Irene Shows Why More People Should Consider Flood Insurance: Deloitte's Mills

While much of the talk around Hurricane Irene focused on potential wind and storm surge damage to the five boroughs of New York City, rain from the storm flooded upstate rivers and streams causing heavy — and potentially uninsured — losses.

Howard Mills, the director and chief advisor for New York-based Deloitte's Insurance Industry Group, has a lot of affection for the Empire State. In fact, he served as superintendent of its insurance department from 2005 to 2007. As a fellow long-time resident of New York — in my 28 years, I've only ever lived in the metro areas of its three largest cities — I wanted to ask him about a little-anticipated, but very tragic impact of Hurricane Irene: heavy flooding of upstate New York rivers and streams that isolated and destroyed some towns.

Insurance & Technology: Lots of the conversation in advance of Irene's landfall focused on the danger to New York City. But the city was largely spared while other areas were heavily flooded. Was this something that could've been foreseen?

Howard Mills: This storm was a very potent reminder of the risk that flooding poses all over New York State. It's something that I'm very familiar with going back to my time as superintendent. People forget the power of dramatic rainfall to bring rivers over their banks.

I&T: I was surprised to hear that, for example, Elmsford wasn't evacuated, especially after I read that similar flooding happened after earlier storms. Are enough people aware of, and insured against, the risk of flooding in their homes in these regions?

HM: People were truly caught totally unaware. You just didn't see enough reports about how people in upstate and central New York need to be prepared. Lenders do require a flood insurance program if you're purchasing a home in a designated flood plain, but maps maintained by the National Flood Insurance Program have been out of date for many years and don't show enough of the severe risk of flooding. There are many people who are not in a designated flood zone, but in a severe event like this they are at risk.

I&T: Do you think this event will lead to more people purchasing flood insurance even if it's not required by their lender?

HM: People don't get the message that the standard homeowners policy doesn't include flood damage. Event after event, people are shocked they aren't covered. People should absolutely look into purchasing some degree of flood insurance. Everybody should do the exercise of examining the potential risk. It's very inexpensive, especially if you're not in a flood zone.

Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio