Five Major Hurricanes In Seven Years; FL Home Insurance Out Of Reach For Growing # Of Residents [View all]

EDIT

In the last seven years Florida has weathered five major hurricanes. Michael, which made landfall in 2018 in the Panhandle, was the first category 5 hurricane to strike the continental United States since Andrew in 1992. Ian, in 2022, was the costliest hurricane in state history and third-costliest on record nationwide, after Katrina in 2005 and Harvey in 2017. Recent major Florida hurricanes also include Irma in 2017, Nicole in 2022 and Idalia in 2023. If the disasters sharpened Floridians’ resolve, in the immediate aftermath, to build back stronger and better, another crisis may be causing some to rethink where they live and the rising risk as the global climate warms.

EDIT

The study found that the most overvalued properties are concentrated in coastal counties where there are no flood risk disclosure laws and where there is less personal concern about climate change. Much of the overvaluation is driven by properties situated outside of the 100-year flood zones designed by the Federal Emergency Management Agency. Low-income households especially are in danger of losing home equity, potentially leading to wider wealth gaps. In Florida properties are overvalued by more than $50 billion, according to the study. The unpriced risk is important for many reasons. Municipalities that rely on property tax revenue may be vulnerable to potential shortfalls, the study says. The National Climate Assessment pointed out last year that the overvaluation of coastal properties makes it difficult to move people out of harm’s way, because of the limited amount of compensation available through flood insurance and federal flood disaster assistance programs.

“Florida is one of the riskiest places from a climate impact standpoint that you can live in,” said Rob Moore, director of the flooding solutions team at the Natural Resources Defense Council. “One only needs to look through a few years of front pages to see how many major hurricanes have struck this state, and that definitely had an impact on how both private insurers and insurers in the public realm are looking at risk and pricing it in the state of Florida.” “We’re so far behind in regard to pricing in the climate. That’s why we’re seeing these big (insurance) spikes in places like Florida and California and Louisiana,” said Jeremy Porter, head of climate implications research at the First Street Foundation. “It’s the first mechanism to start to price climate into the housing market.”

EDIT

Most notably, the government-backed National Flood Insurance Program has raised rates nationwide under its new pricing methodology, Risk Rating 2.0. The change represents a shift away from the subsidization that had helped transfer risk away from homeowners, toward premiums that are more commensurate with risk. In 12 states, flood insurance premiums have doubled, although no part of the country has been untouched, with rates in Florida jumping by 231 percent, Kentucky by 207 percent, Louisiana by 234 percent, South Dakota by 207 percent and West Virginia by 272 percent, according to the First Street Foundation study. This appears to have led some homeowners to forgo insurance altogether, as the number of policies in force has dropped by 21 percent to 4.7 million. “That does price in climate risk in a way that it didn’t for the last 50 years,” Porter said.

EDIT

https://insideclimatenews.org/news/06032024/florida-skyrocketing-insurance-rates/