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Brian: It's The Brian Lehrer Show on WNYC. Good morning, everyone. Here's the dilemma that some politicians in Florida are facing now after Hurricane Ian. Let's say communities in your state are increasingly suffering death and destruction from sea level rise and hurricanes so severe you've never seen anything like it, but you refuse to reduce climate-changing emissions in your state. That's a dilemma. Here's Florida Senator Rick Scott, on all things considered last year with NPR's Ari Shapiro, notice in this clip that Scott acknowledges climate change is real, but only suggests adapting to its impacts, word impacts, not doing anything to prevent more of it.

Senator Scott: We've got to focus on the impacts of climate change, but you've got to do it in a manner that you don't kill our economy.

Ari: You're saying people need to survive hurricanes and get back to normal life. The UN is saying normal life is something of the past and the future looks dire unless dramatic change happens now. Sounds like you're saying as long as it doesn't kill jobs or affect the economy.

Senator Scott: What I think is we can do both. I think we can focus on the impacts of climate change and not put our jobs at risk and kill our economy.

Brian: Impacts, yes; prevention, no. See, Florida has a state law that allows communities to adapt to climate change but prohibits localities from helping to prevent it. That's an actual state law.

An article in the Tampa Bay Times in March, if you don't know about this, said, (Tampa Bay Times:) “The last time Florida's legislature addressed the root cause of climate change, greenhouse gas emissions, it was in a law that effectively blocked cities from cutting emissions. Last year, Florida passed a law, it says written by natural gas companies that prevented cities from banning the use of natural gas. A policy sweeping the country as part of a nationwide movement to cut emissions. Natural gas, which provides around 70% of the state's fuel at power plants, and it's also used in some homes for heating and cooking is made of methane gas, which heats the atmosphere much more than carbon dioxide does.” That was from the Tampa Bay Times. In the year 2021 BI, before Ian. There you go.

The Miami Herald this week published this context. It said “the frequency of severe storms category four or five, Ian was a four, has been on the rise since 1980. According to a New York Times analysis, the National Oceanic and Atmospheric Administration, NOAA projects those powerful hurricanes will account for even more of our storms in the future, in Florida because of climate change. Studies also suggest a 10% to 15% increase in rainfall related to hurricanes. Of course, we see this was a flooding event for a two-degree Celsius global warming scenario, according to NOAA.” That's from the Miami Herald this week, and not preventing climate change when your state disproportionally bears the brunt is one dilemma facing Florida politicians.

Another is campaigning to reduce federal government spending while getting ready to ask Washington for billions in relief from the storm damage you won't help to prevent. Here, again, is Senator Rick Scott. This time this past weekend on CBS Face the Nation. The host Margaret Brennan had just asked him to condemn President Trump's latest racist remark. You've heard about this. He called Mitch McConnell's wife, the former transportation secretary under Trump, Elaine Chao.

McConnell's -quote- "China loving wife, Coco Chow" in a Trump rant against McConnell for McConnell voting for passing spending bills. As you'll hear, Scott ignores Trump's anti-Asian slur to focus on the spending part. This starts with Margaret Brennan's question about the slur.

Margaret: You would agree that that language doesn't bring people together?

Senator Scott: I believe that what President Trump was talking about is the fact that we can't keep spending money. We're going to hurt our poorest families the most with this reckless Democrat spending and we cannot, we got to stop it, we can't cave into their spending.

Brian: Senator Scott also had to answer a question from Margaret Brennan about how much of the hurricane damage in Florida he's going to ask the rest of the American taxpayers to foot the bill for.

Margaret: The disaster modeling firms have scale of damage here from $30 billion up to $100 billion. How much money is it that you think you need to go ask Congress for?

Senator Scott: We're going to find out. Hopefully, most things are covered by insurance. That's what you hope. Now, Florida has had a problem the last few years with their property insurance market. Hopefully, the insurance companies will be able to cover a lot of that.

