Flood insurance continues to be a problem issue after Hurricane Sandy
In October of 2012, Hurricane Sandy made its way to the East Coast of the U.S. and left destruction in its wake. The storm caused widespread flooding throughout many of the East Coast’s major cities, with New York and New Jersey seeing most of the damage. Though the storm caused a grievous amount of damage, it also highlighted many of the problems that exist in the U.S. flood insurance sector, most of which are embodied by the National Flood Insurance Program.
National Flood Insurance Program grapples with financial woes
Most private insurers operating in coastal regions of the country do not offer flood insurance coverage to homeowners. Those that do often charge excessively for the coverage because of the risks associated with flooding in such regions. Because private insurers are leery of the flood insurance market, most consumers get the coverage they need from the National Flood Insurance Program. The federal program offers coverage at a lower rate than those being offered by some private insurers. The problem, however, is that the federal program has been on the verge of financial ruin since 2005.
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Federal program called a “disgrace”
2005’s Hurricane Katrina dealt a powerful blow against the National Flood Insurance Program, from which it has yet to fully recover. Because the program is being bogged down by major financial issues, approximately 70% of the claims generated by Hurricane Sandy have gone unresolved, a fact that has drawn the ire of New Jersey Governor Chris Christie. Many of the unresolved claims come from homeowners in New Jersey and Christie suggests that the delay in claims processing is putting a stop to the recovery effort.
Governor pressuring federal officials to seek solutions to the flood insurance program
Governor Christie is calling the National Flood Insurance Program a “disgrace” and suggests that the federal program needs to be put to action. In New Jersey alone, more than 346,000 properties were damaged by the storm. The majority of these property owners have yet to be contacted by the National Flood Insurance Program regarding the claims they submitted in the weeks following the natural disaster. Governor Christie is now pressuring a congressional delegation to seek answers from the Federal Emergency Management Agency (FEMA), which oversees the National Flood Insurance Program.