Bill would establish Alaska alternative to federal flood insurance program

The Alaska Legislature is considering a bill that would create a new state insurance program to address damages from floods, including glacial outburst floods that are becoming more common as the far north climate warms.

The measure, Senate Bill 11, would set up an Alaska Flood Authority and an Alaska flood insurance fund to supplant the Federal Emergency Management Agency's National Flood Insurance Program.

The FEMA program, which takes in premiums and makes payouts nationally, imposes restrictions on Alaskans that are too onerous and post-disaster compensation that is too paltry, in the view of the bill's sponsor, Sen. Bert Stedman, R-Sitka.

The bill got its first hearing on Monday in the Senate Labor and Commerce Committee. But it has been in the works for several years, Stedman told the committee.

FEMA requires flood insurance for financing of homes or buildings in areas in the agency's defined flood zones. Private insurers may provide that coverage, but Alaska is too small a market to attract that type of service from the private sector, Stedman said at the hearing.

Thirty-two cities or boroughs were participants in the federal flood insurance program as of 2022, according to a state report issued that year. Overall, Alaskans in the system pay out much more in premiums than they receive in compensation for flood damage, Stedman said.

"They're taking our premium-collected dollars to subsidize Florida and all their storms, the Carolinas, their big storms, the whole Mississippi drainage, the Gulf of Mexico. Trump might call it the 'Gulf of America,' but whatever it is, whatever they want to call it, it doesn't matter. We're subsidizing it to the tune of millions and millions," he said.

Unlike the federal program, which sets a maximum payout of $250,000 for a flood-damaged home, which "doesn't go far if you've had a loss," Stedman said, and $500,000 for a flood-damaged commercial building, Stedman's bill seeks a maximum payout of $1 million for a home and $2 million for a commercial building.

The federal flood insurance program is designed specifically to discourage construction in coastal areas that might be prone to inundation, Stedman said. The state insurance program, as he envisions it, would not be as restrictive about locations of buildings as the federal program.

In Southeast Alaska, where steep mountains rise from the water's edge, coastlines may be the only places to build, he said.

"Look at Juneau. You take everybody off the beach, what have you got? You're on the mountainside, right? Go to Ketchikan. It's even worse. And you can go all the way up the coast. All our canneries, all the most premium property is shoreside," he said.

While Senate Bill 11 lists mudflows as a type of eligible flood, it does not list landslides specifically. It is difficult to get landslide insurance in Alaska, according to experts.

Southeast Alaska has had four fatal landslides in the past decade, the most recent one in August in Ketchikan. One of the fatal slides was in Stedman's hometown, Sitka, in 2015.

Stedman said the envisioned Alaska program could be expanded in future years to provide landslide insurance or earthquake insurance.

Those landslides are occurring with increased frequency in Alaska as rainfall patterns change in the Southeast region and as permafrost thaws and glaciers recede in other mountainous areas, scientists say.

Alaska is also highly earthquake prone, but earthquake damage is typically not covered by homeowners' insurance policies, according to the Alaska Seismic Hazards Safety Commission.

The bill was held in committee on Monday for further consideration.

Yereth Rosen came to Alaska in 1987 to work for the Anchorage Times. She has reported for Reuters, for the Alaska Dispatch News, for Arctic Today and for other organizations. She covers environmental issues, energy, climate change, natural resources, economic and business news, health, science and Arctic concerns. This article originally appeared online at alaskabeacon.com. Alaska Beacon, an affiliate of States Newsroom, is an independent, nonpartisan news organization focused on connecting Alaskans to their state government.