Cost Of Losses, Lack Of Insurance Compound Storm's Devastation

Perry russom, correspondent with cnbc news, with shepard smith.

We really appreciate it.

Now that hurricane ian has left florida and we're starting to understand the extent of the damage left in its wake, one of the next big questions is, where it gets rebuilt and who pays for it? The catastrophic damage left by hurricane ian is projected to be in the tens of billions of dollars.

Yesterday president biden declared nine of the counties affected disaster areas which qualifies them for some federal aid.

But not very much and not very quickly.

The bulk of this recovery will rely on insurance.

Just for the property that was insured, insurers are bracing for a hit of between 28 and 47 billion dollars.

But that's just for the insured property.

One of the devastating realities we are now realizing is that so much of where this storm hit was uninsured.

In the counties whose residents were told to evacuate, just 18% of homes had coverage through the national flood insurance program.

Even in areas designated by fema as in the floodplains, less than half of the homes and flood insurance.

When the floods from rain and storm surge went well past fema 's projected floodplains to areas where less than 10% of homes are insured for floods.

Those fema floodplain projections are supposed to warn people if they're in an area that has a 1% chance of flooding every year.

They call the 100 year flood zones.

For every hundred years you should expect one flood.

And florida governor ron desantis pointed out yesterday, the storm hit an area that would be more like a 500 year flood zone.

And that is the issue.

These 100 year storms, these 500 year storms, they're starting to happen all the time.

The national oceanic and atmospheric administration, noah, tracks disasters like this, what they call billion dollar disaster events.

These are not looking good.

This chart is adjusted for inflation, and you can see, even with that, that all through the 80s and 90s, yes, you had some big disasters.

The overall cost for rebuilding stay pretty steady.

But now we have catastrophic climate events all the time.

Last year noah counted 20 billion dollar climate disasters in the u.

Those altogether cost 152 billion dollars.

In the last five years, these disasters have crossed the u.

788 billion dollars.

Now compare that with the amount we are spending on the inflation reduction act, the largest climate bill in u.

history.

That totals 369 billion dollars, is spread out over ten years.

One of those things is a lot bigger than the other.

Is 100 year a 500-year disasters are becoming a regular occurrence and our insurance system is clearly failing to provide support to the people who need it.

And even our biggest, best efforts to battle climate change are basically a drop in the bucket compared to the scope of these disasters.

So how do we fix this? How do we help people right now and make a system that can last to this new climate crisis? Joining us now is caroline who ski, associate vice president for economics and policy at the environmental defense front and author of understanding disaster insurance, which comes out, very prescient, lee next month.

Caroline, thank you so much for being with us tonight.

>> thanks for having me.

Tonight >> let me just ask, to begin with, what assistance should people expectfrom the federal government? >> it's an important question.

There should be assistance coming.

President biden is issued a disaster proclamation with unlocks assistance from fema to meet immediate needs, but unfortunately those grants are limited.

Their captain, most people can probably expect several thousand or $5, 000, but not nearly enough to match the property destruction, the devastation that we have been witnessing.

It's important for people to realize that those grants are going to make them financially go after a disaster like this.

>> when you see five or $7,000 you just oppose that figure against those images we just showed everyone houses completely leveled and effectively just destruction everywhere in some parts of these counties, how can people better know the risk they are taking line when they go to a place like lee county? What kind of information is there for people as they built homes, or rent, or buy homes, in a place that is effectively at the forefront of climate disaster? >> unfortunately we are not doing the best job in this country with communicating to people about flood risks ahead of time.

So you notice those flood zones, when someone moves into one of those flood zones and they take out a mortgage their lender will talk to them about flood risk, because they will be required to purchase flood insurance.

But for everyone else they might not get any information at all.

Some states have basic disclosure when property is sold, but, as you were noting, flood risk extends far beyond most fema zones, and part of it is because there are more extreme events.

Part of it is because those maps are outdated and lead to be refreshed.

Part of it is that those maps typically do not include flooding from intense precipitation, which is getting worse in a lot of parts of the country, with climate change, and is also responsible for a lot of the flooding we are seeing in florida as ian moved inland and dropped enormous amounts of rain, which can lead to this costly flooding fire from the coast.

And we're not good at talking about how this is impacted by climate.

Change >> it seems like the informatiowe have is outdated.

We're living in a new climate reality and the tools we used to navigate that seem sorely and act communistic.

I wonder if you think this moment in hurricane ian marks a inflection point.

On one hand, part of our nature as americans is to rebuild her to move forward.

And then at the same time, when you look at the growth of places like lee county in the reality of climate change, it feels like those things can't coexist.

I wonder if it is going to be a hard conversation about whether we can rebuild and whether we should rebuild, given the economic costs in the literal physical danger that people maybe putting themselves in.

Absolutely those are really difficult conversations, and yet absolutely essential to be having right now.

We are in a period now of ever increasing risk.

This is not a first severe storm to hit our country and it will not be the last.

And it's very much time to take a step back and think carefully about how we can build safer, keep people out of harm's way, build more resiliently.

These are like stronger building codes, maybe moving away from some of the highest risk areas and undertaking community wide measures, whether that's investments in flood protection or nature-based solutions to help protect us.

But we have to start thinking differently about where we build and where we live if we want to not face this sort of ever increasing cost, and the human suffering that comes with it.

>> yes, it's not just an economic question, it's a moral and ethical question.

Let me just close by asking you if someone wanted to take the federal aid and move somewhere else and say, i'm done with this area, i don't want to put myself in the bull's-eye of another climate disaster, could they do that? >> that's a tricky question.

Often, disasters, we might hope could be an opportunity to think differently and if people want to move somewhere safer or build better.

But unfortunately, there's a lot of challenges in the system for doing that.

Some of the federal assistance dollars are only used to build in place in the same way so there's some policy changes we need there.

Sometimes they're simply not enough money to help someone pay off a mortgage and fully relocate somewhere else that could be costly.

Sometimes the assistance we do have for these types of relocations just takes way too long to get to people and face with the sort of devastation people can't wait around years wondering whether they will have the financial healthy need to move somewhere safer.

>> there are so few good answers in all of this.

In the meantime, peoples lives have been shattered and that sort of putting those pieces together as job number one.

Insurance