The Increasing Cost of Natural Disasters

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After all the hullabaloo about a huge hurricane season this year, it seems to have fizzled out and not actually materialized. Weather forecasters are confounded by this turn of events—which the rest of us are confounded by, since they never seem to be right most of the time anyway.

And overall, the missed hurricane season seems like a bit of a good thing. Of course, it’s a real boon for the people, structures and environments who would have been affected by them, but it’s also good news for the U.S. government, who has already shelled out almost $62 billion on disaster relief in the two years prior to September 30, 2012. And that doesn’t even include Hurricane Sandy!

Did you know that our nation’s crops are insured? They are, and the government pays $0.62 on the dollar for premiums and shares losses with insurance companies during the bad years. But overall, the Federal Emergency Management Agency (FEMA) has a Disaster Relief Fund, and it paid out over $8 billion during the 2011 and 2012 fiscal years. During that time there were 25 natural disasters that caused more than $1 billion. EACH.

And how much did Hurricane Sandy cost FEMA and its Disaster Relief Fund? Just a mere $50 billion for relief and recovery—twice for one storm than what those 25 natural disasters cost in total. And that means for the calendar years of 2011 and 2012, natural disasters in New York and New Jersey alone cost $188 billion, and that’s not all. There was more costs for damages that weren’t covered by FEMA’s Disaster Relief Fund that was paid out by private insurance companies, individuals and businesses.

And this lull in the hurricane season notwithstanding, the number of expensive weather-related disasters has been increasing in recent decades. In fact, the number of extreme weather events costing billions of dollars has gone from an average of two per year in the 1980s to over nine per year just from 2010 to 2012.

Luckily, a mild winter has been predicted for our state of California, which will hopefully alleviate flash floods and mudslides that are typical when we get El Niño weather patterns. But, if we’ve learned one thing from history, it should be the lesson that weather forecasts are notoriously unreliable.

And that, dear friends, is why insurance exists—to protect you when the unforeseen happens. Want to make sure you’re covered for everything you need? Call BMR Insurance Agency for a completely free insurance review: 714-838-1911.

 

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