Insured Value of Coastal Properties Continues to Grow |
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Written by U. S. Insurance News
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Monday, 23 June 2008 |
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The U.S. housing market may be down, but the insured value of homes—especially in coastal areas—is up.
A report from AIR Worldwide Corporation, a catastrophe risk modeling
firm, estimates that over the past three years the insured value of
properties in coastal areas grew at a compound annual rate of over 7
percent. In fact, the cost to rebuild properties has maintained an
annual growth rate that will lead to a doubling of the total value
every decade, the report says.
“While the scientific debate over the effects of global warming on the frequency and severity of hurricanes remains inconclusive, there is no question that the significant increase in the number and value of exposed properties over the last decade has and will continue to contribute to increasing hurricane losses for insurers,” said S. Ming Lee, president and CEO of AIR Worldwide.
As a result of Hurricane Katrina’s devastation in 2005, the total insured value of properties in the coastal counties of Louisiana has grown at the lowest compound average annual rate of all coastal states, or just over 2 percent. Mississippi coastal counties, also affected by Hurricane Katrina, have averaged a 5 percent annual increase, the second lowest of all coastal states.
However, the insured value of residential and commercial properties in coastal counties of Florida and New York passed $2 trillion each.
Overall, 38 percent of the total exposure in Gulf and East Coast states is located in coastal counties, which accounts for nearly 17 percent of the total value of properties in the U.S.
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