THIRD WORLD U$A
Anne Geggis, Palm Beach Post
Updated Mon, October 7, 2024
While she baked cookies at her home at the foot of the Smoky Mountains, Vicki Hunter heard a flood alert for the other side of the river. An hour later, she was hanging on for life.
Hunter, 62, like countless others in the inland counties of Georgia, Tennessee, and the Carolinas, was completely unprepared for the events of Sept. 27 as Hurricane Helene came to call. The death toll of 215 deaths and climbing is already the most deadly of a mainland weather event since Hurricane Katrina in 2005. Beyond the heartbreak, though, financial trauma from the event promises to linger into the future.
Little of the damage is covered by insurance and that reality has already filled GoFundMe with pleas for help, spotlighted the ailing National Flood Insurance Program and spurred leaders to call for a re-evaluation of how flood insurance works and who should buy it. All as another tempest, Hurricane Milton, takes aim at the already-battered Florida Gulf Coast this week.
Foreboding signs appeared soon after Hunter heard the flood warning. She looked out her window and thought how strange it was that the trees surrounding her rural oasis in Jonesborough, Tennessee appeared to be moving toward her home, she recalled.
She couldn't feel the house moving and that flash flood warning she heard for Embreeville, on the other side of the Nolichuckee River, had seemed like it had nothing to do with the place she’d lived for 14 years.
“It hasn’t flooded here in 50 years,” Hunter said of her home that sits at 1,519 feet above sea level.
But, in fact, something grave was happening.
As the river’s rise became undeniable, 30 minutes of sheer terror began. Hunter saw her husband’s car and hers bobbing like apples in the carport. She lost track of her husband’s exact whereabouts as she dodged furniture that started moving around faster in the rising water as her house moved into neighbors’ farm fields.
“My little dog was shaking and I didn’t know where Jerry was,” she said, recalling a moment on her back porch, the last time she saw her miniature Schnauzer, Batman, alive and dry. “I was praying to Jesus.”
She managed to call her sister, Vedette Rice, from her cell to say she loved her — just before a swift water rescue came to her aid and saved her. She could only watch helplessly as Batman was swept away, struggling in the water.
Her 77-year-old husband’s body was found Sunday.
As she and countless others are faced with the shock of suddenly losing a loved one, financial realities are pressing down. Hunter said she felt she had no other choice other than selling five of her 12 quarter horses to pay for her husband’s funeral, especially after a recent meeting with her insurance agent added to the inundation of bad news.
“My car insurance … they are going to take care of me, but my homeowners’ said, ‘Nope, sorry, I can’t do anything for you.’”
Hunter said she never imagined she’d need flood insurance. Another of her sisters, gathered around Vicki Hunter to offer support, summed up the reason: “Who would ever think that a Category 4 (hurricane) would come to Tennessee and kill more people than it did in Florida?” Valerie Paulson, 61, of nearby Johnson City asked rhetorically.
Not only has Hurricane Helene dealt out unimaginable grief, the disaster has also come in a form from which there is no easy financial recovery.
New territory for floodwaters
Hurricane Helene’s strengthening in the Gulf of Mexico and landfall in the Big Bend area of Florida were predicted, but the devastation the monster storm wreaked across the inland Southeast from Georgia to North Carolina came as a shock. This turn has experts in disaster management and the insurance industry calling for rethinking flood coverage and expanding the definition of areas prone to destructive deluges.
“Asheville (North Carolina) wasn’t supposed to flood,” said Michael Hecht, president and CEO of Greater New Orleans, Inc., whose involvement in rebuilding New Orleans after Hurricane Katrina’s devastation has meant working to improve the country’s flood insurance.
Parts of the famed tourist town in western North Carolina's high country is in ruins and searches for those unaccounted for were still ongoing a week after the calamity.
“What this latest disaster is making clear is that virtually anywhere in America can experience intense weather and subsequent devastating flooding,” continued Hecht, who testified before the Senate Banking, House, and Urban Affairs Committee about national flood insurance earlier this year. “We need national policies that address this new reality.”
Record-breaking uninsured losses expected due to Hurricane Helene
In the counties hardest hit by Hurricane Helene’s deadly inland tear from Georgia to North Carolina, fewer than 1% of the properties are insured against flooding through the National Flood Insurance Plan (NFIP), which underwrites most of the nation’s flood insurance policies, according to the insurance industry-funded Insurance Information Institute. It's administered by the Federal Emergency Management Agency (FEMA).
