Insurance premiums could rise as more extreme storms hit coastal markets

Influx of capital in insurance market has helped keep premiums artificially low

TRD NATIONAL /
Mar.March 26, 2019 12:30 PM

Marathon, Florida after Hurricane Irma hit the Florida Keys (Credit: Getty Images and iStock)

It’s no secret that coastal homes are becoming more vulnerable to extreme weather and other effects of climate change. But the cost of living on the coast has remained relatively stable in waterfront areas of Miami Beach and the Northeast.

That’s partly due to an influx of capital in the insurance industry that has increased competition and kept premiums artificially low, Bloomberg reported. At the same time, homeowners in areas of the U.S. that will not experience flooding are subsidizing those who do live in flood zones through the national flood insurance program. Those premiums increased by 8 percent in April 2018 to $935 per policy on average.

Meanwhile, residential prices and sales in coastal markets in the U.S. are on the rise. In Miami Beach, luxury home sales increased more than 60 percent year-over-year in the fourth quarter of last year. Home sales in Nantucket, a small island off Cape Cod, Massachusetts, rose 161 percent in 2018 compared to the previous year. And in the barrier islands off the coast of North Carolina, the average sale price rose 11.5 percent over the last three years, according to Bloomberg.

A recent study by the U.S. Geological Survey found that around half a million California residents and $150 billion in coastal real estate are at risk of flooding by the end of the century.

Premiums could rise as more extreme storms hit vulnerable markets and insurance companies update their climate models. “With the greater frequency and severity of storms, will it be more expensive going forward to live in coastal areas?” Howard Mills, global insurance regulatory leader at Deloitte, told Bloomberg. “Yes. And frankly, it should be.” [Bloomberg]Katherine Kallergis


Related Articles

arrow_forward_ios
Alan Ojeda and 8894 NW 44 Street in Sunrise (Google Maps)

Rilea Group scores $46M construction loan for Sunrise apartments

Rilea Group scores $46M construction loan for Sunrise apartments
Yard 8 and Wood Partners CEO Joseph Keough (Courtesy of ACRE)

Wood Partners lands $86M refi for Midtown Miami apartments

Wood Partners lands $86M refi for Midtown Miami apartments
Masoud Shojaee and a rendering of Shoma Village 

Shoma Group scores $67M loan for mixed-use Hialeah project

Shoma Group scores $67M loan for mixed-use Hialeah project
Housing Trust Group CEO and president Matt Rieger and Hudson Village renderings

HTG scores financing for Hollywood affordable housing project

HTG scores financing for Hollywood affordable housing project
 Rendering of Father Marquess-Barry Apartments with Matt Rieger

HTG scores financing for senior affordable housing in Overtown

HTG scores financing for senior affordable housing in Overtown
Fortune International Group’s Edgardo Defortuna, Château Group’s Manuel Grosskopf and a rendering of the project

Fortune and Château score $119M refi for Sunny Isles condo project

Fortune and Château score $119M refi for Sunny Isles condo project
Rendering of the project and from left: Vince Signorello, Ricardo Caporal and Greg West

Zom Living, partners score $57M loan for Ludlam Trail project

Zom Living, partners score $57M loan for Ludlam Trail project
Atma Beauty in Miami and Lloyd's of London (Credit: Google Maps, Leon Neal/AFP via Getty Images)

Miami Beach salon sues Lloyd’s of London over coronavirus claim

Miami Beach salon sues Lloyd’s of London over coronavirus claim
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...