Brian: A problem with the property insurance market. A big federal bailout will likely be needed, he said by implication. A senator who is a big proponent of market forces and not so much of government help. Hurricane Ian's winds have blown in that political dilemma, too. Let's talk about homeowners insurance in the age of climate change and after Hurricane Ian, in particular. With us now is Wall Street Journal reporter, Leslie Scism, who specializes in reporting on insurance. She's got 30 years with the Journal after getting an MBA at Columbia. Her latest article is called Flood Insurance Fell in Florida Before Hurricane Ian Struck. Leslie, thanks so much for joining us. Welcome to WNYC.

Leslie: Thank you very much. I'm glad to be here.

Brian: Your article starts by describing a reduction in flood insurance coverage in recent years. Why was that happening even as the effects of global warming on coastal areas everywhere were increasing?

Leslie: There are so many reasons. To many homeowners, this is an expensive coverage. In general, the biggest take-up rate for these specialized flood insurance policies are on homes that have mortgages and the lender requires the purchase of the flood insurance. Generally, the lenders will required if the property is in one of the areas of a flood map designated at highest risk. These are government flood maps. One reason you have less of it is we've had an influx of homeowners into Florida in the last few years who've paid cash for their homes, thus, they don't have mortgages, and they aren't required to buy the flood insurance.

In other instances, people who don't have the mortgage may be encouraged by their insurance agents to go ahead and buy it but they just think it's really expensive and a lot of them say, "Hey, this area has never flooded before." I'm talking inland areas mostly here. They're willing to take a gamble that there won't be a flood while they're living there. As we've just learned, a lot of people make the wrong bet there.

Brian: Those eye-popping estimates from the experts that Margaret Brennan cited in her question to Senator Scott, $30 billion to $100 billion in damage. That's besides the 100-plus lives lost, which of course, is the most important thing. On the dollar cost in physical damage, any idea what makes up most of that number? Is it damage to people's homes or is it too early to tell?

Leslie: Several risk modelers have the figures out there, though one of them puts what's called the private sector insured damage. It's $63 billion of the estimated $100 billion. This would go to people who have wind damage and are covered by home insurance policies, and a lot of businesses are going to be tapping into their business insurance. You also have a lot of automobiles that are submerged and otherwise damaged. Those people's comprehensive car insurance covers that damage. The $63 billion estimate goes across home insurance, home business, and auto damage.

Brian: Interesting. Can I dig in a little bit on something you just said in that answer? Flood insurance is separate from other aspects of homeowners insurance. Someone could be covered for the wind damage from Ian but not from the water damage. Why is it separate like that?

Leslie: Almost tragically, people don't understand that in the United States, dating at least to the 1960s, these have been flood damage is covered under a policy separate from a home insurance policy. At least since the '60s, the US private sector home insurance business has excluded flood damage. I could go into reasons why that's so but it has been so for well over 50 years in the United States. It states a home insurance policy will state on one of its first pages usually in fairly large letters that this is does not cover flood. Catastrophe after catastrophe people don't realize that until their homes are flooded.

Brian: Yes, and that's a problem for homeowners. Obviously, you can insure your house against things that are lower risk but the thing you might most need insurance for, you have to buy separately. As you've been describing, many people can't afford it. It'd be like if I bought a health insurance policy and it covers everything but cancer. How will the insurance companies sort that out as they go home to home, business to business now in Florida to assess people's claims? Their reputation is they'll use any excuse to deny.

Leslie: The insurers all will tell you that they go on a case-by-case basis. In a lot of instances, it's fairly clear if you have flood damage as compared with wind damage. Wind damage can be serious. A lot of people have home insurance because it covers the wind damage. They have windows blown out. They have roofs that are blown off. If your roof is blown off and these torrential rains start pouring into your house, that damage is typically covered under a home policy because the wind blew the roof off, then the rain came in.

What the policies don't cover is what's called the surge, which is water that comes from the ground up into your home and the water's coming from a body of water like an ocean or a nearby river or a lake or something. If you do have a lot of wind damage, that's going to be covered under these policies. Generally, the wind damage, just it stands out as wind damage. The horrible and the really difficult issues exist in instances say where there's only a slab left on these barrier islands where the homes were basically--

Brian: Like totally blown away?

