U.S. property values for residential, commercial and industrial properties continue to increase faster than GDP growth and the general rate of inflation, says a new report from catastrophic risk management consulting and modeling firm Karen Clark & Company (KCC), released April 13. The report, "Increasing Concentrations of Property Values and Catastrophe Risk in the U.S.," notes that insured property values increased by 9% from 2012 to 2014, according to KCC estimates.
In the aggregate, KCC found, building values now exceed $40 trillion; when contents and time element exposures are added in, estimated insured property values climb to more than $90 trillion. Along with increasing values, there are highly concentrated pockets of exposure, particularly in regions vulnerable to natural catastrophes.
What does all this mean? One implication of increasing concentrations of property value is the higher probability of mega-catastrophe losses. For example, six counties in the U.S. have more than $1 trillion of exposure each and, on a combined basis, account for more than 12% of the U.S. total. Los Angeles County alone accounts for more than 3% of exposed property values.
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Rosalie Donlon
Rosalie Donlon is the editor in chief of ALM's insurance and tax publications, including NU Property & Casualty magazine and NU PropertyCasualty360.com. You can contact her at [email protected].
