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Little financial help for residents following devastating California floods

by Seth Brickman, QCash CEO
February 8, 2023

Earthquakes, wildfires, drought, and now  disastrous floods – California just can’t catch a break.

Since Christmas, 32 trillion gallons of water and snow have fallen on the Golden State. As reported by the Associated Press, the deluge submerged and washed out roads, generated powerful flash floods, knocked out energy to tens of thousands of people, and created mudslides by soaking and loosening wildfire-charred hills. Tragically, all the above contributed to the deaths of 20 people.

You never need security . . . until you need it

Another tragedy within the tragedy itself is the drought that began in January 2023 has numbed the public’s sense of the risk of such disasters as flooding. People usually purchase insurance following disasters when the risk is top-of-mind. Then again, who actually gets “drought” insurance? Further, how many Californians even have flood insurance? According to the Los Angeles Times, only about 230,000 homes and other buildings actually have flood insurance in the state, which is still separate from homeowners insurance.  That total only comes to about two percent of properties in California that are covered against flooding.

“I didn’t think it would flood this bad,” said Acompa, Ca., resident Kyle Starks, from a local evacuation center. On Sunday morning, January 15th, he arose to discover floodwaters had already reached the door of his Jeep outside after yet another heavy rainstorm had drenched the state. Rescue crews arrived with boats to get Starks and other residents out of the mobile home park to safety.

The reality is that, oddly, Californians aren’t really big on disaster insurance. Only two percent of California's population is covered for flooding, 2.7 percent for wildfires, and only 10 PERCENT for earthquakes! And droughts? Not a chance.

A few years before Stark’s neighbor Juan Reyes bought his home, the area had suffered a series of storms that dumped record levels of rain and flooded the area. Reyes was aware of the prior storm events, and still decided not to sign up for flood insurance. Why? You can probably guess: It was too expensive.

Think about it: Low-income individuals and families just experienced the violent loss of their home and any possessions they ever cared about. Many can’t even afford insurance in any form, much less flood insurance. They’re left with nothing, and an affordable and accessible financial asset like the mobile QCash Financial First Responder Loan from their local credit union may just be the difference between life and death for those trying to get back on solid financial footing.

California’s floods ravage the financially vulnerable the most

Stark’s and Reyes’s stories are not singular among the low-income and underserved communities in California. The worst of the state’s flooding issues last year were visited upon the state’s financially vulnerable residents. These represent the workers and families who often live in affordable-housing units or lower-cost rentals in some of the most high-risk areas for flooding; basically, housing that was built poorly or cheaply to begin with.

Such a devastating trend will continue into the foreseeable future. According to a 2020 study by IOP Publishing’s  Environmental Research Letters, the number of affordable-housing units in California at risk for flooding will increase 40 percent by 2050. The state joins New York and New Jersey as the coastal areas most likely to experience the most dramatic surge in severe flood events and ensuing damage.

Piling onto the problems afflicting such communities, flooding isn’t the only concern. Such residents’ homes are disproportionately placed in areas and regions of the state most likely to leave them exposed to the harsh overall effects of climate change, including intense heat. They are often reliant on landlords to modernize, update, or adapt their units to the rapidly-changing environmental conditions around them. Those changes will most likely then be accompanied by rent increases, thereby increasing the renter’s financial instability even further.

Additionally, in a recent post assessing climate change’s impact on the state, the Legislative Analyst’s Office (LAO) cited updated research showing that communities designated by federal agencies in the 1930s as “hazardous” for real estate interests – a designation known as redlining – “tend to experience hotter temperatures and more flood risk than other areas. These areas often have fewer parks and trees and more paved surfaces,” the consequences of which mean less ability to absorb runoff water in the event of storms or curbing radiating and escalating heat during the summer.

And that is also where, disproportionately, poorer, more low-income individuals and families end up living “due in part to historical housing discrimination practices that restricted which racial groups could live and purchase homes in the communities that contained larger and more developed water systems,” the LAO report detailed.

Such limitations in the well-being of areas like Acampo and countless other rural areas of the country extend to the accessibility and stabilization that certain mainstream financial institutions provide, especially credit unions. Unfortunately, there are many instances where a larger bank uprooted and left, leaving more community-oriented credit unions to swoop in and fill the financial inclusion void.

Residents left to figure out how to recover

Among those trying to recover from the California flooding is David Enero in Merced, Ca., a community of roughly 90,000 in the state Central Valley that flooded particularly badly. According to the AP, the flood water was ankle-deep in his house, and the laminate floor in his living room was disconnected and floating.

Enero lives in a region of California designated high-risk where homeowners must purchase flood insurance. He says paying for the damage to his home on his own would be incomprehensible. Fellow resident Jay Laub said he’s worried his mobile home might have sunk into the soggy ground, which he fears would force him to re-level it. He’s not entirely sure how he’d ever pay for such a project.

“What do you do? You’re on social security, like I am,” Laub explains. “But you know what? You take it one step at a time. You’ve just got to stay strong.”

Additionally, you should remain financially aware. The impact of the digital transformation movement in the last five years has enabled access for many millions through the financial stability of their local financial institution. Rather than the expensive R&D involved in manufacturing your own small dollar loan program, fintech represents an eminently faster, more affordable service for your credit union to offer your members through virtually any mobile device should they find themselves facing an unexpected life emergency.

Imagine being able to respond to any climate disaster within one minute of application and have a Life Event Loan deposit waiting in your member’s account as the event occurs. Wherever your members reside and face flooding, fires, or an economic crisis, with QCash’s Financial First Responder Loan they know they can come to you when and where they need it. 

About QCash

QCash Financial, a CUSO, is a fintech firm that is mission-driven to empower financial institutions in their quest to improve the financial well-being of their communities by providing loans to their members in under 60 seconds without the use of a credit score. The QCash platform is the best tool for advancing financial inclusion and access for credit union members.