Leslie: Yes. Were they blown away or did the surge knock them down? That comes which came first and that's where you can get some litigation or do you split it 50/50 between the two insurers, the flood and the home or whatever.

Brian: Listeners, our hearts go out, obviously, to anyone affected by Ian in Florida, like Fiona on Puerto Rico and anything else like that but where it's optional like on Florida's expensive coastlines, should they rebuild? We will get to that question or move inland since climate change for the coming decades seems already baked into a significant degree or any question you want to ask Leslie Scism, insurance reporter for The Wall Street Journal. 212-433-WNYC, 212-433-9692, or tweet @BrianLehrer, a comment or a question. Leslie, Senator Scott spoke in that Face the Nation interview about providing insurance products that people can afford. Is he referring without saying it to government-subsidized flood insurance?

Leslie: I'm not really certain what he's referring to. A lot of states do try to keep their insurance affordable. Of course, that's the definition of that is in the eye of the beholder. The state insurance departments want people to be insured. The more expensive a policy gets, the larger the number of people becomes who are uninsured or underinsured.

Brian: How much has the state of Florida or the federal government been subsidizing flood insurance even before Ian, either subsidizing the insurance companies to offer affordable policies or subsidizing the homeowners and business owners directly?

Leslie: There's long been a complaint by the private sector insurance company and a lot of taxpayers across all of the United States that the government's national flood insurance program, through which most people buy their flood policies, has underpriced and subsidized the cost of the policies. By such, under-pricing that has encouraged development on the coast, more people are building homes on the coast because they say, "Oh, look, we can get the flood policies, so we can get the home policies, we can afford them."

The critics want these policies priced to completely match the actuarial risk these homes posed and that would drive the price up. Now, the National Flood Insurance Program which is run, operated, managed by FEMA is in the process of raising rates. It's a multi-year project, but they are moving to a system that is going to move a lot of the prices up to better reflect their risk. In some instances, this means over. It could take a 10-year period to get to that level but it's going to take rates from some homes that are in the hundreds of dollars a year to $4,000 or $5,000 a year.

There is this effort underway to remove the subsidies on many of the properties. There's a lot of sympathy by US taxpayers for lower-income families who live historically or for many decades have lived in certain areas. Many people think maybe they need some direct subsidies to help pay their flood insurance. Overall, you need to get the NFIP prices at a level that will get people's attention and make them understand the risk which we are seeing play out in all the video of the damage in southwest Florida.

Brian: Right. We will get to as we go in this conversation that existential question of whether they should build back in the same places that are now with climate change, more susceptible, more often to this kind of storm damage, and also the disparities who can afford to stay in their homes, who's going to be made homeless by this in different kinds of ways. I want to take a phone call first because we're getting a call from right there where Ian hit. Elena in Dunedin, Florida. You're on WNYC. For people who don't know Dunedin is on that west coast of Florida. I've been there. Elena, you're on WNYC. Hi there.

Elena: Hi there.

Brian: First of all, how are you? How's your town?

Elena: Oh, we were the ones who were supposed to get the direct hit. We had almost no damage. We are so lucky. Our friends in Fort Myers are just devastated.

Brian: It's so close.

Elena: I love you, Brian. You're a national treasure.

Brian: Thank you. You're right off clear water there, right?

Elena: Yes, we were going to get it. We were one mile in from the shore in a concrete condo so we were probably going to be okay but it was really scary. What I'm calling about is the hypocrisy that our lovely governor and Senator Rubio and DeSantis when they were in Congress voted against federal aid for Sandy because it was mostly blue states, of course. Here now, they're going to go and hand to ask for billions of dollars from the federal government because it's Florida. I'm sure hoping somebody does some good messaging for the election on this.

