A coalition of insurance companies and environmental organizations is calling for a "complete overhaul" of the nation's disaster policies, which it says encourage dangerous development and wasteful spending after catastrophes strike.

The SmarterSafer coalition urges policymakers in a 21-page report released today to increase pre-disaster spending on mitigation efforts, like raising homes and restoring oyster beds, to tackle climbing losses from floods and other perils exacerbated by climate change.

The group also says that, as it stands, the Stafford Act can leave states unmotivated to prepare for landfall hurricanes because they anticipate that the federal government will shoulder most of the reconstruction costs. In that sense, states that do the least to avoid damage may receive the largest amount of federal help.

The fix might be to make federal payments contingent on state mitigation efforts. The report says disaster aid should be dispensed on a "sliding scale" so that communities can get "a full share of funding only if they have taken significant steps to protect its residents from harm."

"With the federal government taking on such an enormous share of the financial burden and nearly all recovery responsibility, there is little incentive for disaster-prone states to take action to reduce risk," the report says. "For example, disaster-prone states like Texas and Louisiana are among those spending the least of their state budget on emergency response and mitigation programs that can reduce disaster costs."


The report coincides with the spring season for thunderstorms, which insurers say have become more damaging over the last 30 years. It's now common for a series of storms with strong winds, hail and tornadoes to cause as much damage as a hurricane. Over a five-day period last May, severe storms created $3.9 billion in economic damages, according to Munich Re.

Insure a road?

One reason for that is additional development. More structures are there to be damaged. Another reason is climate change, says Megan Linkin, a vice president with Swiss Re, a member of SmarterSafer.

She said a combination of increased mitigation spending at all levels of government, stronger land-use rules and the purchase of private insurance by governments could address some of the nation's rising exposure to loss.

Sea-level rise is amplifying the damage from storm surges, Linkin said, and exacerbating inconspicuous inundation events called nuisance flooding in low-lying areas where salt water can enter drinking water and clog up storm drains.

"Even if you strip out climate change from the equation, we just continue to build and invest in high hazard areas," she added. "Now we see multiple billion-dollar loss events annually -- and it's not hurricanes. It's tornadoes. It's severe thunderstorms."

The report also calls for an end to subsidized federal flood insurance, with a program to help low-income families afford the protection. And it urges lawmakers to clarify the law to encourage homeowners to buy private flood insurance. Currently, mortgage lenders favor public insurance.

It also calls for the creation of "disaster mitigation standards" to help ensure that federal projects, like bridges and roads, can withstand natural shocks.

'We cannot wait,' but probably will

And it says that public infrastructure should be insured by the private sector. The report says that would result in stronger projects because insurance "sends proper signals about risk." And it urges lawmakers to increase funding for the preservation and restoration of oyster beds, salt marshes, dunes and beaches to provide protection against storms.

"Lawmakers need to understand the dangers of current policy and take real efforts to ensure we are prepared for the risks we will face in coming years," the report says. "We cannot wait for another disaster to act."

But that's what might happen.

Peter Lefkin, senior vice president for government and external affairs at Allianz of America, another coalition member, said Congress is cool to overhauling disaster policy.

It recently finished a drawn-out debate over raising the price of flood insurance, which ignited discontent among affected homeowners and the real estate lobby. He also suggested that Republicans might steer clear of disaster legislation because it might invite a debate on climate change.

Separately, Congress also appropriated about $60 billion in early 2013 to cover damages from Superstorm Sandy.

"I just don't see anything seriously happening on this at least for the next couple years," Lefkin said, noting one possible exception: if a major disaster strikes.

"People don't do things until their back's against the wall," he added.