Given the scant flood coverage in the area and how standard homeowner insurance policies like the one Hunter has don’t cover flood losses, the collective financial devastation to Helene's victims is likely to make a mark in the history books, according to Mark Friedlander, director of communications for the Insurance Information Institute.
“Helene may be the largest uninsured loss we have seen from a landfalling hurricane because of the widespread devastation in areas where flood insurance take-up rates are so low,” Friedlander said.
Joi McPherson, right, hugs her brother-in-law, Thomas Hall, as they remove items from her home which flooded during Hurricane Helene in Swannanoa, North Carolina, Thursday, Oct. 3, 2024.
A standard insurance policy doesn't cover water damage from hurricanes unless it is determined the hurricane's winds caused an opening in the property allowing the water to pour in, or the winds blew a tree branch down that caused a breach for the water to flow into the insured structure.
Without those factors, flood insurance must provide the financial backstop for fixing storm-induced damage or replacing what was lost. Or, without flood insurance, as most of the residents in this area of the country are, the loss will largely be managed out of their own pockets.
Limited consumer awareness
Flood insurance is not widely required by lenders as homeowner insurance is. Only those who live in federally designated flood hazard zones are required by their lender to get it.
Many homeowners are unaware of their standard policy's limitations and don't understand that living in a flood hazard zone is not a prerequisite for fortifying property with flood insurance, said Dan Kaniewski, former FEMA deputy administrator for resilience. And hearing that your property has a chance of flooding once every 100 years may lead to a false assessment of the risk, he added.
Nationally, the average flood insurance policy bought through the NFIP costs between $800 and $1,000. It can be twice as a high in a flood hazard zone.
“They (a potential policyholder) might think, ‘Well, I’m only going to own this house for 30 years,’” Kaniewski said. “What they don’t realize is that means there’s a 1% chance of flooding every single year.
“It’s not surprising that a lot of these homes that were inundated (in Helene) lack flood insurance because it (flood risk) is a hard concept to communicate in an effective way,” he added.
Florida has an average elevation of 100 feet above sea level — lower than Tennessee’s lowest point — and lists the highest percentage of properties protected by flood insurance than any other state. Most of the participation in flood insurance — amounting to 20% of Florida properties — is driven by mortgage lender requirements because of the property location in a flood hazard zone, industry officials say.
FEMA's flood hazard zone maps are where the error lies, said John Dickson, president and CEO of Aon Edge, a private flood insurance company, based in Montana. These zones that lenders use to determine who must buy flood protection don’t reflect the real flood risks and emerging realities of climate change, Dickson said.
“We have mandatory purchase area maps that were drawn five to 10 years ago, and they are not keeping pace with how the weather is changing,” Dickson said. “Flood has been historically driven by proximity to the coast. Today, it’s rainfall.”
Federal flood insurance woes in contrast to private market
Hurricanes have caused disruption to the private, insured market that most homeowners participate in.
After Hurricane Ian in 2022, for example, some Florida property owners’ standard homeowner insurance premiums were hit by increases that doubled their annual bill, pushed a bevy of insurers out of state or into insolvency, and increased the number of property owners who were dropped by private insurers and had to go to the Citizens Property Insurance Corp. The state-backed insurer of last resort hit a new high in the number of policies it issued shortly after that storm.
Because Helene is largely a flooding event, flash estimates show that the storm will be a much more manageable event for the private insurance market. For traditional insurers, the storm is going cost about six times more than Hurricane Debby, which blew through in August, but about one-tenth of Ian's privately insured losses, according to a top disaster loss modeling company, Karen Clark & Company.
The nation’s flood insurance, however, has a whole different set of problems than the private insurance market, Hecht, in New Orleans, said.
“Home insurance is the acute crisis — like an avalanche,” Hecht said. “Flood insurance, because the (premium) increases are capped at 18% a year, is a slow-moving crisis, like a melting glacier.”
The program started in the wake of Hurricane Betsy in 1965. Hecht said that the water inundation along the Gulf of Mexico had caused the private insurance market to retreat from covering flood damage.
Now, as a federally run program, Congress must authorize the flood insurance program and legislators have not been able to agree on a multiyear renewal since 2017. Its most recent authorization was approved Sept. 20 and expires Dec. 20.