The other thing about Florida that people should know is there's a whole insurance situation, not just flood insurance, but homeowner's insurance. Apparently, there are 79% of the claims in the country are in Florida. Roofers go around and talk people into thinking they need new roofs, saying, "We'll get your insurance to pay for it." The legislature must be in on it because they've refused to act on this. Our condo complex of 300 units has had to raise $151,000 now by assessing everyone just this November because the insurance rates have skyrocketed. So many companies have left Florida and the others are raising the rates astronomically. Individual unit homeowner policies, apartment insurance policies have also pretty much doubled or more in the last year or two. It's a crooked whole situation here with insurance, and then the politicians' hypocrisy is astounding.

Brian: Yes, that dilemma, yet another dilemma for Florida politicians if they didn't want the federal government to subsidize Sandy relief and reconstruction. Now, can they go hand in hand to Washington and ask for it post-in? You're not a political reporter, Leslie, you're an insurance reporter for The Wall Street Journal. On the second part of what Elena raised, is that something that you know to be true that homeowners insurance generally has been going up in Florida, and that there's some scam involving roofers and maybe the legislature is in on it or looking the other way?

Leslie: We have written about the sharply rising homeowner rates in Florida a couple of times over the last couple of years. I believe the statistic that your caller is referring to is something that was compiled by the Office of Insurance Regulation. I don't have the stat in front of me. I believe the stat is that something that a single-digit percentage of homeowners claims come out of Florida each year. If you just look across the United States and look at state by state how many homeowner claims are filed, Florida represents not a disproportionate amount.

However, if you then look at how many claims end up being litigated, Florida jumps up there to that 79% or 80% figure, is eye-popping how many of the Florida claims end up in litigation. That is something that the Office of Insurance Regulation is concerned about. A lot of lawmakers are concerned about it, but not enough lawmakers are concerned about it too seriously to make some of the changes in state insurance law, that the Office of Insurance Regulation and a lot of the private sector insurers say need to be made to make it less rewarding for lawyers in Florida to take disputed claims into court.

The complaint of the Office of Insurance Regulation and the private sector insurers is that as the reimbursement for those lawyers' efforts is too generous. That is a reason for a lot of the lawyers to go ahead and take disputes into court when perhaps they could have been settled out of court.

Brian: Interesting.

Leslie: That litigation is widely viewed as contributing to the cost of doing business by home insurers in Florida, and that has been a major factor. Florida insurers rely heavily on the global reinsurance industry to back up their ability to pay claims, all the smaller companies are required to buy large amounts of reinsurance from this global community, which includes giants like Munich Re and Lloyd's of London, and a lot of other big-name companies that are very well capitalized.

Some of the companies, certainly can't speak to all of them, some of them do cite the cost of litigation in the homeowner's insurance market in Florida is a reason they charge more to their Florida clients than they do to some clients in other states, in addition to their concerns about climate change and just the geography of Florida.

Brian: Yes. On reinsurance, it's an interesting field, a lot of the listeners probably don't realize that insurance companies, in many cases, buy insurance from bigger insurance companies. That's reinsurance on the claims they have to pay out in case something like this, I guess. Ian happens that causes them to pay out so much that they might go bankrupt. Well, they have insurance against the insurance claims that they have to pay out and that's reinsurance, and then that pops up the price of insurance for the buyers in places where the market is risky, like in Florida in the ways that we're discussing.

We'll continue in a minute with Leslie Scism from The Wall Street Journal and more of your calls, and we will get to that existential question of whether they should build back in some of the places that got destroyed by Ian. We'll hear what Senator Rick Scott had to say about that on Face the Nation on Sunday. Stay with us.

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Margaret: Governor DeSantis has said what is happening now is biblical. How would you describe the impact?

Senator Scott: Well, the storm surge was unbelievable. The worst storm surge we had with Irma was down in the keys, and it was 9-foot. It just sucks everything in and out of a one-story house, then we had as you know Mexico beach with Michael, my last year. In Lee County, they might have had 18-foot of storm surge at Sanibel. You look at 12, 15-foot storm surge in Fort Myers Beach and Pine Island. That's hard to survive, you have to get up pretty high and your structure has to survive. Unfortunately, some of its older construction, and so we lost a lot of buildings.

