Chapter 6: Insurance industry

Introduction to <i>Climate Change Adaptation in New York City: Building a Risk Management Response</i>

New York City Panel on Climate Change 2015 Report. Chapter 3: Static coastal flood mapping.

New York City Panel on Climate Change 2015 Report. Conclusions and recommendations.

Chapter 5: Law and regulation

In “The Long Road to Recovery: Environmental Health Impacts of Hurricane Sandy” in the May 2013 issue of Environmental Health Perspectives, Manuel (2013) provided critical insight from the frontlines about ongoing environmental health threats from Hurricane Sandy. While health risks rise along with the sea levels, policies to help prepare coastal communities for future threats are lagging. Without new policies that reflect the lessons of Hurricane Sandy and a changing climate, this opportunity to improve preparedness will be lost and the health of coastal residents will continue to be threatened. The storm surge accompanying Hurricane Sandy caused an all-time record-breaking flood height of 13.88 ft, which included effects of an estimated 9.23-ft flood surge (Freedman 2012). Before Sandy, flood projections based on global climate change did not include this level of storm surge until the 2050s, when it was expected to result from a 100-year storm event (New York City Panel on Climate Change 2009). We don’t have as much time to prepare as we thought we did. The tools we use to plan for storm flooding, especially floodplain maps, need to be quickly updated to fully reflect the new realities of climate change. Many parts of New York City that were inundated during Sandy were not within Federal Emergency Management Administration (FEMA) flood zones and thus were not prepared for flooding. Half of all the affected residences and half of affected buildings of all types were outside of FEMA’s then-mapped 100-year floodplain (New York City Special Initiative for Rebuilding and Resiliency 2013). Policy gaps are hampering preparations for the storms that we can expect with climate change. In early 2013, FEMA updated the flood risk maps for much of the New York–New Jersey region, some of which had not been updated since 1983 (FEMA 2013). The new flood maps of New York City and Westchester County showed 35,000 more structures at risk of flooding, doubling the numbers of at-risk structures (Buckley 2013). Unfortunately, the updated maps do not include future vulnerability from climate change (Bagley 2013). FEMA has a policy prioritizing agency-wide integration of climate change adaptation in planning and actions (FEMA 2012), but it failed to move forward on directives to evaluate climate change implications on disaster planning and on the National Flood Insurance Program. Now in the aftermath of Sandy, FEMA must take action. The agency can make a difference in coastal communities by requiring states to account for climate change in their hazard mitigation planning. The Biggert-Waters Flood Insurance Reform Act, signed into law in July 2012, further aims to improve floodplain maps (National Association of Realtors 2013). However, FEMA has not yet committed to a timeline for producing new maps that incorporate the latest climate vulnerability projections, and in the meantime, communities are at risk from rising sea levels and storm surges influenced by climate change. Hurricane Sandy is a stark example of the cost of inaction and not being prepared. Recent estimates are that Sandy cost at least $70 billion in damages, with only half of that insured (SwissRe 2013). Research shows that the short-term damages are the tip of the iceberg. For example, long-term mental health distress and disability were pervasive post-storm effects among people displaced after Hurricane Katrina, > 2 years after the storm (Abramson et al. 2008). Factoring in the health impacts from hurricanes can raise cost estimates by hundreds of millions of dollars—billions when mortality valuation is included (Knowlton et al. 2011). Preparedness for flood events has been shown to be cost effective, with benefits of efforts to reduce losses from natural hazards outweighing the costs by a factor of 5 to 1 for flooding (Rose et al. 2007). Hurricane Sandy was a wake-up call not limited to the Northeast: An estimated 53% of Americans live in coastal counties now, and that is excpected to reach 75% by 2025 (National Institute of Environmental Health Sciences 2009). Because of climate change, hurricane storm surges are worse than in the past, and hundreds of millions of people must be prepared. The public health concerns highlighted by Manuel (2013) must be translated into actionable, up-to-date preparedness policies at the federal, state, and local levels. Climate change is a matter of health, fueling extreme weather events that can challenge even strong, resilient people. By taking the climate-preparedness challenge seriously, we stand to save lives, save dollars, and create healthier, more secure communities. Let’s not squander Sandy’s call to get ready while we still can.

