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Disaster-prone US area nearing pilot program that could solve pressing issue: 'Very little money can help a whole heck of a lot'

Communities affected by natural disasters don't have the luxury of waiting.

Communities affected by natural disasters don’t have the luxury of waiting.

Photo Credit: iStock

Communities along the Mississippi River may soon see an insurance program that can get them financial aid faster than existing traditional insurance programs and federal aid can, Grist reported.

The Mississippi River Cities and Towns Initiative is collaborating with Munich Re, a German multinational insurance company, to design an insurance pilot program that can release emergency funds quickly after a natural disaster occurs. 

Federal disaster aid from the Federal Emergency Management Agency and traditional insurance programs can take weeks or months to come through due to routine investigations and proof of loss requirements. Communities affected by natural disasters don't have the luxury of waiting for aid.

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This novel insurance product can get local governments a faster payout, allowing cities and towns to focus on restoration without having to dip into resources they've budgeted and allocated for addressing daily needs. Additionally, the insurance program will operate on "triggers" such as river heights or wind speeds that will automatically result in payouts, increasing resiliency. 

As communities along the Mississippi River experience increased frequencies of natural disasters such as flooding, this pilot program could provide much-needed security. 

Insurance companies have dropped coverage for homeowners in high-risk wildfire communities in some instances. However, this joint collaboration aims to keep communities safe rather than abandon them. Lawmakers in Florida have proposed similar initiatives to protect homeowners from hiked insurance prices or dropped coverage.

According to Grist, this pilot program will not cost these river communities a single penny, as there are no payouts yet. Once the pilot program enters the implementation stage, MRCTI hopes larger corporations with a vested interest in the Mississippi River will foot the bill. 

"In the first 24 to 72 hours after a disaster event, very little money can help a whole heck of a lot," Colin Wellenkamp, executive director of MRCTI, said, per Grist. 

"Not every city is going to flood every year, but the flooding will impact at least one section of the river," said Raghuveer Vinukollu, senior vice president of Munich Re in the U.S., per Grist. 

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