Brian: Again, Senator Rick Scott of Florida on Face the Nation on Sunday with host, Margaret Brennan, and we are with Leslie Scism who covers insurance for The Wall Street Journal. Leslie, would it be fair to say that the increasingly damaging storms of biblical proportions actually as governor DeSantis said, as Margaret Brennan cited in that question, and things like Rick Scott was describing in his answer, like have basically never been seen before in anybody's lifetime?

DeSantis called it a 500-year storm, but they think it's going to happen more, are these things causing insurance companies to take a cold hard look at the climate warming future because they're in the reality-based math business of buying monetary risk, and so they may look at climate change differently than a politician?

Leslie: As you said in the beginning, I covered the insurance industry on and off for nearly three decades of The Wall Street Journal. 20 years ago, 30 years ago, you never heard anybody talk about climate change. It is a topic that comes up frequently, in the insurance circles, property insurance circles these days, and I don't know, several years now is been much more of a topic of conversation. A lot of these reinsurance companies, and the biggest insurance companies employ a lot of experts.

They hire outside consultants, but they also have on staff people who try to help them better understand changes so that they can get their arms around it and make sure they're getting their pricing right. There are some reinsurance companies that, in the last couple of years, have backed off the amount of, what they call, property catastrophe reinsurance they sail, partly because of some uncertainties about whether their models are fully incorporating what change is occurring. I'd also note, there have been terrible, terrible hurricanes in Florida's past.

Hurricane Andrew in 1992 remains just one of the worst ever storms. Some horrible storms have happened in past years.

Brian: I'm glad you brought up Hurricane Andrew, right at this juncture because it's going to come up in this last clip that we're going to play, the existential question for some of those communities that Margaret Brennan also asked Senator Rick Scott about on Face the Nation on Sunday. Here we go.

Margaret: Is the bottom line here, though, Senator, that some of the communities have been so hard to hit that you need to take a second look here, maybe some of them should not be rebuilt because of the risk level from extreme weather?

Senator Scott: What I think you have to look at, should you build in places, I believe these places are places where people want to live. They're beautiful places. What you really have to do is you have to say, "I'm going to build but I'm going to do it safely." After Andrew in 1992, the state completely changed its building codes, which is dramatically reduced the risk of damage. While I was governor, we improved our building codes. I think after this, we're going to continue to improve our building codes.

Brian: Leslie, anyone obviously would hate to abandon their beloved homes or their cherished communities, but Scott said in that clip that they've improved building code since Hurricane Andrew, back in the '90s to make the buildings more hurricane-proof as required under these new laws, and he said, now they'll do it again. Do you know if the insurance companies consider that doable? Are there improvements that can be made against Ian-level storms after they've already been made against Andrew-level storms?

Leslie: The insurance industry is a big supporter of research into construction techniques, how to fortify homes and properties. It will be very interesting to learn which structure stood after Ian because I think you could-- the barrier islands looked like there-- just so many properties were reduced to nothing, but there are a lot of properties that are still standing. Well, what distinguished the construction in those from everything else?

There's a lot of science about how to make a property resistant to extremely strong winds, I think up through at least category four level winds, but you got a lot of older construction that still is out there, that there are a lot of homes down there in that southwest Florida that were built I think in the '50s and the '60s. Those are not built to modern standards, a modern code. A lot of protecting a property against surge is elevating the home and how high you require the elevation to be.

You'll have to talk to some other experts about what that high ought to be, and I don't know where the Florida code is. If it needs to raise up by a couple of feet what you're going to allow in terms of construction.

Brian: Jeff in Brooklyn, you're on WNYC. Hi, Jeff.

Jeff: Hello, Brian. Brian, I teach environmental management and I want to focus on another aspect of this which is particularly troubling for homeowners along the coast, and that is a prime element of coastal climate adaptation will be not to rebuild in certain areas and it's been given a horrible term planned retreat which is the worst political term to use. Nonetheless, there are areas based on modeling where we probably should not be rebuilding, and instead, we should have green infrastructures, what are called soft coastlines that allow for water to surge in and then surge back.

