Improving risk management and resiliency: a plan for a proactive national policy on insurance practices in FEMA's public assistance program

Abstract

Disasters happen. The risks cannot be completely eliminated. However, the risks to insurable public infrastructure can be reduced or controlled through better federal guidance that shapes the value and importance of insurance in risk financing and improves mitigation utilization for risk control. This thesis explores the areas where the federal guidance on insurance can be updated. The intent of Congress is clear. However, the federal guidance on insurance is dated, imprecise, and incentivizes poor risk management. Updated federal guidance can more accurately provide the appropriate incentives and disincentives to promote better risk management in the protection of insurable facilities. Federal policy must allow the flexibility to manage risk while encouraging sound insurance decision making by facility owners to reduce or eliminate the reliance of federal disaster assistance. This can be accomplished through the requirement of insurance, ineligibility of deductibles, flexibility in types of insurance, and promoting resiliency through incentives for hazard mitigation. By improving risk control for insurable infrastructure, we can begin to reduce the costs of disasters and increase the resiliency of communities across the nation.