Debris is piled up outside of a home that flooded during Hurricane Helene in the Lower Beacon neighborhood of Swannanoa, North Carolina, Thursday, Oct. 3, 2024.
That short-term commitment, national flood proponents say, has prevented FEMA from fixing the long-term problems that plague the flood insurance program. That's caused more and more policyholders to drop the coverage. The current 5 million policies in force are expected to drop to 4 million shortly, according to testimony in front of the Senate committee.
That drop in purchased policies threatens to defeat an aim of the flood insurance program: Spreading the risk far and wide, across the country.
Criticism of the country's national flood insurance has come from a number of quarters.
The National Resources Defense Council, an environmental group, for example, paints the NFIP as encouraging unsustainable development in places that repeatedly flood. And, starting in 2021, the program went to a new rate structure with the goal of being actuarily sound. Instead of just borrowing to offset larger-than-expected claims, premiums are now set to offset expected losses and reflect the risk at each property.
As some policies advance to premiums that reflect actual risk — with perhaps many years of 18% increases over the previous year — the aim is to end the deficit spending; the NFIP is about $20.5 billion in the red, reflecting money borrowed from the U.S. Treasury to offset policyholder claims, according to Ohio's Democratic Sen. Sherrod Brown's office.
What to do about the debt is just one of the issues that Congress can't agree on, Kaniewski, the former FEMA official said. But the government can't let the program lapse because then new policies can't be written or renewed for properties in the high flood hazard zones that have mortgages that require the coverage.
"To address the challenges that NFIP faces, Congress needs to provide FEMA with the reforms it has requested," Kaniewski said, noting that FEMA would like to offer flooding insurance rates based on income to broaden its appeal. "The program is going to continue to have challenges well into the future until Congress acts."
Kaniewski said that he expects that Hurricane Helene's victims' effort to return to their old lives will illustrate just how important flood insurance is.
"It's only going to become more apparent that very few of these disaster survivors have flood insurance and they will struggle through this disaster recovery," he predicted. "It's going to take the government, at all levels, philanthropic organizations and friends and family to get them back on their feet."
Jerry and Vicki Hunter in their home in Jonesborough, Tennessee before Hurricane Helene's destruction took Jerry's life, their home and their dog.
The road to recovery from Hurricane Helene
On Saturday, Jerry Hunter was laid to rest, leaving his widow to rebuild her life without him.
Vicki Hunter is eligible for individual assistance from FEMA to begin the journey, but that funding is considered a safety net for immediate needs, not meant for rebuilding destroyed property.
Many Katrina victims also didn’t have flood insurance, relying on the levees to keep them safe, according to Stephen Murphy, a disaster management professor at Tulane University in New Orleans. A court case determined that homeowners’ policies did not cover Katrina’s flooding, and many expect that flooding claims from Helene against standard homeowners' insurance will not be covered.
“We're going to have to have some innovative tools like there were for New Orleans following Katrina,” Walker said. “It’s pretty obvious that the homeowner insurance (in the disaster zone) doesn’t cover floods, so something has to be done … or people are going to be leaving that area.”
Right now, Vicki Hunter can’t imagine going back and living in the same place. Her home’s destruction basically amounts to losing all the equity accumulated over 14 years of living there, she said.
She thinks she’ll have to sell the property. Donations to the GoFundMe her sister started five days ago have slowed since garnering more than 130 donations on its fourth day. Her tragic story competes with many more tellings of worlds shattered by a torrent of water.
“That’s where I lost my husband, my dog, my house,” she said.
Anne Geggis is the insurance reporter at The Palm Beach Post, part of the USA TODAY Florida Network. You can reach her at ageggis@gannett.com. Help support our journalism. Subscribe today.
This story was updated with the correct information about where Aon Edge is based.
This article originally appeared on Palm Beach Post: Most Hurricane Helene damage not covered by regular property insurance
After '60 Minutes,' Palm Beach County legislator calls for probe of Ian insurance payouts
Anne Geggis, Palm Beach Post
Tue, October 8, 2024
Reports that damage claims from Hurricane Ian were systemically downgraded has a Palm Beach County state lawmaker leading a call for a Florida grand jury and a select legislative committee to investigate.