If you put structures there and you harden it, you have hardened coastlines with bulkhead, that undermines the ability of a region to react or respond to a climate change-related incident or any major storm. That's a tough decision for any policy maker whether be Republican or Democrat to say to a community you shouldn't be rebuild somewhere but the science is pretty clear-cut on that.

Brian: It's a tough call. Well, Jeff, if you-- because people obviously love their homes, love their communities, if you teach environmental management, is there something that's considered a best practice? Or where do you see this strategic retreat or whatever it should be called, as being determined by market forces or would government have to push it on people?

Jeff: Well, the science has to come first and that is we need to do detail. In fact, this already exists. Detail coastal modeling of the areas that are most vulnerable, the areas where you need to have-- I'm not a coastal expert but I think the terminology is return flow where surge can flow back into the ocean, and the modeling can tell you which areas are most vulnerable and which areas should not have physical hard human-made structures but instead have doom systems, and coastal wetlands that can absorb the storm surge. Actually, they tend to protect areas further upland.

There are a very well-established suite of practices out there so that the science is there and it's a question of how can the science interact with the policy so that public policy agenda can be established, and then from there, maybe there's some opportunity for private sector involvement, but I think first the science and the public policy have to come together.

Brian: Let me ask you, and then I'm going to ask Leslie the same question, and then we're at a time in the segment, but where do wealth and privilege come into play here? Are Florida's coastal homes generally upscale or luxury homes because the coast is considered desirable, Jeff, if you've looked at Florida in this respect, and so the wealthier people maybe get to rebuild even if they shouldn't and build higher to protect their homes more something like that, and less wealthy people bear the brunt?

Jeff: That's a sad reality but even for wealthy people who want to rebuild in their very appealing areas, there needs to be some public policy commitment to say here on this particular spot and it could be one square mile, not an entire community where the modeling says, "Don't build yet. This is the most vulnerable spot and this is the spot where we need to have natural systems functioning." Then, the governments have to play some role in restricting that.

From there, in areas that can be rebuilt as your speaker who is discussing, there are ways to harden structures, but there has to be some compelling reason to do that. I hate to pick on the community where I grew up in Rockaway Peninsula but after Hurricane Sandy, I walked along the beach in Neponsit and Belle Harbor, two very wealthy communities where the first and second rows of houses were seriously damaged. Many of them completely destroyed and only a relatively small percentage of those homes have actually been rebuilt with obvious storm surge protection measures.

One of the most obvious ones is having the living structure one entire floor above-- well, raised up one entire floor. The section below is basically soft components maybe garage doors and the like, so when the storm surge runs through, it will push all that structure out of the way, all the material out of the way but not damage the underlying structure. That's being done, I've seen it there, I've seen it on Fire Island, but apparently, most people make a decision not to do it. Their insurance companies don't pressure them.

They don't want to make the extra investment and it's not being done even in areas where there's enough wealth to do it.

Brian: Thank you for your call. I really appreciate your contribution. Leslie, same question about the disparate impacts on people who are more wealthy or less wealthy from Hurricane Ian and in the respects that we've been talking about.

Leslie: I think we are seeing a lot of our coastal areas increasingly be home to the wealthiest because the wealthiest can better afford the higher costs of the better construction, and also, they can better afford the rising insurance costs. It's a tough situation to say to allow, to see our coastal areas increasingly home to the super rich, but the economics are going that way. A lot of what is destroyed in these hurricanes are the older homes with where that house people of more modest incomes, and often, they are underinsured and they don't have other resources to draw on to rebuild.

A lot of instances-- I've seen this happen on the South Carolina coastline that's been hit by a lot of hurricanes over the past 25 years or so. The modest homes get swept away, demolished, and then the people don't have the money to rebuild, the more well-to-do people can come in and buy that land from them and then put up these much bigger and stronger elevated structures that your caller was talking about. Yes, that's the situation really.

Brian: Leslie Scism covers insurance for The Wall Street Journal. Thank you so much. We really appreciate it. Thanks.

Leslie: Thank you.

 

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