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Property Devaluation from Flooding

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Risk & costs on the rise

Credit: Kirill_Liv

A new study identifies nine counties in Florida facing the greatest risk of property devaluation from flooding in a worse-case projection through the year 2050.  Damage from a 100-year storm surge event in Florida could increase from $35 billion today to $50 billion in 2030 and $75 billion in 2050, based on data culled from the U.S. Army Corps of Engineers’ high-end scenario.

The McKinsey Global Institute’s case study, Will mortgages and markets stay afloat in Florida? is also based on property data (including elevation), tidal gauge readings, and climate change projections provided by the First Street Foundation, a nonprofit group that provided property devaluation projections for the study.  The focus is on sea-level rise, which the report indicates makes properties less attractive to buyers.

Statewide, the study estimates property devaluation of $10 billion to $30 billion by 2030, and $30 billion to $80 billion by the year 2050.  The nine counties facing the highest devaluation impact due to tidal flooding are St. Johns, Palm Beach, Broward, Miami-Dade, Monroe, Lee, Manatee, Pinellas, and Citrus Counties.

The report notes that Florida is especially vulnerable to flooding.  We’re surrounded on three sides by storm-inducing warm water, our porous limestone foundation is penetrable from below by sea water, and two-thirds of the population lives in counties with coastline.  In fact, 10% of residents live less than five feet above sea level.

A new report by Guy Carpenter, Protecting our Planet and the Public Purse, notes the increased risk has created a “culture of reliance” on government assistance surrounding disaster relief, which puts pressure on governments to provide help after catastrophes occur, prompts a perception of moral obligation, and is increasing costs significantly.  Yet the insurance protection gap widens.  The report suggests using reinsurance to help innovate new coverages to close the gap.

The lesson, as we’ve said many times here folks, is to educate consumers on purchasing flood insurance.  If you live in Florida, where it rains, it can flood.  Regardless of where you are on a Flood Insurance Rate Map, purchasing flood insurance can be a wise investment.

LMA Newsletter of 5-11-20

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Tags: Flood Insurance, Flood risks, Florida Flooding, Guy Carpenter, McKinsey Global Institute, Property Devaluation, U.S. Army Corps of Engineers

“Thank you Lisa for staying on top of, as well as advocating, for Florida residents and legislative reform. Your newsletters are very informative and enjoy reading the points of view.”  

Shawna Miller, Sr. Claims Quality Assurance & Compliance Manager
Florida Peninsula Insurance Company
Jacksonville, FL

“Your newsletter is fabulous!  I greatly appreciate the topics you expose, so that insurance professionals like myself can keep up with the latest events that affect the public we serve and ourselves.”

Cynthia Hoehn, Independent Property & Casualty Personal Lines insurance agent
Clermont, FL

“Another great Newsletter on Florida industry this week.  Your service and advocacy in Florida is very important to keeping me updated and apprised of the Florida insurance laws, trends and overall environment.  Something similar is very much needed in Louisiana, too.”

Jennifer Tedesco, Esq., Claims Director
Pharos Claims Services
Orlando, FL

“Lisa this is another great newsletter, and we appreciate the time and energy you put into these informative updates – you are on top of these topics!”

Mike Graham, CEO
Smart Vent Products, Floodproofing.com, & Risk Reduction Plus
Juno Beach, FL

“Great article on Risk Rating 2.0!”

Austin Perez, Senior Policy Representative for Federal Housing, Valuation, Insurance and Commercial Issues
National Association of Realtors
Washington, D.C.

“Just wanted to say that I thoroughly love your newsletter. It’s is always informative and insightful to the ins and outs of our industry.  You are an inspiration and an important asset in the insurance world.  Keep up the great work!” 

Cynthia Scott, President
University Insurance Group
Davie, FL

“Lisa Miller is a true champion for the insurance industry, with her regular updates! We appreciate all you do and keeping us up to date on priority issues!”

Gillian Lloyd, Account Executive
Zywave
Milwaukee, WI

“Just a quick note to let you know how much I have appreciated your newsletter over the years and the assistance they offer for those in the field of claims. We depend on the information more than you will ever know!”

Laurie Rasberry, Chief Claims Officer
Acorn Claims
Prosper, Texas

“I have followed your weekly newsletter and podcasts and now have a full appreciation for what you bring to this industry.  You are an inspiring force, plain and simple.  I wanted you to know that you make a difference.  Thank you for all you do!”

Jeffrey Karam, CPCU
Bradenton, FL

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