SO, WHAT DO WE DO WITH THIS DATA, AND HOW DOES THIS AFFECT PROPERTY OWNERS? Well, you likely have insurance because, outside of pesky lender requirements, you want to protect your investment in case your property sustains some sort of damage. Over the last decade, there has been such an increase in claims due to catastrophes (wildfires, floods, tropical storms, droughts, etc.) that the insurance industry’s response has been to increase rates for those living in disaster-prone areas or areas that catastrophe models predict will soon be subjected to catastrophe-related losses. Remember, higher payout of claims = higher premiums. Along with higher rates, many standard insurance carriers are now pulling out of states that have Remnants of tropical storms cause significant damage inland, and the increase in tropical storm frequency has led to an increase in floods as well. By insurance standards, this is the most frequent and costliest type of natural disaster in the United States. The National Flood Insurance Program (NFIP) has stated that the program’s six costliest years in history have all occurred in the past 15 years. 4 Morgan Stanley calculated the cost of climate- caused disasters in the past three years at $650B, $415B of which occurred in North America. 5
ALONG WITH HIGHER RATES, MANY STANDARD INSURANCE CARRIERS ARE NOW PULLING OUT OF STATES THAT HAVE BEEN DEEMED TO BE “TOO RISKY.”
been deemed to be “too risky.” While Florida, Louisiana, and Oklahoma have been on that list for years, more states such as Texas, Colorado, and California are now also facing a retreat from standard insurance carriers as well. The Global Risks Report 2021, published by the World Economic Forum and backed by insurance brokerage and risk management company Marsh McLennan, identified the failure to mitigate climate change as the number-one risk in terms of worldwide potential impact. Now, while insurers are connecting the dots between sustainable practices leading to reduced risk, many insurance carriers are starting to provide incentives (read: discounts) for policyholders that are proactive about protecting their investments from catastrophes.
P A G E 6 5
Powered by FlippingBook