Democratic state Rep. Kelly Skidmore of Boca Raton said the report on the CBS network news magazine “60 Minutes” that aired Sept. 29 echoes testimony heard during a 2022 House Commerce Committee meeting. During that hearing homeowners and insurance adjusters testified that valid claims from the hurricane two years ago were rejected and underpaid once it came time to make insured Floridians whole from the damage suffered.
“This exposé was, unfortunately, not news to us in Florida,” Skidmore said. “For nearly 30 years, Republicans have had full oversight and control over the insurance industry. The result? A downward spiral for property owners with no real solutions to the problem.”
The Florida House Democratic Caucus has sent a letter to Republican Gov. Ron DeSantis asking for the special statewide grand jury to investigate whether illegal activity resulted in insurers giving Hurricane Ian victims short shrift. And another letter was sent asking for the select legislative committee to Speaker of the House-Designate Daniel Perez, a Miami area Republican, Skidmore said.
Governor DeSantis: Concern already addressed on Hurricane Ian insurance payouts
Asked about the Democrats’ request, a spokesman for the governor provided a clip of DeSantis reacting to the 60 Minutes’ report but not the call for the statewide grand jury. DeSantis said that safeguards against downgraded claims were already baked into reforms that were passed post-Hurricane Ian.
“We now have protections in Florida law that you can't just disregard what the adjuster does,” DeSantis said, after noting he is “not much of a fan” of the CBS news magazine. “You actually have to have a clear, valid reason to be able to depart downward. That may not have been in place when Ian happened.”
DeSantis also noted that the company the news magazine focused on, Heritage Property & Casualty Insurance, was fined $1 million last May for violating claims-handling requirements after Ian. Most of the findings in that March report, however, focused on handling claims in a timely manner and following procedures, rather than the actual amounts paid, although it did note Heritage’s failure to pay interest.
Kelly Skidmore
Heritage, for its part, issued a public statement after the 60 Minutes segment aired noting the program's reporting omitted information the 12-year-old company had provided about improvements that were made in its claims-handling procedures in Ian’s wake. And also there was no deliberate effort to deceive customers about the value of their claims, Heritage said.
“It is important to point out that when we did our own review of Hurricane Ian claims following 60 Minutes’ outreach — using a random sample of 10,000 claims — we found that 4,162 of those were revised downward, 2,583 of them were revised upward and about 3,311 of them had no change from what the adjuster reviewed. This is further evidence that we work to pay every eligible claim,” the company statement reads.
Perez could not be reached by email, text or phone to respond to the Democrats’ call.
Florida property insurance a political hot potato
The same year that Hurricane Ian's winds made landfall at nearly Category 5 strength, five property insurance companies became insolvent or stopped doing business in the state. Special legislative sessions were called to shore up the situation.
But Democrats were unhappy with many of the reforms that the Republican-dominated Legislature put in place. Those measures largely focused on stemming the tide of litigation from contested damage claims. But critics said the Legislature's actions left consumers with little recourse to contest an insurance companies' valuation of a claim.
More than a year out from those reforms, Floridians typically pay two to three times more for their property insurance premiums than the national average. The state's potential for catastrophic hurricanes, the number of lawsuits and the financial industry's reluctance to help insurers' with the risk of those factors have been largely blamed for the state of affairs in providing ample and affordable property insurance.
Florida should lead the way in seeking solutions to the problem, Skidmore said, noting that Democratic U.S. Rep. Jared Moskowitz has proposed spreading the risk of these storms around a much wider area with a National Catastrophic Risk Pool. Moskowitz of Parkland has proposed that natural catastrophes like the one hurricanes Ian, Helene and, now possibly Milton present — with widespread, devastating damage — would be backed by the nation’s credit, instead of relying on private insurers and money markets to shoulder the worst sort of risks that have wiped out some insurers faced with a crush of damage claims.
“I am renewing my call to act and support Congressman Moskowitz’s efforts to, at the very least, have a conversation about creating a National Catastrophe Risk Pool,” Skidmore said in a prepared statement.
The risk pool idea is similar to a bill former Democratic U.S. Rep. Charlie Crist proposed when he represented Pinellas County. Moskowitz’s bill, introduced in March 2023, has not gotten a committee hearing or a cosponsor.
Anne Geggis, Palm Beach Post
Tue, October 8, 2024
Reports that damage claims from Hurricane Ian were systemically downgraded has a Palm Beach County state lawmaker leading a call for a Florida grand jury and a select legislative committee to investigate.
