Weathering the Storms of Disaster Prevention, Relief and Recovery
By Jennifer Esperanza, Senior Director of Organizational Culture and Strategy
​August 1, 2024
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The Bennett family of Houston, Texas, are as Carolyn Bennett says, “caught between a rock and a hard place.” She and her husband Kenneth, who are caretakers of their four grandchildren, were recently denied claims from their homeowners insurance company shortly after Hurricane Beryl hit their area because no trees physically hit their home. Yet, trees had fallen all around their property, and the family had been without power, gas and functioning sewage for weeks. The local utility company had also declared that power cannot be restored to their home until a licensed electrician comes to make necessary repairs.
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"It's really dangerous to be in this house. I pay all my bills, then I try to get help from people, and they give me the runaround," says Kenneth Bennett, Carolyn’s husband.
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We’ve read the headlines of how storm damage, floods and torrential rains have affected millions of homeowners like the Bennetts. Hurricane Beryl wreaked havoc in Texas this July, declaring nearly half the state’s counties as disaster areas and causing home insurance premiums to skyrocket in Texas. The storm subsequently evolved into heavy rains, wind, and tornadoes that also damaged homes in Louisiana, Oklahoma, Missouri, Illinois, Indiana and Tennessee. Such disasters are only expected to increase over the coming years, and as a result, we will likely see a steady rise in insurance premiums in all regions of the country.
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What can credit unions do? Presently, there are no direct or easy solutions for credit unions to lower insurance premiums, but credit unions can leverage their long-standing mission of promoting financial resilience by strengthening their member support for those impacted by climate-related disasters. The key is to offer solutions in three areas: prevention, relief and recovery.
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Prevention
Members may not realize their local credit union offers loans to retrofit their homes in ways that can mitigate risk and prevent extensive damage to their property. Credit unions may partner with local contractors to offer members preferential rates on mitigation improvements recommended by insurers. Homeowners in flood-prone areas can prevent extensive flooding by installing updated gutters and downspouts that bring water away from the house, and grading soil around their home’s foundation to slope away from the structure. New roofing, sturdier windows and doors can prevent damage from tornadoes, hurricanes and high winds. Finally, homes that are at high risk of the devastating effects of wildfires can benefit from fire-resistant roofing, siding and deck materials or hire landscapers to clear flammable trees and other vegetation away from home. Filene Research Institute published a report on green lending solutions that can also serve as a positive business growth strategy for credit unions.
Relief
In the days and weeks after a climate-related disaster, victims need support in a variety of ways. Credit unions can offer short-term, low-interest emergency loans to help cover immediate needs such as temporary housing, food and clothing. Creating and distributing marketing materials in wake of disaster, such as pamphlets containing QR codes for easy-to-access information, can put a homeowner in direct contact with staff in your lending department.
Recovery
In the months and even years after disaster hits, consider providing low-interest or deferred-payment recovery loans to help members reconstruct or repair their homes. Additionally, consider debt consolidation counseling to help your members manage existing debts into a single loan with a lower interest rate, which could ease members’ financial burdens, possibly paying off loans years earlier than originally planned.
To support long term recovery, credit unions can join forces with other community organizations to lobby for changes in state regulations or federal policies that address rising insurance costs. This could involve being an advocate for mitigation efforts or fairer pricing structures in high-risk areas. Additional collaboration with insurance companies could lead to negotiations for better rates through group discounts (for subdivisions or historically registered neighborhoods) or preferred rates with insurance companies for their members. We encourage credit unions to be prepared to have conversations with their members about worst-case disaster scenarios, but also reassure members your credit union has solutions to support them should disaster strike.
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