Buying insurance guards Floridians against risk of regret

Regrets. We all have them. A couple of weeks back I was gripping the arms of a dentist chair getting a tooth pulled. I thought about the older gentleman who when asked about what he most regretted in life, he said: “I wish I’d have flossed more.”

Yet people continue to smoke, speed through red lights, text while driving, and not prepare for natural disasters. This includes not buying insurance.

In a recent industry conference, one presenter told of a Louisiana woman who said: “If I had known I would have to live in that FEMA trailer for two years, I’d have bought flood insurance.” It also includes the far more tragic, like the woman in New Jersey who waited too long to evacuate and had two small children swept out to sea due to storm surge. (The bodies were never recovered. It turns out that, despite evacuation orders due to Hurricane Sandy, less than 20 percent of people left — 106 people died in the U.S. alone.)

How do we account for human nature as we plan for the next big catastrophic event? I just read a book called the “Ostrich Paradox” that explains the propensity of humans to fail to plan for low frequency, high impact events like natural catastrophes. The book has many examples of both individual and also government failures with tragic consequences that could have been avoided with a little up-front common sense, planning, and/or investment. Here are some random real-life facts from right here in sunny Florida:

Over 1.1 million Florida homes are highly vulnerable to storm surge but carry no flood insurance. Most would pay just a little over a dollar a day to secure coverage.

With 19 million people and 1,350 miles of coast line, the state only had $2.8 million to award to cities, counties, and nonprofits for wind mitigation. It’s comes out to a whopping 15 cents per resident.

In Broward County, with nearly 2 million people, there is only one hurricane shelter that will allow you to bring your pet animal. What are you supposed to do? Leave Fido in the car and hope for the best?

One in seven coastal homeowners have dropped property insurance altogether due to affordability — mostly seniors on fixed incomes.

It’s not just Florida. Only about 10 percent of Californians, with three-quarters of the country’s earthquake risk, have earthquake insurance. Talk about moral hazard!

We have to do better. As individuals and families, and as governments at all levels. As we improve our resiliency, we have to take into account human nature, economics, risk, cost benefit, and, perhaps most importantly, involve all stakeholders input in charting our course.

The Florida Association for Insurance Reform and our sister organization, the FAIR Foundation, have put forward practical plans and programs designed to make people safer and their homes and businesses more resilient. But we are only just starting to scratch the surface. We need your financial support. But we also need volunteers, board members, and advocates. There is much to do. We can’t make it perfect, but we can make it a heck of a lot better. Let’s work together to try to eliminate some future regrets.

How do we account for human nature as we plan for the next big catastrophic event?