The National Research Council (NRC), a branch of the National Academies of Science, recently released its report Disaster Resiliency: A National Imperative. Among the recommendations in its report, the NRC suggests investment in risk reduction through insurance and other financial instruments that enhance resilience by encouraging mitigation of properties and infrastructure.
More specifically, the report recommends multi-year insurance policies tied to the property with premiums reflecting risk. Risk-based pricing can serve as an incentive that clearly communicates to those in hazard-prone areas the level of risk that they face. Use of risk-based pricing could also reward mitigation through premium reductions and should apply to both privately and publicly funded insurance programs. The report suggests that the National Flood Insurance Program can set a tone for these broader recommendations by developing better flood maps and moving to risk-based pricing with insurance vouchers for those who need financial assistance.