Communities along the Mississippi River may soon see an insurance program that can provide financial assistance faster than existing traditional insurance programs and federal aid, according to Grist.
The Mississippi River Cities and Towns Initiative is collaborating with Munich Re, a German multinational insurance company, to develop an insurance pilot program that can quickly release emergency funds following a natural disaster.
Federal disaster assistance from the Federal Emergency Management Agency and traditional insurance programs can take weeks or months to arrive due to routine investigations and proof of loss requirements. Communities hit by natural disasters do not have the luxury of waiting for help.
This novel insurance product can provide local governments with a faster payout, allowing cities and towns to focus on restoration rather than depleting resources budgeted and allocated for daily needs. Furthermore, the insurance program will rely on “triggers” such as river heights or wind speeds to automatically result in payouts, increasing resiliency.
As natural disasters like flooding become more common in Mississippi River communities, this pilot program could provide much-needed security.
Insurance companies have dropped coverage for homeowners in high-risk wildfire areas in some cases. Instead of abandoning communities, this collaborative effort aims to keep them safe. Florida lawmakers have proposed similar initiatives to protect homeowners from rising insurance premiums or reduced coverage.
According to Grist, this pilot program will cost these river communities nothing because no payouts have been made yet. Once the pilot program enters the implementation phase, MRCTI hopes that larger corporations with a stake in the Mississippi River will foot the bill.
“In the first 24 to 72 hours after a disaster event, very little money can help a whole heck of a lot,” Colin Wellenkamp, MRCTI’s executive director, told Grist.
According to Grist, “Not every city is going to flood every year, but the flooding will impact at least one section of the river,” said Raghuveer Vinukollu, senior vice president of Munich Re in the US.