Cities are at the forefront of the battle against climate change. We are the source of approximately 80% of global greenhouse gas emissions. And as the climate changes, densely populated urban areas—particularly coastal cities—–will disproportionately feel the impacts. Those of us in local government recognize the importance of national and international leadership on climate change. But we are not waiting for others to act first. Under PlaNYC, New York City's comprehensive sustainability plan, most of our efforts have focused on reducing our greenhouse gas emissions. Initiatives including the Greener, Greater Buildings Plan, which will increase energy efficiency of existing buildings, and retrofitting ferries to use cleaner fuel, will help us meet our goal of reducing the city's emissions by 30% by 2030. These actions alone, however, will not stop climate change. We already face climate risks today, including heat waves, blackouts, flooding, and coastal storms. With climate change these risks will only increase. To ensure that New York City is resilient to existing and future climate risks, we must take further action. Through a generous contribution from the Rockefeller Foundation, I convened the New York City Panel on Climate Change (NPCC), which gathered the leading climate change scientists, academics, and insurance, risk management and legal experts. These experts helped develop a framework and tools to assist the City create a risk-based response to climate change that is grounded in state-of-the-art science information. In February 2009, the NPCC released the most detailed climate risk information for any major city in the world; this volume of the Annals of the New York Academy of Sciences presents the NPCC's full findings. The NPCC climate change projections put numbers to what we already know: climate change is real and could have serious consequences for New York if we do not take action. I appreciate the hard work of the members of the New York City Panel on Climate Change. Through PlaNYC, the City will build on their work as we craft strategies to improve the city's resilience to climate. Building climate resilience can take many forms, including increasing our understanding of climate risks and vulnerabilities, hardening facilities and assets to prevent impacts, educating vulnerable populations about risks, and ensuring that we can quickly resume operations after weather events occur. In the coming months, the New York City Climate Change Adaptation Task Force, another PlaNYC initiative, will release a plan detailing how Task Force members will prepare the city's critical infrastructure for warmer temperatures, changing precipitation patterns, and rising sea levels. Planning for climate change today is less expensive than rebuilding an entire network after a catastrophe. We simply can't wait to plan for the effects of climate change. The NPCC and Rockefeller Foundation's contributions to the City's climate resilience efforts will help ensure that we create a greener, greater New York for future generations. In 2008, Mayor Bloomberg established the New York City Panel on Climate Change (NPCC), with the mandate to provide New York City with the most up-to-date and comprehensive scientific, technical, and socioeconomic information about climate change and its impacts on the city and environs. Climate Change Adaptation in New York City: Building a Risk Management Response is the first report of the NPCC. The report will help New York City develop, adopt, and implement policies to adapt the city's critical infrastructure to the changing climate. This NPCC report outlines a powerful and novel framework for deploying sophisticated tools of risk management to address the city's climate adaptation challenges, and details with rigor and insight the critical challenges that climate change poses to New York City's energy, transportation, water, and communications systems. The report also presents a coordinated set of climate projections prepared by the NPCC to be used by the many public agencies and private-sector organizations that manage critical infrastructure in the region as they develop adaptation strategies, and it describes how legal and regulatory tools can support adaptation policies. The challenges facing the insurance industry and the use of insurance to reduce climate risks are also described at length. A final section sets forth the indicators and monitoring activities needed to inform Flexible Adaptation Pathways as the City and region move forward. The NPCC report is the product of the committed scientists and experts in the New York City region who served as authors, led by Co-chairs Cynthia Rosenzweig and William Solecki. The dedicated Science and Policy Team at the Columbia Earth Institute and the CUNY Institute for Sustainable Cities organized the process that has resulted in the production of this landmark report. It is becoming recognized throughout the world that cities have a crucial role to play in responding to climate change. The NPCC 2010 Report puts climate change adaptation in New York City in the broader national and international contexts and helps establish New York City as a thought and policy leader in this urgent endeavor. Climate Change Adaptation in New York City will be widely read around the world, both for its specific insights and also as a roadmap for other cities in preparing plans for climate change adaptation. The work of the NPCC is a pioneering activity for which all New Yorkers, and all others around the world who will benefit, should be most grateful. The Rockefeller Foundation also merits our gratitude for the generous support it has provided to this endeavor. Climate change will have a profound impact on New York City and its residents as it alters environmental baselines on which the urban infrastructure was built. Despite this, both the City and its stakeholders have a wide range of tools and resources with which to respond to the problem. Key insights in the following report derive from the highly integrated connections between science and public policy as they relate to climate change. The New York City Panel on Climate Change, for example, comprises a number of scientists and other technical experts capable of considering the issues at hand with a view to understanding the potential impacts of climate change and options for adaptation. The City University of New York is well placed to contribute to the multifaceted complex questions of climate change and how the city will be affected. This requires a multidisciplinary approach that can draw from the deep resources of the colleges that make up our institution. In addition, the New York City Panel on Climate Change had ongoing, continuous, and fruitful communication with the Mayor's Office of Long Term Planning and Sustainability, and the New York City Climate Change Adaptation Task Force. The collaborations brought forward in this document embody the culmination of a first step in a science–policy linkage that will be required to effectively address climate change in New York City. In addition, these collaborations show how great universities in a great city can link together to make a positive difference in the lives of its citizens.

