After meteorologists warned of another
In Louisiana,
In recent weeks a handful of insurance companies
Louisiana law, however, mandates that Citizens’ premiums are higher than the highest private rates among major insurance carriers so as not to compete with the private market.
Matt DeMeyers, 45, a real estate developer who lives in the New Orleans suburb of Metairie, said finding a new insurance policy has been “frustrating” at the least. He received a note in late May that his insurance policy would end on July 1. When DeMeyers was offered a new plan, his annual premium jumped to over $23,000, about a two-fold increase.
According to Robert Stone, a New Orleans-based insurance agent, across the state “premiums are double, if not triple” what they were before 2020.
Florida homeowners face the same headache. The heightened risk of large storms threatening to make landfall — after Hurricanes Harvey, Michael, Florence, Dorian, and Ida — coupled with
Federated National, which insured 140,000 Florida policyholders, had to undergo a court-ordered restructuring agreement and
Ivis Fernandez, a real estate agent who lives in Homestead, 35 miles south of Miami, was unhappy to learn that her policy with FedNat had been canceled. It was her second home insurance policy in three months, she said. She shared with a reporter paperwork showing she had been paying the carrier $3,002 a year, compared to $1,682 with another insurer in 2019.
Catastrophe risk modelers say that climate change — which is
As storms intensify, the probability of large-scale property damage climbs, according to Carolyn Kousky, executive director of the University of Pennsylvania’s Wharton Risk Center and an expert on climate risk management. Insurance companies, therefore, have to amass even more capital to pay for all the claims from homeowners to protect themselves against bankruptcy-triggering losses.
Companies and homeowners have not made the adjustments to adequately prepare for a world of higher risk, Kousky said.
“What it really comes down to, in my mind, is that the cost of insurance is related to the risk, and so insurance costs go up when risk goes up,” she said. “The real way to kind of solve this problem is to reduce the underlying risk — and we haven’t done that nearly enough in any place that’s prone to these disasters right now.”
Experts also question whether officials in vulnerable US cities are financially prepared to protect homeowners and urban infrastructure from the damage of storm surges and winds.
“New York, for example, might have enough money to build a big flood wall,” said Dag Lohmann, chief executive officer of KatRisk, a climate catastrophe modeling agency. But other places might not have the resources, he said.
To contact the author of this story:
Kevin Simauchi in New York at