Insured Property Values in Coastal States Top $10 Trillion; Florida Has Most at Risk; Miami Ranks 2nd Among Metros

June 17, 2013

In separate reports AIR Worldwide and CoreLogic estimated insured property values in coastal areas of the United States reaching into the trillions of dollars.

CoreLogic, focusing on residential properties exposed to storm surge, estimates $1.1 trillion at risk for more than 4.2 million properties.

AIR Worldwide offers a bigger value, estimating $10 trillion at risk for both residential and commercial properties located in the more than 100 coastal counties of 18 eastern and Gulf Coast states–from all hurricane forces, not just storm surge.

Just two of the states–Florida and New York–account for more than half of the $10 trillion estimate, AIR said, putting insured values located in coastal counties of those two states at roughly $2.9 trillion each.

Florida tops rankings with $386 billion in potential exposure.

Property Percentage

While New York and Florida’s coastal insured values are similar in terms of dollar amounts, Florida ranks higher when evaluated in terms of the percentage of the total statewide insured property value that is situated in coastal counties.

For Florida, this coastal percentage is 79 percent ($2.9 trillion as a percentage of $3.6 trillion worth of total insured property for the state). For New York, it is 62 percent ($2.9 trillion as a percentage of $4.7 trillion in insured property values for the entire state).

AIR also calculates a relatively high coastal percentage for the state of Connecticut, where coastal values accumulating to $567.8 billion compare to a statewide insured property total of $879.1 billion–resulting in a 65 percent coastal percentage. Still, while Connecticut has the third-highest coastal value percentage, it doesn’t even make the top-5 states ranked by dollar values of coastal property–outranked by New York, Florida, Texas, Massachusetts and New Jersey.

In contrast, for Texas, coming in with the third-highest figure for dollars of coastal property value at over $1.1 trillion, the coastal percentage (of a statewide total TIV of $4.6 trillion) is just 26 percent.

In CoreLogic’s analysis of residential properties exposed to storm surge, Florida tops rankings indicating the number of properties in each state exposed to storm surge, with nearly 1.5 million properties at risk, as well as a ranking of dollars exposed by state, with $386 billion in total potential exposure.

coastal

Louisiana ranks second in total properties at risk with just over 411,000 homes in storm-surge zones, but fifth in values exposed at just under $72 billion.

Ranking second in total value of coastal properties exposed to storm surge is New York at nearly $135 billion. New York ranks sixth in total properties at risk, numbering 270,458.

CoreLogic also accumulated properties and property values at the local level, finding that more than $658 billion of the $1.1 trillion at risk to storm surge is concentrated in 10 major metro areas.

Among these, the New York metropolitan area, which encompasses northern New Jersey and Long Island as well, contains not only the highest number of homes at risk for potential storm-surge damage (447,428), but also the highest total value of residential property exposed, at more than $200 billion.

Miami, with roughly half the value exposed ($100 billion), ranks second among the metropolitan areas studied, but fourth in total properties exposed (239,910) behind Virginia Beach and Tampa (each with roughly 300,000 properties at risk).

For AIR Worldwide, a catastrophe modeling firm, the report titled, “The Coastline at Risk: 2013 Update to the Estimated Insured Value of U.S. Coastal Properties,” is the third report on insured values at risk since 2005. Comparing results of the latest report with earlier analyses, AIR notes that growth in insured values in coastal regions fell to four percent per year in the last five years, percent annual growth rate calculated between the two earlier reports (for the period from 2005 to 2008).

The report attributes the slower growth rate to the economic recession, but stresses that the slowdown in housing starts–not real estate value declines–impact the numbers.

“It is replacement value, or the cost to rebuild, that largely determines the values reported,” the report says. “While market values plunged, replacement values did not.”

For the purposes of AIR’s report, total insured values of properties are estimates of the cost to replace structures and their contents, including additional living expenses and business interruption coverage, for all residential and commercial property in the state that is insured or can be insured.

Storm Surge

According to CoreLogic, the findings of its fourth annual Storm Surge Report, reflect a significant increase in both the number of total properties at risk, as well as total value.

The report gives an in-depth explanation of what storm surge and breaks down residential exposure by zones ranging from extreme- to low-risk zones, with extreme-risk zones being those where homes are vulnerable to storm surge damage even from a Category 1 storm.

According to the report, over 976,000 homes with over $371 billion in value are in extreme risk zones, but a noticeable number of properties in the New Orleans area that were previously located in an extreme-risk zone have now been downgraded to “high risk,” which means they are vulnerable to storm surge from Category 3,4, and 5 storms, but not Categories 1 and 2.

This dramatic shift is a direct result of the recent completion of a new protective levy system by the Army Corps of Engineers developed in the aftermath of Hurricane Katrina, CoreLogic said.

The company, which provides property information, analytics and services in the United States and Australia, said this year’s report features an enhanced methodology using CoreLogic Automated Valuation Model (AVM) data that improves the accuracy of the analysis. New this year, the 2013 analysis also addresses the potential impact of a climate-related rise in sea level on coastal storm-surge risk in a select number of metro areas.

These findings show that the Miami area could potentially have the highest increase in the number of homes at risk of the cities discussed in the report. Given a one-foot rise in sea level, total properties at risk would nearly double from just under 132,000 to almost 340,000, and estimated value would increase from an estimated $48 billion to more than $94 billion overall.

CoreLogic notes that the total properties and structural values included in the CoreLogic analysis are based on all homes that could potentially be damaged from hurricane-driven storm surge, and are not meant to infer that a single storm or storms in a specific hurricane season will result in these damage totals.

From This Issue

Insurance Journal West June 17, 2013
June 17, 2013
Insurance Journal West Magazine

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