Could NYC’s community-based flood insurance be a model?

At the corner of 183rd Street and 90th Avenue in Hollis, Queens, there’s a yellow diamond street sign with black letters: ROAD MAY FLOOD. 

It was installed after the remnants of Hurricane Ida dumped some 9 inches of rain on New York City on Sep. 1, 2021, set a record for hourly rainfall and caused major flooding. More than a dozen people died in the city that night, most in basement apartments, including on this block, where George Lee, 72, has lived for most of his life. 

“Everything from my house and that house across the street on down got flooded,” Lee said. “It was like a nightmare.”

Lee’s parents bought the house in the mid-1960s. The block has long been prone to flooding — it’s at the bottom of a hill — but in the past, he said, “it wasn’t that bad. I’d have water in my basement, maybe up to my ankle, and that’s it. But when we had Hurricane Ida, forget it.”

That night, the rain was so intense that Lee’s basement flooded, all the way to the first floor. The water was moving so fast, he said it knocked over huge, heavy planters in his front yard, full of dirt and flowers, and carried them away. Same with heavy construction equipment out on the street. Everything in his basement was destroyed, including thousands of dollars’ worth of computer equipment and irreplaceable mementos.

“I had very valuable stuff in my basement,” Lee said. “I had a whole comic collection that was gone. I had a whole record collection that was gone.”

The rain from Hurricane Ida damaged over 33,000 buildings in New York, according to the city, most of them residential. In the weeks after the storm, many residents who had flood damage learned their insurance wouldn’t cover much, if anything. 

“People didn’t know where to turn to,” said Theodora Makris, a senior program manager at the nonprofit Center for New York City Neighborhoods. “Was it a federal disaster declaration? Are there funds coming from the federal government? Where can we apply?”

People were able to apply for federal funding — grants from the Federal Emergency Management Agency and loans from the Small Business Administration — but for many, the process was confusing and stressful, Makris said.

“And ultimately, when they did get money, if they did get money, it didn’t really cover the things that they were hoping for it to cover,” Makris said.

It also took a long time to arrive, which is common after disasters.

“It can take definitely weeks, and sometimes months and months to get your insurance payout, to get a FEMA check, to get access to credit,” said Carolyn Kousky, associate vice president for economics and policy at the Environmental Defense Fund. 

That is particularly challenging for people with low to moderate incomes, who tend to be disproportionately affected by climate disasters and have a harder time recovering. Watching that play out over and over again, Kousky started thinking, “How can we get fast and flexible dollars to these households in need after a big flood event?”

The Center for NYC Neighborhoods is piloting one idea as a possible answer to that question, a kind of community-based flood insurance. In partnership with the city and several other nonprofits and private companies, the Center for NYC Neighborhoods has bought something called a parametric flood insurance policy on behalf of city residents with low to moderate incomes living in high-flood-risk neighborhoods.

Parametric insurance is different from traditional home or flood insurance in that it pays out if there’s a qualifying storm, one that meets certain parameters set ahead of time.

“So, think wind speeds exceed some threshold within so many miles of your home, you automatically get a set payout,” Kousky said. 

Or in this case, if a certain amount of rain were to fall in certain neighborhoods in New York, the Center for NYC Neighborhoods would get a lump sum insurance payout that it could then use to give emergency cash grants of $5,000 to $15,000 to a limited number of people affected by the flooding. 

“The nice thing about parametric is that it’s very fast,” Kousky said. “Because there’s no loss adjustment.”

There’s no waiting for someone from the insurance company to come inspect damage and decide how much it will cover. The payout is automatic if the storm is bad enough. 

This is the second year of the Flood Recovery Fund pilot in New York. In 2023, the Center for NYC Neighborhoods was able to pay the insurance premium with a grant from the National Science Foundation. This year, it got a grant from the tech insurance startup Raincoat.

Jonathan Gonzalez, co-founder and CEO of Raincoat, called the program “awesome, just from a creativity perspective” and “very, very innovative” for its focus on rainfall flooding, its public-private partnership and its community-based model.

“I think the model is the way to go,” he said. “That’s why I was so excited to support the program, because I think it’s the future of a real solution.”

Parametric insurance is still relatively unusual in the United States; it’s more common in other parts of the world. In New York, there has not been a qualifying storm since the pilot program began, so no one knows exactly how, or how well, the Flood Recovery Fund will work in practice. 

But Makris said it’s designed so people who get these grants will be able to use them for whatever they need after a flood — to replace food or clothes, clean out their apartment, stay in a hotel temporarily, rent a car — no restrictions.

“I think what’s really important about that is nobody knows a family’s needs or an individual’s needs better than themselves,” she said. “Especially in the moments after a disaster, where things are really crazy and chaotic and you need to have a little bit more flexibility.”

In the days immediately after Hurricane Ida flooded his home in Queens, George Lee needed help pumping water out of his basement and cleaning it out.

“I had to hire three people to come to put everything in the garbage truck,” he said, adding it still took a couple of days to clean everything out. “I had so much stuff.”

And after the cleanup, there was so much to fix and replace — windows, the boiler, computers. Even now, three years later, Lee said some of his basement walls are still cracked from the water.