The string of properties speckling the Gulf and East Coasts serve as a reminder of what is at stake when the next hurricane sweeps through. According to AIR Worldwide, the increase in the number and respective values of exposed properties along the coastlines remains the largest factor affecting insurers' hurricane risks today.
The significant surge in coastal properties is said to be driven by population growth and “increased standard of living.” In the wake of Hurricane Katrina in 2005, the Boston-based provider of risk modeling software and consulting services generated a report — The Coastline at Risk: Estimated Insured Value of Coastal Properties — which raised the issue of global warming's possible link to the frequency and severity of hurricanes. In the years since, experts have yet to reach a definitive conclusion as to a correlation, but they do agree that more coastal dwellings today than ever are in harm's way.
“While the scientific debate about 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, in a release.
AIR issued an update to its earlier report based on estimates for insured property values during Dec. 31, 2004 through Dec. 31, 2007. The data compiled indicated that the insured value of coastal properties in the U.S. continued to grow at a compound annual growth rate of just above seven percent.
The data also showed that, as a consequence of the devastation caused by Hurricane Katrina, the total insured value of dwellings situated in the coastal counties of Louisiana has increased at the lowest compound average annual rate of all coastal states, at just over two percent. “Mississippi coastal counties, also impacted by Hurricane Katrina averaged a five percent annual increase, the second lowest of all of the coastal states,” AIR added.
Some coastlines have much more at stake, though. For instance, the reported insured value of residential and commercial properties in coastal counties of Florida and New York surpassed $2 trillion each.
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