Sandy caused an ultimate total of $70.2 billion in damages, making it the second most high-priced storm in United States history up until 2017, behind the infamous Hurricane Katrina (NOAA 2017). Its costs will, however, likely be surpassed by those of Hurricane Harvey and possibly Irma, a reflection of how storm costs have been rising. That is partly due to their increasing intensity, but also to growing investments and populations along America’s coasts (Irfan, 2017). While Sandy’s human toll of 159 deaths (72 direct and 87 indirect) was dwarfed by the 1,833 from Katrina, it proved more lethal than any other modern hurricane in the United States, including the most recent storms. An estimated eight million homes lost electrical power, more than in the entire hurricane season of 2017 (Webley, 2012). These far-reaching impacts from Sandy mostly came after its winds had slowed from hurricane-level speeds, due to its tremendous extent as well as the densely built parts of the country it struck. Its path of destruction cut across seventeen states, with the severest impacts centering around the nation’s largest metropolitan region. The New York Stock Exchange was forced to shut down for two consecutive business days, for the first time since 1888 (NOAA 2017).
Compared to other storms that have affected Long Island, Sandy ranks among the two worst ever recorded. Sandy’s storm surge flooded Long Island at historic levels that “exceeded benchmark storms from the 1990s and rivaled the great hurricane of 1938,” according to data collected by the federal government(Herbert, 2012)(Schubert, et al, 2015). The 1938 hurricane, also known as the Long Island or New England Express, stirred up storm tides as high as the 16.75 measured at Willet’s Point, and likely higher elsewhere (NOAA, 2016). Though not a hurricane, Sandy’s highest surge may have surpassed this earlier record-setter: Long Beach’s storm surge reportedly reached 17.48 feet, though a later, official USGS maximum only went as high as 12.45 feet at Kings Point (Herbert, 2012)(Schubert, et al, 2015). The scale and intensity of Sandy’s impacts helped lead scientists to alter their predictions of the frequency of severe storms in the New York region. Since the mid-1800s, according to one 2014 study, the annual likelihood that a storm would over-top Manhattan’s seawalls, as Sandy did, has gone from 1% to 20-25%, or once every four years (Thompson, 2014).
The Question of Flood Insurance
Hurricanes cost billions of dollars. When a hurricane hits, and the damages mount, so does the need for funds to repair them. For most of US history, these costs were covered either by property owners or private insurance companies, but in the middle of the 20th-century, the federal government got in on the act. Congress in 1956 passed the Federal Flood Insurance Act which sought to encourage a private insurance market for damages wrought by hurricanes and other storms. It took a severe hurricane, Betsy in September of 1965, for the federal government to undertake a more far-reaching approach. From 1968, a National Flood Insurance Program was established, setting up a “partnership” between the government and communities it determined to be prone to flooding. The program began developing flood maps, establishing rules such as deductible limits and premiums, and subsidizing flood insurance policies for existing homes. With further legislation such as the Flood Disaster Protection Act of 1973 and the National Flood Insurance Reform Act of 1994, joined by efforts to promote flood insurance policies by the Federal Emergency Management Agency (FEMA), the scope of federal flood insurance expanded considerably, especially in areas determined to be vulnerable (Kerjan, 2010)
In the wake of Sandy, FEMA paid $1.4 billion dollars to applicants that lived in Connecticut, Maryland, New Jersey, New York and Rhode Island. But many Long Islanders were disappointed with the aide they received, and conflicts ensued, especially as FEMA itself concluded it had overpaid Sandy victims by as much as one dollar in every five. Eventually the federal agency backed down, reshuffled its own management, and improved its arrangements with private insurers (Ryan, 2015)(Dooley, 2016).
Still in 2017, residents are facing difficulties. For homes in risky areas, designated as Special Flood Hazard Areas (SFHAs), insurance is mandatory, and that means paying the premiums. These required payments in turn make it harder for people to sell their homes, even as the subsidies long provided for insurance on existing homes are now being phased out. As owners are being asked to pay full premiums, they are considering new methods to safeguard their residences, such as “endur[ing] the hardships that come with elevating a home”–raising its ground floor several feet up to avoid flooding. (McDermott, 2017) Chief among these hardships is the cost, which can range into the tens of thousands, even over a hundred thousand, depending upon the size of the house (Crichton and Herbert, 2013).
As we face a future of rising sea levels, much more damage will then need covering. Who will be willing, or able to pay? The National Flood Insurance Program, scheduled to expire at the end of September, was extended by Congress until December 8, 2017. Despite the record-setting damages of the 2017 hurricane season, whose costs will likely be unprecedented, it is not clear whether the President or Congress will commit to continuing this program, the main means by which the federal government has long assisted disaster victims (Simpson, 2017). One thing is clear, however, in the areas hit by Harvey, Irma, and Maria, the existing program was unsuccessful at building out private flood insurance markets. With eighty percent of Harvey’s victims uninsured for their loses, the vast majority will either have to fall back on their own funds to rebuild, or else hope to secure grants from FEMA, as unsteady and controversial as its post-Sandy role has been. It is high time that we explore other models for covering flood losses. In Europe, several countries have insurance coverage against flooding and other natural hazards that often mandatory for homeowners, and successfully enforced; they have also experimented with more public investments in protective infrastructure (Kerjan, 2010). America could use some tips from overseas.