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Hurricane Harvey — The Biggest Disaster Since Katrina

Posted By Administration, Wednesday, September 6, 2017

It’s a certainty that Hurricane Harvey will be as big a financial disaster as Hurricane Katrina. Or maybe even bigger. Ironically, it hit Houston, Texas and surrounding areas almost 12 years to the day that Katrina hit New Orleans.

It goes without saying that heroism and all that is good about humanity prevailed during the disaster and prevails today as Texans and those impacted in other states begin to put their lives back together.

Relief efforts are underway by the federal government, state governments and by private and public groups and individuals. Some celebrities have donated huge sums of money as have the afore mentioned groups.

The PIA Disaster Relief Fund — a project of the PIA Insurance Foundation — is soliciting charitable donations and providing relief grants to Main Street businesses that may be facing gaps in the insurance coverages or other assistance available to them. Grants are available in areas of Texas covered by federal or state declarations of disaster related to the flooding events that resulted from Hurricane Harvey.

PIA National Executive Vice President Mike Becker said, “Our hearts go out to the people of Texas who are experiencing what may be the worst flooding in their history. When disasters strike, PIA members are there to help. The PIA Insurance Foundation is happy to do its part to help people in Texas recover from these unprecedented floods."

 

Click here to donate to the PIA Disaster Relief Fund.

Click here to apply for a PIA Relief Grant.

If you have questions about the process, click here.

 

Another group helping out is PIA Western Alliance member Adjusters International Pacific Northwest. It is volunteering to help insurers out. In a statement released shortly after the scope of the disaster was made known, the group said, “We are currently mobilizing teams to represent clients whose properties have been impacted. We specialize in claims from $750,000 to $250,000,000. Please reach out to us and let us know how we can help. Resources are scarce in disasters like these, but we are dedicated to helping your insureds recover.”

  We offer no obligation reviews of insurance policies with an eye to identifying the best route for optimal recovery.

  We can assist in the immediate needs for Emergency Services through our relationships with local Texas vendors.

  We can relieve the burden and uncertainty that often is associated with complex claims from natural events.

  We can and will be your clients' advocates during the entire claim process from the very beginning to a complete settlement.

  We will keep you informed during the claim and work with you as a partner to advance your clients' interests.

Please contact Steven P. Severaid at steves@aipnw.com or call 800.248.3888.

 

One of the most interesting rescue efforts is coming from social media. The hurricane knocked out power and phone lines and smartphone batteries for phones that worked needed to conserve power. So social media became a critical cog in staying informed and in getting help if needed.

Allison Matherly is a coordinator of digital engagement at Texas Tech University. A ways away from the storm at her home in Lubbock, Matherly started a Facebook group. “I managed to find a neighborhood Facebook group. Now someone who lives around the corner from him keeps posting pictures and updates. They are all binding together and saying, ‘If anybody needs dog food, I have some,' to a broader level of 'here are resources,’” she said.

Her site is also offering lists of places where people can find shelter and food.

Another site helping was Reddit and its live Hurricane Harvey Megathread. It kept people up to date on the storm as did Snapchat’s Snap Maps. “I think it really shows the great nature of humanity and people really do want to help each other and they have this platform to do it,” Matherly said.

Unless you’ve been vacationing on the Moon most of you know the whole Hurricane Harvey story. The Trump administration is asking for $7.85 billion in aid for victims and at the same time is asking Congress to raise the debt ceiling so it can spend the money.

White House Budget Director Mick Mulvaney said, “if the debt ceiling is not raised, it may not be possible to outlay the requested supplemental appropriations or funds for other critical Government operations.”

And the Federal Emergency Management Agency only has $7.6 million available for the crisis and of that $7.6 billion, and spokesman Andy Read said $5.9 billion would need to be borrowed. “The National Flood Insurance Program has $1.7 billion available to pay claims. Additionally, the NFIP has $5.9 billion in borrowing authority to pay claims resulting from Hurricane Harvey. This does not include additional resources that reinsurance may provide,” he said.

Hurricane Harvey dumped trillions — as much as 11 trillion — gallons of water on Texas and most of it in the Houston area. Those trillions of gallons averaged in some places to 51 inches of water in a very few days.

