catch-up. But this year, Congress should use the NFIP reauthorization as the first chapter in a new era of disaster response.

Tom Santos is vice president of federal affairs at the American Insurance Association, where he covers the issues of natural catastrophes, including flood insurance, Terrorism Risk Insurance, credit-based insurance scores and Dodd-Frank implementation.