Katrina blamed for costly insurance - East Valley Tribune: Phoenix & The Valley Of The Sun

Katrina blamed for costly insurance

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Posted: Friday, June 9, 2006 11:05 am | Updated: 2:09 pm, Fri Oct 7, 2011.

The economic repercussions of Hurricane Katrina are being felt in Scottsdale. The city will be able to get only one-fourth the flood insurance it had last year, and it’s going to cost more, officials said.

“Insurance companies are flat-out not selling it; they’re not offering it,” said Craig Clifford, the city’s financial services manager.

Clifford blamed the catastrophic losses caused by Katrina for the impact it is having on the insurance industry, and ultimately on cities.

Considered the deadliest hurricane to hit the United States, Katrina slammed into southeast Louisiana in late August and left more than 1,800 dead. Some expect the economic toll to exceed $100 billion.

Scottsdale has $80 million in flood insurance for city property.

But starting June 30, when that policy expires, the city will be able to get just $20 million in coverage.

“That’s all we could secure,” Clifford said, adding that the city uses a brokerage firm to search for providers.

What is more, taxpayers will get less bang for their buck: The reduced coverage will cost more.

Scottsdale paid $157,000 last year, and this year the reduced coverage will cost $185,000, Clifford said.

Clifford raised his concerns to the City Council on Tuesday.

He said he will bring the proposed flood insurance policy to the council for approval on June 20.

“Our concern is that our entire water campus up north lies within a flood plain,” Clifford said.

The water campus is at 8787 E. Hualupai Drive, just west of Pima Road and north of Union Hills Drive.

The campus includes a reclamation plant, which processes water from the Central Arizona Project.

But Clifford said he believes the reduced coverage will be adequate in the event of a disaster.

“I think we’re fairly wellprotected,” Clifford said.

Although Scottsdale has been experiencing a drought, the potential for flooding remains a concern.

But Scottsdale’s flood-plain administrator says the chances of a serious flood ripping through the area are minuscule.

“Let’s put the risk in perspective,” said Bill Erickson, the city’s flood-plain administrator.

The chances of a catastrophic flood coming through Scottsdale are 1 percent in any given year, he said.

All of Scottsdale can be considered at risk, but some areas such as Rio Verde, which lies on the northeast border of the city, are at a higher risk, said Dennis Burch, a Scottsdale-based insurance agency manager.

“All over town, even in areas you wouldn’t think,” there is risk because of canals and washes, said Burch, who works for Arizona Western Insurance.

Other cities also are having a hard time getting adequate flood insurance, said Jim Hamilton, director of state pooling for the National League of Cities, a lobbying group for municipalities.

“Flood insurance is an uninsurable risk . . . the losses are catastrophic and its (floods) are unpredictable,” Hamilton said.

Scottsdale and cities nationwide experienced similar problems getting insurance coverage in the wake of the Sept. 11, 2001, terrorist attacks.

“Any time you get a major catastrophe it affects the whole market,” said Fred Erikson, executive director of the Arizona Insurance Information Association.

The Arizona Department of Emergency Management reported the Grand Canyon State since 1966 has had 14 floods that prompted presidential declarations of emergency, according to that department’s Web site.

The last time Arizona declared an emergency regarding a flood was mid-September.

It involved a flood in Pima County that cost the state roughly $680,000, the department reported.

Flood information

Floods are the most common natural disaster in the United States.

• In the past 10 years (1995-2004) the average annual flood losses in the U.S. were $867 million.

• During that time, the National Flood Insurance Program paid nearly $8.7 billion to flood insurance customers.

• 20 percent to 25 percent of all flood insurance claims are filed in low- to moderate-risk areas.

Source: The National Flood Insurance Program

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