Tropical Storm Beta made landfall on the central Texas coast on Sept. 21 as the 23rd named storm of the hyperactive 2020 Atlantic hurricane season and the third to hit the Gulf Coast this year.
Slow moving Beta dumped heavy rains on Texas coastal counties, flooding streets and swamping vehicles and homes, before heading toward southwestern Louisiana, an area that is still recovering from the devastation caused by Hurricane Laura just under a month earlier. In between the two, Hurricane Sally pounded Alabama and Florida with massive flooding from which the National Flood Insurance Program (NFIP) expects significant losses.
If nothing else, the sheer number of named storms so far in 2020 reinforces the importance of flood insurance.
Hurricane Katrina in 2005, which holds the record for the highest payouts in NFIP history — $16.3 billion, according to the Insurance Information Institute (I.I.I.) — and 2017’s Hurricane Harvey, which ranks second for NFIP payouts at $8.9 billion, are “poster storms” for the need for flood insurance in vulnerable areas. Property data provider CoreLogic has estimated that 70% of the flood damage from Harvey was uninsured.
Flood insurance uptake rates did increase in Louisiana and Texas following each of those storms, but according to Texas insurance regulators, the number of policies in south central and coastal Texas has fallen in recent years.
The Texas Department of Insurance reported that the number of federal flood insurance policies in nearly all Corpus Christi-area counties has declined. Across nine counties, the number of policies in effect is down by more than 1,200, TDI said. Of the Corpus Christi-area counties, only Goliad (2% increase) and Live Oak (3% increase) have seen upticks in the number of NFIP policies in force.
Bexar County, where San Antonio is located, also has seen a 13% drop in flood insurance policies, TDI said. Nine nearby counties have also had declines. The number of flood policies in 10 San Antonio-area counties fell by more than 1,400 in the past two years.
The NFIP writes more than 80% of the flood coverage in the U.S. and has about 5 million flood insurance policies in force nationally, according to Butch Kinerney, branch chief, National Flood Insurance Marketing and Outreach.
“We are in every state, every territory, every tribal nation. We are in more than 23,000 participating communities nationwide. We cover $1.3 trillion in assets, all against flood. About 95% of our policies are residential and about 5% of our policies are nonresidential,” Kinerney said as moderator of a virtual panel discussion, Communicating the Value of Flood Insurance Throughout the Hurricane Season, held in June.
The I.I.I. reported that as of September 2020, 60 insurance companies were participating in the NFIP’s Write Your Own program, in which private insurers write policies and adjust claims for the NFIP.
Limits for NFIP residential policies are $250,000 for the building and $100,000 for the contents. For nonresidential structures, limits are $500,000 for the building and $500,000 for the content. The average annual cost of an NFIP flood insurance residential policy is about $700.
After Florida, Texas and Louisiana have the most NFIP flood policies in force, according to the I.I.I. As of December 2019, Texas had 125,833 direct NFIP policies in force; 659,460 WYO policies in force; and 785,293 in combined NFIP/WYO policies. Louisiana had 112,472 in direct NFIP policies; 386,192 WYO policies; and 498,664 NFIP/WYO policies in force.
Private insurers often offer much higher limits, according to Caitlin Connor, flood strategy coordinator with Johnson & Johnson Insurance in Tampa/St. Petersburg, Florida. The private flood insurance market is an emerging one and “everyday they’re offering more and more coverages,” Connor said during the June panel discussion on flood insurance.
Some $287 million in net private flood insurance premiums were written in 2019 in the U.S., down from $541 million in 2018, according to the I.I.I., which quotes S&P Global Market Intelligence as the source for that figure. In 2019, 140 private companies were writing flood insurance, compared with 116 in 2018.
A 2019 report on the private flood insurance market by Wells Media’s Research & Trends division shows that 30% of the U.S. private flood market is written in seven Gulf and Atlantic coast states identified by CoreLogic as having the highest potential for storm surge damage: Florida; Louisiana; Texas; Virginia; South Carolina; North Carolina; and Georgia.
Topics Florida Catastrophe Natural Disasters Texas Flood Louisiana Hurricane
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