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FEMA vs. Texas: How Will They Recover from the 2020 Storm Season?

The governor of Texas filed an appeal of a FEMA decision related to tornado damage from October of last year.  The decision ruled that Texas did not meet the threshold of financial damage that entitled them to qualify for a disaster declaration that would provide the state with much needed funding.  FEMA certified the state had suffered $18.5 million dollars due to tornadoes that ravaged the northern part of the state.  This amount did not meet the required threshold of $38.5 million in uninsured damages.

However, as Dallas continues to deal with the destruction, they identified around $27 million more in damages.  This places the state well beyond the $38.5 million needed, but FEMA denied their request.  Since Texas would potentially receive 75% of cost damages if FEMA were to approve the request, Texas lawmakers, along with the governor, have filed an appeal.

2020 Storm Season Brewing

The appeal process is just beginning as the deadliest months of severe storms are fully underway.  April and May are the most dangerous months for potential thunderstorms and tornadoes.  Just last month, tornadoes ripped through the state of Tennessee, causing tens of thousands of insurance claims, totaling more than than $1 billion.

Claims are only now beginning to slow down, but there is no assurance that there will not be another dangerous storm in the region.  Were Tennessee or Texas to endure another storm like the ones in October 2019 or April 2020, the damage and costs would increase exponentially.

FEMA Falling Under Pressure

FEMA and its reserve of relief funds and private insurance plans are the only recourse these states have during such a time.  When the system gets overloaded due to increased need, the safety nets upon which people and state governments rely upon for recovery become stretched too thin.  On top of an active storm season, the COVID-19 pandemic continues to ravage the nation.

Insurance companies of all kinds remain under immense pressure to offer relief through reduced or refunded premiums.  For example, in California, lawmakers ordered auto insurers to return premiums to their customers.  As lawsuits increase across the country, insurance companies embrace for the worst year on record.

Now it seems FEMA is coming under similar pressures.  As other states join Texas lawmakers in their appeal, the storm season may include the federal government caught up in a storm of its own. But under the present crisis, it is unknown if the federal government is prepared to handle all of these requests. With everyone in need of cash, help seems far off under the present circumstances.

Devastating storms, in combination with COVID-19 related claims, implicate a busy season for insurers of businesses, homes, and properties across the nation.

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