A new Environmental Defense report, Blown Away: How Global Warming Is Eroding the Availability of Insurance Coverage in America’s Coastal States [PDF], documents an unsettling trend. With record losses and payouts far outstripping premiums in recent years, insurance rates are rising and many companies are moving out of America’s coastal states.
Allstate, one of the nation’s largest insurance providers, has cut off coverage for 40,000 coastal homeowners in New York, and is no longer writing any new policies in Florida.
That’s bad news for homeowners like Becky and Chris Withstandley, whose Florida condo was ravaged by Hurricane Frances in 2004. Three years later, they still haven’t been able to move back home. Meanwhile they’ve had to shell out $100,000 for uncovered repairs and their insurance premiums have quadrupled. (Read more about the Withstandleys’ ongoing rebuilding ordeal.)
Study highlights
- Alabama: Premiums 10 times higher
Between 2001 and 2006, some premiums for homes along the coast rose more than 10-fold. - Florida: Premiums up 77%
From 2001 to 2006, average homeowner policies increased by 77%, more than in any other state. - Louisiana: Premiums up 65%
Between 2001 and 2006, home insurance premiums rose 65.2%, ranking the state fifth in the nation for rising homeowner costs. - Mississippi: Premiums up 63%
Between 2001 and 2006, average homeowner premiums climbed 63.3%, ranking the state 6th in the nation for increases. - South Carolina: Premiums up 56%
Between 2001 and 2006, homeowner premiums climbed an average of 56.4%. - Virginia: Premiums up 67%
Since 2001, premiums have climbed an average of 67.2%, ranking the state among the top five for biggest premium increases. - Texas: Premiums up 50%
Between 2001 and 2006, average premiums increased more than 50%, from, for example, $806 to $1,214. (See our complete list of fact facts from the report.)
Study: Insurance rates on coasts doubling and tripling
The problem is industry- and country-wide, our study reveals. Between 2001 and 2006, average insurance premiums rose nearly 50 percent. For many coastal areas, even state-mandated “insurers of last resort” are asking for triple-digit rate increases.
Scientists say that catastrophic weather events — hurricanes, wildfires, floods and drought — will increase in frequency and severity as the buildup of greenhouse gases pushes temperatures higher. (More on extreme weather.) The U.N. projects that climate change-driven natural disasters will cost the world’s financial centers as much as $150 billion per year within the next decade.
In the meantime, insurance companies will do what they do best: limit risk.
Climate Change Today 