Democratic state Rep. Kelly Skidmore of Boca Raton said the report on the CBS network news magazine “60 Minutes” that aired Sept. 29 echoes testimony heard during a 2022 House Commerce Committee meeting. During that hearing homeowners and insurance adjusters testified that valid claims from the hurricane two years ago were rejected and underpaid once it came time to make insured Floridians whole from the damage suffered.
“This exposé was, unfortunately, not news to us in Florida,” Skidmore said. “For nearly 30 years, Republicans have had full oversight and control over the insurance industry. The result? A downward spiral for property owners with no real solutions to the problem.”
The Florida House Democratic Caucus has sent a letter to Republican Gov. Ron DeSantis asking for the special statewide grand jury to investigate whether illegal activity resulted in insurers giving Hurricane Ian victims short shrift. And another letter was sent asking for the select legislative committee to Speaker of the House-Designate Daniel Perez, a Miami area Republican, Skidmore said.
Governor DeSantis: Concern already addressed on Hurricane Ian insurance payouts
Asked about the Democrats’ request, a spokesman for the governor provided a clip of DeSantis reacting to the 60 Minutes’ report but not the call for the statewide grand jury. DeSantis said that safeguards against downgraded claims were already baked into reforms that were passed post-Hurricane Ian.
“We now have protections in Florida law that you can't just disregard what the adjuster does,” DeSantis said, after noting he is “not much of a fan” of the CBS news magazine. “You actually have to have a clear, valid reason to be able to depart downward. That may not have been in place when Ian happened.”
DeSantis also noted that the company the news magazine focused on, Heritage Property & Casualty Insurance, was fined $1 million last May for violating claims-handling requirements after Ian. Most of the findings in that March report, however, focused on handling claims in a timely manner and following procedures, rather than the actual amounts paid, although it did note Heritage’s failure to pay interest.
Kelly Skidmore
Heritage, for its part, issued a public statement after the 60 Minutes segment aired noting the program's reporting omitted information the 12-year-old company had provided about improvements that were made in its claims-handling procedures in Ian’s wake. And also there was no deliberate effort to deceive customers about the value of their claims, Heritage said.
“It is important to point out that when we did our own review of Hurricane Ian claims following 60 Minutes’ outreach — using a random sample of 10,000 claims — we found that 4,162 of those were revised downward, 2,583 of them were revised upward and about 3,311 of them had no change from what the adjuster reviewed. This is further evidence that we work to pay every eligible claim,” the company statement reads.
Perez could not be reached by email, text or phone to respond to the Democrats’ call.
Florida property insurance a political hot potato
The same year that Hurricane Ian's winds made landfall at nearly Category 5 strength, five property insurance companies became insolvent or stopped doing business in the state. Special legislative sessions were called to shore up the situation.
But Democrats were unhappy with many of the reforms that the Republican-dominated Legislature put in place. Those measures largely focused on stemming the tide of litigation from contested damage claims. But critics said the Legislature's actions left consumers with little recourse to contest an insurance companies' valuation of a claim.
More than a year out from those reforms, Floridians typically pay two to three times more for their property insurance premiums than the national average. The state's potential for catastrophic hurricanes, the number of lawsuits and the financial industry's reluctance to help insurers' with the risk of those factors have been largely blamed for the state of affairs in providing ample and affordable property insurance.
Florida should lead the way in seeking solutions to the problem, Skidmore said, noting that Democratic U.S. Rep. Jared Moskowitz has proposed spreading the risk of these storms around a much wider area with a National Catastrophic Risk Pool. Moskowitz of Parkland has proposed that natural catastrophes like the one hurricanes Ian, Helene and, now possibly Milton present — with widespread, devastating damage — would be backed by the nation’s credit, instead of relying on private insurers and money markets to shoulder the worst sort of risks that have wiped out some insurers faced with a crush of damage claims.
“I am renewing my call to act and support Congressman Moskowitz’s efforts to, at the very least, have a conversation about creating a National Catastrophe Risk Pool,” Skidmore said in a prepared statement.
The risk pool idea is similar to a bill former Democratic U.S. Rep. Charlie Crist proposed when he represented Pinellas County. Moskowitz’s bill, introduced in March 2023, has not gotten a committee hearing or a cosponsor.
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