Monday, November 18, 2024
Communities along the Mississippi River have suffered repeated losses over the last few years, but federal disaster funding can take weeks, months or even years to pay out.
As The Lens reports, the Mississippi River Cities and Towns Initiative announced a new insurance pilot, with hopes of better helping river towns recover from disasters. MRCTI, which represents 105 cities—including Baton Rouge—along the 10 mainstem states of the Mississippi River Basin, is working with Munich Re, a German multinational insurance company, to create the insurance product.
While traditional insurance programs are tied to property and require proof of loss for a payout, which can be burdensome and lengthy to assemble, the new pilot will test a novel type of insurance pool—called parametric insurance—that is designed to rapidly fund emergency response after natural disasters such as flooding.
While conventional insurance requires owners to prove their losses by submitting evidence as well as prestorm documentation, parametric insurance pays out quickly after agreed-upon “triggers”—such as wind speeds or river heights—reach a certain level.
For the MRCTI pilot, Munich Re has suggested using watershed data from the U.S. Geological Survey to determine the best gauges along the river to measure flood depth. Once the river flooding reaches a certain depth, the payout would be triggered.