Radley Horton,1,a Daniel Bader,1,a Yochanan Kushnir,2 Christopher Little,3 Reginald Blake,4 and Cynthia Rosenzweig5 1Columbia University Center for Climate Systems Research, New York, NY. 2Ocean and Climate Physics Department, Lamont-Doherty Earth Observatory, Columbia University, Palisades, NY. 3Atmospheric and Environmental Research, Lexington, MA. 4Physics Department, New York City College of Technology, CUNY, Brooklyn, NY. 5Climate Impacts Group, NASA Goddard Institute for Space Studies; Center for Climate Systems Research, Columbia University Earth Institute, New York, NY

New York City Panel on Climate Change 2019 Report Chapter 5: Mapping Climate Risk

William Solecki,1,a Cynthia Rosenzweig,2,a Reginald Blake,3,a Alex de Sherbinin,4 Tom Matte,5 Fred Moshary,6 Bernice Rosenzweig,7 Mark Arend,6 Stuart Gaffin,8 Elie Bou-Zeid,9 Keith Rule,10 Geraldine Sweeny,11 and Wendy Dessy11 1City University of New York, CUNY Institute for Sustainable Cities, New York, NY. 2Climate Impacts Group, NASA Goddard Institute for Space Studies, Center for Climate Systems Research, Columbia University Earth Institute, New York, NY. 3Physics Department, New York City College of Technology, CUNY, Brooklyn, NY; Climate Impacts Group, NASA Goddard Institute for Space Studies. 4 Center for International Earth Science Information Network (CIESIN), Columbia University, Palisades, NY. 5New York City Department of Health and Mental Hygiene, New York, NY. 6NOAA CREST, City College of New York, CUNY, New York, NY. 7CUNY Environmental Crossroads, City College of New York, CUNY, New York, NY. 8Center for Climate Systems Research, Columbia University Earth Institute, New York, NY. 9Department of Civil & Environmental Engineering, Princeton University, Princeton, NJ. 10Princeton Plasma Physics Laboratory, Princeton, NJ. 11New York City Mayor’s Office of Operation, New York, NY

The United States' National Flood Insurance Program (NFIP) has accumulated over $20 billion in debt to the US Treasury since 2005, partly due to discounted premiums on homes in flood-prone areas. To address this issue, FEMA introduced Risk Rating 2.0 in October 2021, which is able to assess and charge more accurate and equitable rates to homeowners. However, rates must be continually updated to account for increasing flood damage caused by sea level rise and more intense hurricanes due to climate change. This study proposes a strategy to adopt updated premium rates that account for climate change effects and address affordability and risk mitigation issues with a means-tested voucher program. The strategy is tested in a coastal community, Ortley Beach, NJ, by projecting its future flood risk under sea level rise and storm intensification. Compared with using static rates for all the properties in Ortley Beach, the proposed strategy is shown to reduce the NFIP's potential losses to the community from 2020 to 2050 by half (from $4.6 million to $2.3 million), improve the community's flood resistance, and address affordability concerns. Sensitivity analysis of varying incomes, loan interest rates, and conditions for a voucher indicates that the strategy is feasible and effective under a wide range of scenarios. Thus, the proposed strategy can be applied to various communities along the US coastline as an effective way of updating risk-based premiums while addressing affordability and resilience concerns.

