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Op/ed: The Daunting Dilemma of Disaster Insurance

States Must Be at Front Lines of Reform as Climate Change Surges, Public Policy Researcher Argues

By Donald F. Kettl

flooded houses

The FEMA emergency fund ran dry this year after a litany of disasters. A UMD researcher says state-level insurance reforms are needed to ensure that homeowners have access to insurance and that the federal fund remains solvent for disasters.

When a massive flood or fire ravages a community, displaced homeowners need help—but who should pay for it? In Florida and California, insurers are pulling out or going insolvent as losses from natural disasters pile up, and homeowners increasingly pass the cost of rebuilding on to the federal government.

Writing in Governing magazine, Professor Emeritus Donald F. Kettl, former dean of the School of Public Policy, says reforms must take place at the state level to keep insurers operational and ensure federal emergency funds are available to help people in crisis, rather than pay for constant rounds of repairs to homes in risky locales.

When wildfires burned virtually every inch of Lahaina in Hawaii back in August, President Biden flew there to be with those suffering. He and his wife walked down Front Street and came back to tell his audience that “the devastation is overwhelming.” He said he had signed a major disaster declaration “that mobilized the whole-of-government response, which means whatever you need, you’re going to get.”

But when Biden got back to Washington, the conversation shifted. The Federal Emergency Management Agency's (FEMA) emergency fund was broke, because of enormous flooding in California during the spring, an April tornado outbreak in the Midwest and South, Hurricane Idalia’s destruction in Florida during August, more flooding in New England during September, and then of course, the fires in Hawaii. Federal climatologists added up the cost of 139 major disasters since 2016 and found a total of $1.1 trillion, as well as the loss of more than 5,200 lives. It was getting harder to keep the fund full.

Read the rest of the essay in Governing.



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