“No pun intended, this is the perfect storm,” said Chris Brown, executive director of the SmarterSafer Coalition, a disaster policy group.
According to insurance experts, the cost of Ian’s destruction could easily reach tens of billions of dollars. Overall insured losses alone were shown to exceed $30 billion. Many of them were caused by flooding, according to RMS, an analytics firm owned by credit rating agency Moody’s.
“Just because we’re not in the ‘flood zone’ doesn’t mean we’re not at risk of catastrophic events like this,” Republican Florida Gov. Ron DeSantis said at a briefing on Wednesday. “This is a problem we have to deal with.”
“You’re looking at a storm that has changed the character of a significant part of our state,” DeSantis added Thursday. .
Lack of flood insurance coverage makes reconstruction more expensive. Florida has more insurance against major floods than any other state, but only 18% of homeowners use the federally-operated National Flood Insurance Program. These federal policies only cover damages up to $250,000. Median home sales price in Lee County is $387,500where Ian landed — not including living expenses that can pile up after a disaster.
Of the 80% of Floridians who don’t have flood insurance, Friedlander says, “These families have no financial protection from flood damage.” “Many families, perhaps thousands, will be devastated.”
President Joe Biden said Thursday that the federal government will try to ease the financial burden by providing up to $75,000 for home repairs.FEMA will also provide recovery assistance.
To make matters worse, many Florida residents canceled their federal flood insurance before the storm. The Federal Emergency Management Agency introduced a new pricing system in October aimed at more accurately pricing hazards, according to Matthew Evey, president of the First Street Foundation, which analyzes floods. After that, the number of insurance policies in Florida dropped by about 3%, or about 48,000 households. Many Florida premiums have risen, and data suggests homeowners have waived coverage.
Other residents may have thought they didn’t need flood insurance because of outdated FEMA flood maps that didn’t take into account future climate change. Anyone with a federally backed mortgage should have flood insurance if they live in a once-in-a-century floodplain. Purchasing flood insurance outside the area is an option, but these areas still face the risk of flooding. According to FEMA, a quarter of the claims are from outside the once-in-a-century floodplains.
And FEMA’s maps often don’t incorporate new science about the link between climate change and more powerful hurricanes. Some scientists believe that warmer waters accelerated previous hurricanes, such as Ian and He Harvey in 2017, rapidly before they made landfall, bringing heavy rainfall to inland areas. There, storms hit the coast and people who are less likely to have flood insurance than those who live on he once-in-a-century floodplains.
Rapid analysis by climate scientists suggests that climate change is likely Increased Ian’s Extreme Precipitation by 10% Compared to a world without human-caused global warming gases.
“[Flood insurance requirements] We never miss an entire subset of properties,” says Eby. “Hurricanes aren’t what they used to be. They intensify much more quickly.”
Some of Ian’s hardest-hit counties highlight the issue. The First Street Foundation estimates that more than 50,087 properties in Charlotte County, including Port Charlotte and Punta Gorda, are at risk of flooding, but FEMA’s 102,675 properties on the 100-year floodplain do not. not In other words, federal maps did not include one-third of the properties that should have been included.
In Lee County, home to Sanibel and Fort Myers, the 48,587 facilities outside of FEMA’s 100-year floodplain should be considered flood prone.
But Florida may be better prepared than other states, says Laura Lightbody, who directs the Pew Charitable Trust’s flood preparedness community initiative. Many counties there are incorporating the new climate data into their floodplain maps, she said. Designed with hurricanes in mind, the post-Andrew building code is considered best-in-class, and its performance “will certainly be studied,” she added. Florida has more flood insurance policies than any other state.
But heavy downpours from Ian, which hit Florida’s interior communities similar to those that hit Houston during Hurricane Harvey in 2017, have raised alarm about the extent of flooding.
There are concerns that the rains from Hurricane Ian will have the greatest impact on inland communities that are not affected by hurricane events that typically affect Florida, and communities that do not typically flood. Insurance,” said Lightbody.
Neptune Flood, a private flood insurance company with 130,000 policyholders, saw people demanding four times as many flood policies compared to normal levels on Monday when Ian moved north. The company’s CEO, Trevor Burgess, said about half of the company’s sales weren’t a once-in-a-century floodplain, and that consumption typically spikes after a disaster. So is Premium.
Flood compensation has become more expensive in the five years of Neptune’s existence, Burgess said, given new data points showing increased severity and frequency from floods. He expects that trend to continue, prompting people to reconsider whether it is wise to rebuild or live on a floodplain.
“Developers and consumers will start asking the question, ‘Does it really make sense to pay $5,000, $8,000, or $10,000 a year for flood insurance? Or should we build higher? Or should we build further inland?” he said. “And over time, there will be fewer buildings in these coastal high-risk areas.”
Florida is already unwell for this kind of storm.Six property and casualty insurers for homeowners have gone bankrupt this year, according to Insurance Information Institute’s Friedlander. This was the most since Hurricane Andrew in 1992 forced dozens of insurance companies out of state. The state has 27 other companies on his watch list. He said Ian could be pushed further to the brink.
Due to the lack of private property insurance in Florida, many homeowners turn to state-founded Citizens Property Insurance Corp., a last-resort insurance company that does not specifically cover flood damage, to homeowners and storm insurance. means you have no choice but to purchase insurance for Many homeowners complain that Citizens insurance is largely out of reach.
These pressures are forcing some homeowners to sell their homes, Friedlander said. Rising property and material prices also mean that many homeowners will find insufficient insurance to replace their homes, he said.
“Eventually, this will catch up with the market and drive home values down,” said Friedlander.
Southwest Florida real estate has boomed over the past two years as more people flock to the coast and the median sale price is $327,100, up nearly 19% since August 2021. According to Rocket Holmes.
Still, signs emerging in disaster-prone communities across the country could point to a reversal coming, said Dave Bart, CEO of investment research firm DeltaTerra Capital. Year-over-year, in his 100-year floodplains in the United States, home sales fell 19% by May, and he fell 22% in wildfire-prone areas. He said much of that was due to soaring premium rates and improved awareness of the risks climate change poses to housing.
Taken together, higher insurance premiums and higher interest rates due to the Federal Reserve’s anti-inflation measures means fewer investors looking to buy and resell flood-hit properties, which is a significant benefit for homeowners. It removed a large off-ramp from past disasters, which could deepen the spiral, he said.
“There will probably be a lot of strategic defaults,” says Burt. “They emigrate. They’re going to leave.”
When Bart’s firm conducted an analysis last year of the metropolitan areas most at risk of repricing due to the disasters that pushed home prices down, the Cape Coral and Fort Myers metropolitan areas in Lee County, Florida topped the list. . As premiums rise, home prices are likely to fall, which could ripple across the market, he said.
“What we’ve seen in the past is the economy and, importantly, the property market has been able to absorb these kinds of events,” Bart said. That’s because past disasters haven’t changed people’s long-term expectations for cost of ownership, he added.