Wayne Texeira Marketing Director, CFMP, AINS, AIS, API
On October 29, 2012, Hurricane Sandy slammed into the East Coast. A year ago today, many coastal communities were only beginning to assess the devastation caused by the historic superstorm. While many areas have begun to rebuild, many families and businesses continue to be displaced and struggle financially as they work to recover.
You only have to search online for “hurricane sandy photos” to be reminded of the devastation caused. One interesting page on Mashable shows photos taken just after Hurricane Sandy along side pictures of the same locations today.
Over a dozen states were impacted by Hurricane Sandy, which caused an estimated $18.75 billion in insured property losses, excluding flood insurance claims covered by the National Flood Insurance Program. When you consider uninsured losses and the ongoing financial impacts, the economic implications from Hurricane Sandy will continue to be felt for many years. Some of the outstanding damage is listed in a Business Week article by Mark Glassman.
FEMA also has a page outlining how Hurricane Sandy has been managed and where we are one year later. More than $1.4 billion in individual assistance has been provided to more than 182,000 survivors as well as $3.2 billion in emergency work, debris removal and repair and replacement of infrastructure.
While coastal New Jersey and New York continue to feel the effects of Sandy, the impact of major hurricane damage is being felt nationwide in the form of recent changes to the National Flood Insurance Program (NFIP). The Flood Insurance Reform Act of 2012 was passed with the objective of making the NFIP more financially self-sustaining. The changes will mean premium rate increases for some – but not all -- policyholders over time; however, some increases will be significant.
Recently, there have been political and legal moves to attempt to delay and/or modify the Flood Insurance Reform Act as the actual financial impacts of its implementation are being realized. However, as these issues are reviewed, homeowners, who have flood insurance on their primary residence, need to be aware that their current premium rate structure may be grandfathered as long as their existing policy remains in force. It is extremely important for homeowners to maintain their current flood policies and not let them lapse; otherwise, they will have to purchase a new policy that is subject to the new rules and rates.
As we wait to see how the flood insurance reform situation develops, we can all be grateful no major storms have occurred on the East Coast during the 2013 hurricane season. In looking back at Hurricane Sandy (and Irene in 2011), the lesson is that significant devastation can occur in areas that traditionally are not impacted by such storms. And, although you certainly can and should take steps to protect your property from storm damage, it's equally important to purchase the maximum amount of coverage you can afford for situations when Mother Nature delivers a major punch.