I’ve got love and assurance, I’ve got new [property] insurance
And I’ve got strength and endurance, so I count my blessings.
And I’ve got strength and endurance, so I count my blessings.
-Damian “Jr. Gong” Marley, Count Your Blessings
In 1955, the island community of Isle de Jean Charles, some 80 miles south of New Orleans, covered 22,000 acres. Since then, rising water levels and subsiding land have shrunk the island every year. Inch by inch and acre by acre, the surrounding marshes have claimed most of the island’s grassland and forests, so that today only about 450 acres remain.
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Isle de Jean Charles, Louisiana, surrounded by rising water
Photo: National Geographic
https://www.nationalgeographic.com/news/2016/05/160525-isle-de-jean-charles-louisiana-sinking-climate-change-refugees/ |
In the early 2000s, community leaders organized a push to save the island and its community, but the movement lost ground when the Army Corps of Engineers left Isle de Jean Charles out of levee projects and Hurricane Katrina pushed salt water into the freshwater marshes. Today rising water and salination have killed off the island’s forests and the land continues to subside. Isle de Jean Charles is connected to the mainland by a single, frequently flooded road built in the 1950s. In recent years, departures along that road have outnumbered arrivals as most of the island’s families moved away. By 2016, with about 25 households left, the federal government finally allocated $48 million, not to save the island, but to resettle everyone to higher ground and leave it behind. There’s a lot more to the story of Isle de Jean Charles that doesn’t relate to a CAT Law blog post, and you can learn more in the award winning documentary “Can’t Stop the Water.”
If climate migration would only affect tiny, remote communities like Isle de Jean Charles, the insurance industry might not pay much attention, but the Isle de Jean Charles is just the beginning. After Hurricane Irma in September 2017, HUD allocated $616 million to recovery efforts in Florida, including $75 million for a buyout program targeting areas prone to storm damage and flooding. Many residents of the Florida Keys have applied for resettlement grants, ready to start over somewhere else as soon as they get out from under their mortgages. Similar programs have followed and will expand in years to come and are certain to focus on Florida. According to the Union of Concerned Scientists, of all the land in the U.S. currently threatened by rising sea levels, about 40% is in Florida. Also, a report by Climate Central listing the 25 U.S. cities most vulnerable to coastal flooding and sea level rise indicates that 23 are in Florida. The implications for the Florida insurance market alone are staggering.
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Chart: Climate Central
https://www.climatecentral.org/news/us-cities-most-vulnerable-major-coastal-flooding-sea-level-rise-21748 |
Sea level rise and other climate-change trends have become hot topics in the insurance sector because they change the entire risk-assessment framework. Lloyd’s CEO, Inga Beale sounded alarms 2018 when she reported that rising sea levels and increased hurricane activity doubled Lloyd’s 2017 losses compared to the previous year. This was not unique to Lloyds. To the contrary, according to Aon’s annual report, 2017 insurance losses caused by natural catastrophes cost more than $344 billion – more than any other year on record. As climate change continues, and climate migration gains momentum, property insurance will adapt to the migration and fuel it at the same time. In the Florida Keys, for example, insurance premiums are rising steadily, and applicants for the post-Irma buyout program are partly motivated by the realization that their insurance recoveries will not be enough to fund rebuilding. In the bigger picture, insurance coverage in riskier areas will continue to become less affordable, the gap between covered losses and the cost to rebuilt will continue to grow, and the scales will tip further in the direction of starting over somewhere else.
Where will it all lead? Most likely to parallel trends in adaptation and migration. In Miami for instance (which ranks second only to New York city in terms of population threatened by climate change) exodus seems out of the question and adaptation gets all the attention. One example: with real estate development booming and the skyline is spiked with cranes, building codes are evolving to make structures more resistant to flooding and hurricanes. Another example: the city is spending millions to elevate roadways and upgrade storm sewers. But micro-migrations from one neighborhood to the next are going on at the same time, as property values rise in neighborhoods like Little Haiti that are situated at slightly higher elevations. Miamians may not be ready to leave town, but they are ready to spend more for higher, drier ground.
Back in Isle de Jean Charles, unfortunately there is no higher ground. Within the next decade or so, the town may be gone completely, and the tiny insurance market it represents gone with it. It’s hard to imagine, but the extinction of Isle de Jean Charles and its insurance market is a microcosm of things to come. Current climate change models project dramatic rises in sea level over the next century. Even if they’re only partially accurate, significant slices of low-lying coastal areas will be underwater by the middle of this century, including large parts of Miami and much of Miami Beach.
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Photos: Florida Trend
https://www.floridatrend.com/article/23305/sea-level-rise-and-florida-2050--2075 |
A recent study by Climate Central, detailed in the New York Times, found that previous studies have not accurately measured land elevations in many major cities, and the corrected data shows that about 150 million people are currently living on land that will be below the high tide line by 2050. At that point, no amount of adaptation will be enough, because as they know very well in Isle de Jean Charles, you can’t stop the water.
Dennis Anderson is a Senior Associate in Zelle LLP’s Minneapolis office.