The earthquake that struck the Japanese port city of Kobe on January 17, 1995, was the most severe quake ever to strike a modern urban area. It has become the most studied, analyzed, and discussed natural disaster in history. What I propose to add to this dialogue is an economist's overview of what he saw in Kobe 19 months after the event and what he learned during the ensuing 6 months.

Appendix II: NPCC 2015 technical details.

Protected areas are a key instrument for conservation. Despite this, they are vulnerable to risks associated with weak governance, land-use intensification, and climate change. We used a novel hierarchical optimization approach to identify priority areas for expanding the global protected area system that explicitly accounted for such risks while maximizing protection of all known terrestrial vertebrate species. To incorporate risk categories, we built on the minimum set problem, where the objective is to reach species distribution protection targets while accounting for 1 constraint, such as land cost or area. We expanded this approach to include multiple objectives accounting for risk in the problem formulation by treating each risk layer as a separate objective in the problem formulation. Reducing exposure to these risks required expanding the area of the global protected area system by 1.6% while still meeting conservation targets. Incorporating risks from weak governance drove the greatest changes in spatial priorities for protection, and incorporating risks from climate change required the largest increase (2.52%) in global protected area. Conserving wide-ranging species required countries with relatively strong governance to protect more land when they bordered nations with comparatively weak governance. Our results underscore the need for cross-jurisdictional coordination and demonstrate how risk can be efficiently incorporated into conservation planning. Planeación de las áreas protegidas para conservar la biodiversidad en un futuro incierto.

Water sprays from an open fire hydrant in Brooklyn, New York, in the midst of a July 2010 heat wave that affected much of the eastern United States.In 2007 the New York City Department of Environmental Protection first teamed up with Alianza Dominicana, a Washington Heights community organization, to educate city residents about the appropriate use of fire hydrants and other ways

Congress established the National Flood Insurance Program (NFIP) in 1968 to reduce flood damages nationwide and ease the Federal government’s financial burden for providing disaster recovery. Due largely to recent flood disasters, the NFIP is over $20.5 billion in debt. A proportionally small number of properties insured through the program, known as “severe repetitive loss” (SRL) properties, are repeatedly flooded, repaired, and rebuilt. These properties contribute disproportionally to the rising debts of the NFIP program. Climate change impacts, including sea level rise, more intense and frequent precipitation events, and increased storm surge, put these already vulnerable properties at even greater risk and will greatly increase the number of properties caught in this cycle of “flood-rebuild-repeat.” \nThe NFIP contains an adaptive mechanism—the substantial improvement/damage (“SI/SD”) standard—which can break the cycle of “flood-rebuild-repeat.” The SI/SD standard requires property owners in the program who are making significant improvements or repairs to structures in areas most vulnerable to flooding to take certain measures to mitigate their risk. However, two critical shortcomings of the current FEMA SI/SD definition undermine the effectiveness of program: 1) the SI/SD standard is only triggered when damages or repair work are equal to or exceed 50 percent of the fair market value of the structure, and 2) the regulatory definitions of “substantial improvement” and “substantial damage” do not consider repetitive cumulative repair work or cumulative damage over time. This paper explains how reforming the SI/SD standard to calculate damages cumulatively over time and to be triggered for damages and repair work worth less than 50 percent of the fair market value of the structure can help the NFIP program better weather a changing climate, lessen the taxpayer burden, and increase the safety of homeowners. It analyzes the prevalence of heightened SI/SD standards among NFIP communities and in state model ordinances and discusses the benefits and challenges of implementing more rigorous SI/SD standards.