17. Natural Catastrophes and Risk Management in the United States.
Throughout its history the United States has experienced a myriad of natural catastrophes such as hurricanes, earthquakes and floods. Adapting to such risks has been a major challenge not only for insurance and reinsurance companies, but also for governmental institutions and American citizens. This session looks at these specific dimensions of American risk management from an interdisciplinary perspective. Contributions tackle the U.S.’s particular exposure to natural catastrophes, the development of risk taking and risk management strategies in an international comparative view, also compared to the global south, and specific cultural and societal manifestations of risk exposure and management. The focus is on long term developments and major events since the end of the Second World War.
“Comprehensive-Risk” or “Flood-only”? The Controversies surrounding the National Flood Insurance Program in the Wake of Hurricane Betsy (1965).
Eleonora Rohland (Universität Bielefeld)
On September 9, 1965 hurricane Betsy made landfall at the mouth of the Mississippi as a strong category 3 storm, causing Lake Pontchartrain to flood New Orleans from the back. It was the last time the city was inundated in such a manner until forty years later hurricane Katrina hit on August 29, 2005 and set eighty per cent of New Orleans under water. Betsy was the spur for two significant changes in disaster preparedness on the local as well as on the federal level: on the one hand, the storm fueled the building of the New Orleans Hurricane Protection System, on the other hand, it set in motion a political process which culminated in the establishment of the National Flood Insurance Program (NFIP) in 1968. Looking through the lens of the concept of adaptation – and considering disaster insurance as a form of adaptation – this paper will sketch out the evolution of the NFIP and the controversies surrounding it on the local (New Orleans) and, more centrally, on the federal political level. It concludes that the political decision-making process that led to the specific structure of the insurance program was steeped in political, legal and cultural traditions which, hence, ultimately influenced adaptation on the federal level. This paper is based on original archival research and historical records have not been published so far.
Failed sustainability – flood insurance and recovery in the USA and Germany.
Mark Kammerbauer (Technische Hochschule Nürnberg)
Insurance is considered a risk management and governance mechanism that “enables individual risk taking and provides a financial safety net in the face of uncertainty” (Krieger and Demeritt 2015: 2- 4). Flood insurance is made available to households to provide financial compensation for postdisaster reconstruction efforts. In the United States, the National Flood Insurance Program is administered by the Federal Emergency Management Agency’s Federal Insurance Administration. In 1973 flood insurance became “mandatory for properties secured by federally regulated or insured loans in special flood hazard areas” (Witham et al. 2007:11). In Germany, private-market insurance companies offer flood insurance as Elementarzusatzversicherung to homeowners for the purpose of covering disaster-related damages. Coverage in Germany is considered low, with a 2015 figure of 38 percent (GDV 2015; Thieken et al. 2016). Questions arise regarding the sustainability of such mechanisms in the light of increased needs to not only rebuild and reconstruct according to existing conditions, but to adapt to future disasters of greater frequency and intensity due to climate change. This contribution intends to discuss these questions based on long-term empirical field research in two cases, Hurricane Katrina in New Orleans in 2005 and the southern Germany floods in Deggendorf in 2013. Both cases show that (absent, failed) interactions between state and private market actors on the one hand and failure to incentivize adaptation measures on the other hand counteract attempts toward realizing sustainable planning approaches for a resilient recovery. Among affected homeowners, individual access to financial resources was limited, not all disasterrelated losses were covered by insurance payouts, and alternate forms of state funding for postdisaster recovery became available. What similarities or differences exist between the two cases, what lessons can be learned for future planning for adaptation and risk reduction, and how can (or should) involved state and private market actors increase the sustainability of flood insurance?
The Discovery of Risk and Natural Catastrophe in Early America.
Elisabeth Engel (German Historical Institute, Washington DC)
Americans discovered risk comparatively late in the global timeline. While a thriving industry of risk management had shaped in Europe since the fourteenth century, its colonial outposts were rarely covered by these safety networks. American insurers, who emerged in the late colonial period and rapidly expanded their business in the founding decades of the United States, were among the first groups in the American population that engaged questions of risk mitigation in their largely unknown local settings.
This paper revisits the origins of the American insurance business to explore how American insurers conceptualized natural threats and thus prefigured cultural understandings of natural catastrophe. To this end, it discusses the place extreme weather conditions, including lightning, hurricanes, and storms, had in early American insurer’s risk portfolios. The paper will survey these portfolios by drawing on the records of insurance companies that were located in the North, South and West as well as in urban and rural environments. Based on this analysis, it aims to reveal how insurers began to capture local differences in risk exposure, and traces the ways in which the construction of natural risk influenced cultural responses to these constructions, within and beyond the insurance business. These responses include the development of infrastructures of transportation, early urban planning, farming, food security. This narrative serves to offer a prehistory of forms of insurance that, beginning in the late nineteenth and twentieth century, targeted problems such as hail, floods, urban conflagration and earthquakes specifically.
Why Has Catastrophe Mitigation Failed in the U.S.?.
Welf Werner (Heidelberg Center for American Studies, Heidelberg University)
The history of natural catastrophes in the United States is one of ever-increasing economic losses, catastrophe insurance volumes, and loss payments. For several decades, empirical studies and media reports have been presenting relative and absolute indicators that show an alarming development. Among the reasons for this trend that we evaluate in this paper are population movements, climate change, and catastrophe mitigation policies on the national, state, and local levels. Significant movements to and resettlements of disaster-prone regions in the West and the Southeast of the United States have exposed an increasing share of the American population to hurricanes, floods, and earthquakes. Although government policies on all three levels have undergone several major revisions, they are still limited in their effectiveness. Compared to the effects of population movements and the ineffectiveness of government intervention, those of climate change seem to have had a minor influence on the development of economic losses so far.
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