Takeaways:
- Even large states like Florida saw flood prevention hobbled by FEMA cuts
- Federal resources provided the large majority of funding
- Insurer-insurtech partnerships could be tapped for disaster mitigation
Cuts to the Federal Emergency Management Agency will pit smaller states against bigger states for natural disaster recovery resources, according to Chip Merlin, founder of Merlin Law Group.
"The bigger states that have more money and bigger government are probably in a much better position to respond and take on those responsibilities," Merlin said.
Merlin is an attorney for natural disaster victims, whose experience includes representing communities affected by Hurricane Katrina. The
"Some calamities are going to take place," he said, pointing to $300 million cut in April from Florida's
"Some of the mitigation money was going to be used to build up with respect to the anticipated water level rise," said Merlin, who is based in Tampa. "What's going to happen in future hurricanes? Even the state of Florida doesn't have that kind of money, so it's not going to happen. There will be floods."
Previously, under the U.S. Stafford Disaster Relief and Emergency Assistance Act enacted in 1988, federal funds accounted for at least 80% of mitigation funding, with states contributing 20%. However, in some cases, federal funds supplied 90% or 100% of funds.
Federal funding cuts leaving states relying on only their own resources means natural disasters will get reaction, but not mitigation, according to Merlin. The federal government could also provide more sophisticated response to disasters, he added.
"That type of sophistication is going to unfortunately be lost. Most mayors, most municipalities are going from budget to budget, trying to make things work. They have schools, pensions, everything else," Merlin said. "They tend to put off the rainy event days for very last. It's forced upon you when you have a catastrophe. At the state and local level, the federal government's been the impetus behind that. My prediction is that we're going to lose some of that impetus."
State-level disaster and forecasting agencies are hiring just a small fraction of the federal personnel laid off from FEMA, the
For mitigation of natural disasters, Merlin suggests partnerships between insurers and insurtech companies as a means to fund systems and efforts.
"Partnership is something we should promote a lot. It's a win-win situation for everybody," he said. "Insurers can underwrite by telling insurtechs to build applications for them, like something that can take a video of a property. The insurer can then say if the policyholder does certain things, they will give mitigation credits. It's going to cost some money up front, but they don't want to have this loss and want people to be safe. To the extent that the policyholder doesn't do those things, it will cost them more for insurance."
