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Pictures of elderly women sitting in flood water in their nursing home, heroic individuals rescuing people trapped in submerged cars, a law-enforcement officer wading through water carrying children on his shoulders, and major interstate highways turned into flowing rivers.

Figure 1:

The images coming out of the Houston, Texas region following Hurricane Harvey are heartbreaking.

Figure 2: @HCSOTexas

After making landfall, the storm stalled over Texas, drifted into the Gulf of Mexico and made landfall again in Louisiana. During its devastating journey Harvey reportedly dumped an estimated 24.5 trillion gallons of water on the region.

“There but for the grace of God go I,” is a phrase Floridians should say as they watch the disaster unfold in the Lone Star State.

Think of the Texas nightmare if it happened in hurricane-prone Florida. Already, in South Florida flooding is a regular concern when rain is in the forecast.

This disaster is certainly a stress test for the insurance industry that Floridians need to watch.

In the background, the National Flood Insurance Program (NFIP) is set to expire at the end of September. The program, established in 1968 after private flood insurance became too expensive for homeowners, is nearly $25 billion in debt. Even though most homeowners in the Houston area don’t have flood insurance, the program’s red ink is certain to rise as Harvey’s flood waters eventually subside and recovery begins.

The Insurance Information Institute projects the cost of damage from Hurricane Harvey could equal the cost of Hurricane Katrina in 2005 – the costliest natural disaster in U.S. history causing $128 billion in property damage. The Flood Insurance Program reportedly paid out $15 billion for damage related to Hurricane Katrina.

According to the Wall Street Journal, not including Hurricane Harvey, since 2010 there have been 20 storms that have caused a billion dollars or more in damage. This compares to nine billion-dollar floods in the entire 1980s, according to inflation-adjusted estimates from the National Oceanic and Atmospheric Administration.

Prepare for a storm of outrage to come when Texas homeowners and small businesses discover their losses from the flood may not be covered.

Property owners in hurricane- and flood-prone areas should check their policies to see if they’re covered.

“We are home to nearly 40 percent of all NFIP policies and paid nearly $1 billion into the program last year,” said Florida Congressman Charlie Crist in a recent Tampa Bay Times op-ed.  “On top of that, we are ground zero for rising sea levels, hurricanes and other severe weather events. It’s clear that our housing market and our economy depend on NFIP and would collapse without it.”


Figure 3: Washington Post


The Washington Post reports that more than 1.2 million residents (nearly half of all people) in Miami-Dade County, Florida (see map above) live in a high-risk flood zone. A 500-year flood like the one Hurricane Harvey brought to the Houston area, would leave Miami Beach and other very populated areas of the county under water.

According to director Roy Wright, previous storms had a significant impact on the NFIP.

“The NFIP’s exposure to major floods is on the rise, as evidenced by Hurricanes Katrina and Sandy,” Wright said in a recent blog post. “These events generated claims of approximately $24.6 billion, leaving the NFIP $23 billion in debt to the U.S. Treasury.”

Flood insurance rates are expected to rise. How much will fall to homeowners is in the hands of Congress.

One proposal would cap rates at $10,000 a year. Representatives have called that level, “unaffordable” for homeowners.

Hurricane Harvey is a wake-up call for residents in hurricane-prone areas, especially homeowners. While some are focused on rising gasoline prices, how the flood insurance program is handled over the next month is an emergency issue every homeowner or potential homeowner should monitor as it could cost them thousands of dollars more.

Ryan Banfill is Communications Director for the Florida Justice Association. Follow him on Twitter: @RyBan1001


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