Mississippi River Towns Pilot New Insurance Model to Help with Disaster Response
Mississippi River hydrology to pick up the tab on the premiums, he said.
Quick Payouts Could Take Burdens Off Cities
“In the first 24 to 72 hours after a disaster event, very little money can help a whole heck of a lot,” Wellenkamp said. “We use that time for evacuations and to move people out of additional harm’s way in the aftermath.”
But soon after the initial emergency response, municipalities start to look for funds for longer-term cleanup and repair. Under the current paradigm, that money can be hard to tap.
In the spring of 2019, major flooding on the Mississippi inundated many communities, including Grafton, where the downtown partially closed and people were forced to evacuate.
The Trump administration didn’t declare a major disaster until September of that year, months after flood waters had receded. It took until 2022 for federal money to reach Grafton, Morrow said.
“The former administration went through that flood,” Morrow said. “I’m the mayor now and I was getting some of the money that they had put in years ago.”
That wait places stress on a city’s finances, especially smaller ones like Grafton, Morrow added.
Traditional insurance doesn’t always help either. Grafton has a flood policy but it only covers property owned by the city. Residents and businesses in the community would need to take out their own flood protection. The National Flood Insurance Program (NFIP), which underwrites many flood insurance policies, has various coverage restrictions. For example, NFIP doesn’t cover roads or wastewater infrastructure.
The policies also require proof of loss before issuing a check because they cover specific damage, like to a particular building or its contents. This “proof” can take days to document, and longer to process, which delays how fast a local government can begin repairs. Without proper pre-storm documentation, damage can sometimes be nearly impossible to prove.
Parametric insurance – which works with measurable triggers and isn’t tied to documentable losses – could ease the process.
Cities from the headwaters to the mouth of the Mississippi could buy into the policy, creating a pool that spreads out the risk that any individual community faces.
“Not every city is going to flood every year, but the flooding will impact at least one section of the river,” said Raghuveer Vinukollu, head of climate insights and advisory for Munich Re in the U.S.
The insurance pool would protect a town from the risk of ruin, and a more timely payout would increase the town’s
