As Hurricane Sandy barreled toward the East Coast in late October, meteorologist Tim Doggett swung into action, poring through the latest weather information and racing to enter data into a powerful computer program before losing power.
But Doggett wasn’t preparing a weather forecast. Working in a row of sand-colored cubicles in the Back Bay, Doggett and his colleagues were trying calculate the amount of damage the storm could cause, even before it made landfall. The final estimate: as much as $22 billion in insured losses, making it the one of the costliest US storms on record.
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Why is there no mention of FEMA? FEMA's untertaking to redraw the nation's flood zones seems most appropriate given the measurable and costly toll of rising tides, increased flooding, and severity of storms. However, something went terribly wrong in how the revised flood maps were rolled out, placing additional financial stress of property owners, many who are barley hanging on to their homes due to economic conditions. Communities "rubber stamped" the approval process adopting the revised flood maps, or risk forfeiting disaster releif funds for their community. FEMA underwrites ALL flood insurance policies. It appears that FEMA has created a new source of revenue by widening the flood zone circle at the expense of, and resulting in financial hardships to those suddenly deemed "in a flood zone". Banks and mortgage holding companies wasted no time serving up their "valued customers" in "force-placing" flood insurance policies costing thousands of dollars annually in most cases, and adding in the requisite added fees for themselves. Property owners must act quickly to hire professional services, costin thousands more to prove to the banks that their propery is either above elevation or not in a flood zone. I conclude that home ownership in America is no longer the great American dream of securty and community but increasing a liability to one's own independence.
Banks and mortgage holders had an opportunity to protect their "valued" customers by taking a stand to challenge the flood maps as inaccurate in many many cases...but too the low road again to of serving up their own customers, many of whom are clinging to their homes, thrusting them back into a new and unwarranted financial hardship.
respectworld is almost totally on target with his/her analysis of the insurance dilemma that coastal property owners find themselves in these days. The one thing that ought to be added is the impact that property insurance companies have on the huge annual increase in flood insurance rates owners must pay. A person with a strong case of paranoia might suspect a conspiracy between property insurers, FEMA and mortgage issuers such as banks.
It's seldom spoken about except by insurance agents and their clients, but property insurance company officials adopt from some other fianncial services companies guesses at how much it would cost to fully pay for replacement of a property in any given year. The number always goes up on the anniversary of the property insurance policy, so the mortgage holder uses that new guesstimate of replacement value to pressure the property owner into increasing FEMA 's flood insurance, usually by a few thousand dollars which in turn raises flood insurance rates a couple of hundred bucks. If the owner does not have such new coverage arranged by the time the old policy expires, the bank's insurance department starts threatening the "forced placing" of special, very expensive flood insurance policies that the bank has access to. This whole bizarre financial coersion mess really comes back to actuaries who sit around eating peanut butter sandwiches while they wait for their computers to spin out new guesstimates of this that and t'other data.
Thank you for bringing to light the challenges facing home owner with increasing insurance costs. Helpful posts re: force-placed flood insurance can be found here: http://everydaytipsandthoughts.com/according-to-fema-my-house-is-suddenly-in-a-flood-zone/
Todd Wallack did a fairly astute report on this AIR Monitor outfit, although the story is as much a puff piece about a little known, but fairly large Boston financial services agency as it is about that service's impact on the state's property owners (mostly of residences). Wallack left out several hugely important players in the field of homeowner insurance rates that Air Monitor influences with its pipedreamy computer guesstimating.
The first issue left out is the availability of federal flood insurance, which did not exist in 1938 or during the 1950s storms that did so much damage. In addition, contemporary homeowner policies do not cover damage from flooding of any sort.
The second issue Wallack ignores the regular insurance carrier requirement that property owners in certain locales along the coast accept a deductible applicable only to wind damage. Given that Wallack's major focus of the Air Monitor impact is on coastal insurance rates, it is difficult to understand how he can ignore wind, a huge participant in ocean storms, and often a more dangerous participant than forces that produce coastal flooding.
Thirdly, the writer does not mention the participation of reinsurers in the setting of rates that are partially based on prognostications from outfits like AIR Monitor. Many property insurers depend on reinsurers like Lloyds of London for the extra coverage that they would need to stay financially afloat in cases of losses like those caused by Sandy and Katrina level storms.
As I said, at least partially a puff piece for a little noticed Back Bay financial services company. And the writer also ignored the impact that such matters as Air Monitor's guesswork has had on locales beyond Cape Cod... like Duxbury, and Scituate and Hull and Winthrop and Nahant and Marblehead and Gloucester, as well as Quincy and Beverly. Yes, the Cape Cod property insurance rates have skyrocketed in recent years, but so have those for properties in the other towns/cities not on the Cape.
How can anyone write an article like this without mentioning climate change? AIR Worldwide certainly takes it into account as a bit of googling shows but it didn't make its way into the Globe.