“States across the nation are grappling with the emerging hazards and incipient risks created by a rising occurrence of natural disasters. Taxpayers are seeing the impact of these issues firsthand as they are forced to pay to insure themselves and their communities against failures of infrastructure and stressed public services,” according to a new report from the National Association of State Chief Administrators (NASCA). 

As the report continues, protecting taxpayers and securing “appropriate coverage for state assets” requires long term planning, solid public-private partnerships, and innovation in the approach to risk management. 

NASCA interviewed state leaders and risk management professionals in Georgia, Tennessee and Arkansas in order to develop three case studies, which can have application across many other states. Ultimately seven practices stood out as cross-cutting lessons for other similar states. They were: 

• “Centralize risk-management authority wherever possible. Each state relies on a central authority to oversee insurance, claims management, or disaster recovery activities. Even where full centralization across every agency isn't achievable, concentrating insurance decisions in a single office can improve coordination, reduce duplication, support faster recovery, and provide a clearer point of accountability during disaster events”.

• “Invest in accurate, field-verified asset data. Reliable, current property valuations and asset inventories support sound insurance decisions, reduce coverage gaps, and improve recovery efforts. All three states emphasized the importance of maintaining current asset information, and that data also builds credibility with private insurers and reinsurers.”

• “Treat the self-insurance and commercial-coverage balance as dynamic. Arkansas, Georgia, and Tennessee all use hybrid approaches that combine self-insurance with commercial coverage to control costs while maintaining protection against catastrophic losses. All three states have adjusted their retention levels more than once in response to market conditions and loss experience and expect to keep doing so.”

• “Build strong relationships before a disaster, not during one. Effective disaster response depends on established partnerships with insurers, brokers, contractors, adjusters, emergency management agencies, and federal partners. Each state credited these relationships with faster, more accurate claims handling and accelerated recovery”.

• “Make risk mitigation an ongoing investment. States are investing in inspections, loss-control programs, training, and enterprise risk management practices to reduce losses and improve resilience before disasters occur.” 

• “Plan for complexities with federal disaster assistance. All three states described complexity coordinating with FEMA's Public Assistance program, and two have engaged specialized outside partners to help manage that process.” 

• “Pursue risk mitigation even though savings are hard to measure directly. Interviewees acknowledged that a prevented loss leaves no data trail, but each state continues to invest in loss-control audits, leak-detection technology, and appraisal-driven risk scoring on the premise that mitigation still pays off over time.”

The report makes clear that these lessons aren’t any kind of panacea. In fact, these three states all acknowledged that they didn’t view their current models as finished products.

As NASCA notes, “the experiences documented in this report are offered not as a single prescriptive model, but as a starting point for state leaders to evaluate their own governance structures, data practices, and risk-financing strategies against those of their peers.”

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