The Kennebec River floods the parking lot of the Hathaway Creative Center on Water Street in Waterville in December, a day after a storm dumped several inches of rain on the region. Rich Abrahamson/Morning Sentinel file

State leaders tasked with reviewing Maine’s preparations and responses to climate change-fueled natural disasters are at a crossroads.

While Maine has seen seven federal disaster declarations for severe storms and flooding in the past three years, statewide enrollment in federally-backed flood insurance policies is dwindling.

Public infrastructure has been repeatedly damaged, including the coast’s working waterfronts, and the state has been reliant on federal disaster assistance to rebuild.

At a meeting earlier this month, members of the state Infrastructure Rebuilding and Resilience Commission wondered whether a public insurance option offered by the state could protect both the uninsured and the state’s own public infrastructure.

“It’s the only way I can think of that actually provides a permanent stream of funding … to respond … to disasters as they occur and the need for increased resilience,” said Charlie Colgan, an economist and policy analyst at the University of Southern Maine.

Climate resilience, Colgan said, “is going to have to come mostly from our own resources.”

Colgan’s proposal, which he presented during the meeting on Sept. 4, includes a public insurance model jump-started by a state bond.

What would happen next is less clear. The insurance program, as Colgan envisions it, would at first be open only to public entities, like municipalities, which would pay into the pool and draw money after disasters.

Payouts could also cover funding obligations for federal grants and fund general resilience projects, like upsizing culverts.

If extended beyond the public domain, Colgan imagines the program could also provide an additional layer of protection for Maine property owners – acting as a low-cost insurance option that would fill the gaps of federally-backed flood insurance.

There are other publicly funded insurance programs in the U.S., including the Citizens Property Insurance Corporation. The nonprofit public insurance company was formed by the Florida State Legislature in 2002 as an insurer of last resort but has been plagued by complaints from policyholders.

The idea for a publicly-funded option in Maine energized fellow commission members when Colgan presented it in early September, shortly after the group painted a grim picture of the state’s current insurance coverage.

Only 1.3% of all homes and buildings in Maine are covered under the National Flood Insurance Program, a number that has declined by 25% to 30% since 2009, according to Peter Slovinsky with the Maine Geological Survey.

Meanwhile, Mainers who do have flood insurance are filing more and more claims. Over the past 10 years, Mainers filed a total of 443 claims, paying out a sum of $16 million, according to Maine Bureau of Insurance Superintendent Bob Carey.

Nearly half of those claims came from the past year alone, Carey said, accounting for 164 claims totaling roughly $8 million.

Commission members only had vague ideas of what could be causing the decline in the number of homes and buildings covered under the National Flood Insurance Program. More houses could be owned outright, Slovinsky suggested, meaning that homeowners would not be required to purchase a flood insurance policy like they would with most federally-backed mortgages.

Many who aren’t required to have flood insurance are opting out of buying coverage because annual premiums are rising or because they don’t trust that the payout will be worth the premium. Several flood victims who filed claims after last winter’s flooding told The Monitor that the payout hasn’t always been worth the cost.

“I mean, if you think for the past six years, we’ve spent $40,000 in flood insurance to have not covered anything,” said Gardiner business owner Stacy Caron back in January, a month after her family’s pizza parlor was wrecked by flooding from the Kennebec River.

For comparison, flood insurance policies nationwide paid out an average of $44,401 per claim in 2021, according to online insurance marketplace Policygenius.

Colgan also tied Maine’s low participation rates to insurance lapses that the commission has seen along the coast.

Privately-owned wharfs in places like Stonington, for example, are the spine of Maine’s coastal economy but don’t necessarily have the insurance coverage they need to recover on their own after disasters like this January’s flooding, Colgan said.

“A lot of the working waterfront facilities that were destroyed are private utilities, but provide essential public services,” said Dan Tishman, commission co-chair and chairman of Tishman Realty & Construction.

Linda Nelson, chair of the commission and Stonington’s economic and community development director estimated that only a little more than a dozen Stonington property owners had flood insurance policies, which didn’t provide the money needed to build back resiliently.

“The things they thought were going to be covered by [flood insurance] somehow weren’t possibly covered by [flood insurance],” Nelson said.

This story was originally published by The Maine Monitor, a nonprofit and nonpartisan news organization. To get regular coverage from the Monitor, sign up for a free Monitor newsletter here.