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I recently wrote an entire treatise on insuring homes in a warming world. It got me thinking about the interviews I did along the way that didn’t make it into the final article. Conversations such as the one I had with Appalachian State professor David Marlett, who heads the college’s Brantley Risk & Insurance Center.

When App State closed for a couple of weeks after Hurricane Helene, Marlett volunteered at the college’s Disaster Relief Hub, helping folks file insurance claims and apply for FEMA aid.

I told Marlett about a problem one homeowner faced right after Helene. Land on his neighbor’s property shifted from the storm, creating a scarp around an unstable swath of land upslope from his house. The county condemned his house as a result — it wasn’t safe to remain in a home downhill from that kind of landslide hazard.

Marlett said insurance — even national flood insurance — probably wouldn’t help if that land did start to slide. And he suggested some other models we should look at, which we’ll explore, too.

This interview excerpt was edited for concision and clarity. 

David Marlett: Landslide is the most complicated issue right now because with flood insurance, covers mudflow. Mudflow is not landslide. That mudflow is — the description I’ve heard is picture chocolate milk. If you got chocolate milk coming down the mountain, that’s covered.

If it’s a landslide or the side of the hill gives way in the next couple days, that’s not covered under flood insurance.

Zack Turner: Is it covered under anything?

Marlett: Under your homeowners’ policy, you can purchase what’s called “earth movement” or “earthquake coverage” … but that only covers landslides related to earthquakes. So, there’s a pretty big gap for these landslides like we’re having — that even if the consumer did everything right and bought the endorsements and bought the coverage, there’s still a significant gap.

Long term, we need to reevaluate the entire approach. It’s ridiculous that we have multiple insurance policies coming in covering individual perils, and expect the consumer to deal with two or three, or four insurance policies with different terms, and different deductibles. This piecemeal approach — it’s just it’s too complicated. You have a single policy, covers everything and a requirement that everybody buy it.

Turner: Do you see that as being something that’s going to become more important as our climate continues to warm — since a lot of those weather-related hazards are predicted to worsen?

Marlett: Yeah … Unfortunately, things are probably going to get worse for a continued period of time for the lawmakers, and really at the federal level, to take a stab at this. Because the insurance markets’ residential property (insurers) are struggling to the point that they’re pulling out of the big states — California, Florida, and Texas. And the consumer is getting less coverage, paying more. It’s just gradually pulling apart. And so, at some point, we’re going to need to model what other countries do — where you get sort of a universal homeowners policy [that] covers the perils, and there’s some sort of federal backstop that protects the insurance company so they can have some financial protection in the event that you have a major earthquake or hurricane.

One policy for all weather-related hazards

I followed up with Marlett to ask which countries he was referencing when he talked about universal homeowners’ policies. He mentioned one in particular: Spain.

Devastating floods there in October killed more than 200 people and damaged over 40,000 buildings.

Instead of a patchwork of private and public insurance policies with coverage for various specific disasters, the government-regulated Consorcio de Compensación de Seguros (Insurance Compensation Consortium) will pay out more than 90% of the resulting claims. Everyone chips in to make that possible: Insurers in Spain charge an additional fee to policyholders, and those funds are paid into the Consorcio. The public entity functions as a backstop, covering “extraordinary risks,” such as floods, earthquakes and even falling meteorites. Basically, it covers natural disasters that private insurers don’t, including supplementary expenses such as mud and debris removal.

But that coverage doesn’t come from a separate insurance policy homeowners have to buy in advance. One of the ways that the Consorcio differs from North Carolina’s nonprofit Beach Plan, or NCIUA, is that it doesn’t issue policies to homeowners. Private insurers manage home insurance policies, and the Consorcio pays out the claims when a catastrophe strikes. In Valencia, where most of the flooding occurred, about 77% of homes had an insurance policy. Homeowners could then file flood claims with their private insurer because the Consorcio automatically covered them when they purchased the policy.

Still, the system’s not perfect. The Consorcio received about 225,000 claims from the October floods. A month later, only 7% of claims had been paid, and most of those were vehicle claims. The limiting factor appears to be staffing, as approximately 1,000 employees work to process a couple hundred cases each, contacting each claimant via phone to verify damages before issuing a payment.

That said, it appears that most of the insured will eventually be made whole. The Consorcio ended 2023 with 10.3 billion euros to pay insured risks ($10.6 billion); Spain’s October flooding resulted in roughly 3.7 billion euros ($3.8 billion) in insurance claims.

In western North Carolina, flooding caused most of the damage from Helene. Few homeowners there had flood insurance. That left FEMA disaster aid, but relatively few have taken advantage of the program. Some folks initially had trouble applying for aid because they didn’t have power or internet for weeks. Others haven’t applied because they don’t trust the federal agency or are reluctant to accept outside help.

One month after Helene hit, FEMA approved $200 million for over 121,000 households in the state. So far, only 15% of homes in western North Carolina have applied for FEMA aid, according to reporting by The Washington Post. Over 274,000 N.C. residents applied for federal disaster relief, and FEMA has paid out over $15.8 million as of this week. In one respect, the state and federal governments in the U.S. face the same problem as the Consorcio; the funds are available, but it’s taking a while for that money to reach the people who need it.

With less than a month left to apply for federal aid, it looks like many western North Carolinians may not receive direct financial assistance as they rebuild their homes.