AIR Worldwide says insured losses from the wind and storm surge will range from $1.2 billion to $2.3 billion. Most of those losses are not insured. Only a few of those in Hurricane Harvey’s path have flood insurance. Robert Hunter of the Consumer Federation of America (CFA) says those flooded basements, ruined rooms and possessions that are destroyed will not be covered by homeowners’ policies and many — who cannot afford repairs — will lose everything.

Hunter — a former insurance commissioner — thinks the flood damage alone to hit $35 billion. 

Morgan Stanley predicts insurers in Texas will end up losing billions in claims. Like Hunter, the bank thinks damages will be very high and will hit $30 to $40 billion. When you adjust for inflation, Harvey could end up as the most expensive storm in U.S. history. Here’s the bank’s estimates as to which insurers have the most insured in the area:

 

Homeowners Market Share

  State Farm — 21.5%

  Allstate — 12.7%

  Farmers — 10.9%

  USAA — 10.1%

  Liberty Mutual — 8.2%

 

Commercial Multi-Peril Property Market Share

  HIG — 8.2%

  TRV — 7.7%

  Nationwide — 6.9%

  Farmers — 5.8%

  CB — 5.7%

  Liberty Mutual — 5.4%

  Argo Group — 4.7%

  AIG — 3.9%

  Allstate — 3.6%

  State Farm — 3.4%

 

One positive with the hurricane is that it will get Congress moving on the renewal of the National Flood Insurance Program (NFIP). It is currently $24 to $26 billion in debt — depending on who you talk to — and Hurricane Harvey will definitely add to that debt.

House Financial Services Committee Chairman and Texas Republican Jeb Hensarling said, “I’m just hopeful this will provide the urgency and onus to get this bill on the floor. We need to make sure we don’t compound a physical tragedy today with a fiscal tragedy tomorrow.”

The NFIP expires on September 30th.

The House has a bill already done but the Senate — typically — is lagging. One is sitting in the Senate Banking Committee but not much has been done with it and a new proposal is being kicked around.

Ohio Democrat Sen. Sherrod Brown is the top Democrat on the committee. He says a short-term extension can be done if no agreement is reached. “It is too early to determine how hurricane Harvey will impact the timeline. But it is likely that Congress will pass a short-term extension to ensure the program doesn’t lapse,” he said.

David Sampson is the president of the Property Casualty Insurers Association of America (PCI). He wants to see at least a six-month extension of the NFIP if Congress can’t get it figured out by the end of September.

“While PCI and our members support meaningful reforms to the program, passing a minimum six-month extension of the program will allow time for many of the claims from Hurricane Harvey to be settled and any ongoing concerns identified and addressed before Congress and FEMA make significant reforms to the program,” he said.

Hensarling is not in favor of a short-term deal. Neither is R.J. Lehmann who is a senior fellow at the conservative think tank R Street Institute. “Harvey should make it clearer that the way we’ve been doing things has not been sustainable and changes need to be made. But lawmakers are not going to want to whack people who are already suffering from the hurricane with more costs,” he said.

What’s most interesting about the flood insurance renewal debate and Hurricane Harvey is that private insurance — still — wants to be involved in the renewal and wants to be able to sell flood insurance.

Sampson said the House bill calls for more involvement by private insurers. “The bill would allow more private sector risk-bearing, thus relieving some of the taxpayer burden that the program is under now. One immediate lesson that we have already learned from Harvey and recent previous storms is that too few homeowners and businesses have flood protection and this bill also would expand consumers’ flood options,” he said.

Robert Gordon — who is a senior vice president of policy research for the PCI — agrees. “I don’t think [Harvey] changes the dynamic for insurers. Insurers are becoming increasingly comfortable with the modeling” and are willing to start writing policies.

 

Source links: NBC, The Washington Post, Insurance Business America — link 1, link 2, link 3, PropertyCasualty360.com, Insurance Journal, Associated Press, Bloomberg

Tags:  Hurricane Harvey — The Biggest Disaster Since Katr  Insurance Content  Insurance Industry  Insurance News  Weekly Industry News 

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