Goshen News, Goshen, IN

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April 28, 2013

Money spent beforehand can blunt impact of disasters.

— Gayland Kitch doesn’t feel a bit sheepish about not having a storm cellar, even though he is the director of emergency management in Moore, Okla., which faced one of the most violent tornadoes on record, with wind speeds greater than 300 mph, in May 1999.

It isn’t that Kitch is resisting the $3,000 or so it would take to build. It’s that during tornado weather, he’s not home. He’s at the office, which has its own shelter. His wife is there, too, volunteering. When their kids lived at home, they came, as well.

Kitch isn’t stupid, though. When he retires, he said, “I will probably install one.”

Many people in Moore have done just that since the 1999 tornado killed 43 people in the Oklahoma City area. Kitch says more than 10 percent of Moore’s homes — about 2,500 — now have a safe room or shelter. Helping homeowners make the investment: A federal program that has paid up to $2,000 of the cost.

Every person has to make decisions about what to spend on preparedness for natural disasters. Buy a house with a view, or live a few blocks from the beach? Build a storm shelter or make friends with a neighbor who has one? Get a weather radio? Buy earthquake insurance? Towns, too, must set building codes and choose whether to restrict the use of cheap building materials. They decide whether to allow development in flood plains, and whether to invest in sophisticated emergency equipment.

Minimizing cost

These are all down payments on the cost of a disaster. The rule of thumb is that every dollar spent on preparedness saves $4 in recovery costs, according to a report by the National Institute of Building Sciences’ Mutihazard Mitigation Council, which others confirm. That’s $4 taxpayers won’t have to spend as the government increasingly covers the costs of disasters.

The burden of disaster recovery is growing. In the 1950s, disasters in the United States caused a combined $53.6 billion in insured losses, according to an assessment by the Wharton Risk Management and Decision Processes Center at the University of Pennsylvania. In the 1990s, losses reached $778 billion.

Driving up the costs are population growth and urbanization. In 2004, Florida alone had $1.9 trillion in insured assets along its high-risk coastal areas, according to the Wharton Risk Management Center’s report.

And the insurance industry is balking. Private insurers, stung by huge costs of doing business over the last decade, have stopped writing policies for some areas, or charge such high premiums that people decide to take their chances. Even the National Flood Insurance Program, which will run a $28 billion deficit after Hurricane Sandy, won’t insure against flooding in some areas.

Many assets aren’t insured, which places more of a burden on government recovery programs. Taxpayers paid out about 62 percent of the recovery costs of disasters between 2000 and 2008, the Wharton Risk Management center reported.

“You didn’t see the governor of New Jersey make a big deal about having only 30 to 40 percent market penetration for flood insurance,” after Hurricane Sandy, said Jeffrey Czajkowski, a research fellow at the Wharton center. He noted many people live in areas where they could get flood insurance from the government but do not. “The other 60 percent should have insurance, and if they don’t, why should they get fast aid?” he said.

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