Blaming an increasing degree of risk due to climate change, insurance companies are ending the practice of providing flood insurance in many coastal areas, triggering a potentially enormous effect on housing and land use patterns.
In his recent article in the Washington Post, Joel Garreau explores how the insurance industry could be the driving force behind changes to coastal land use -- due to a growing recognition of the impact of climate change.
"Highway fatalities dropped when insurance companies started financially punishing unsafe drivers, as well as makers of unsafe cars. Cigarette smokers saw their life insurance premiums skyrocket.
The big buzz in the insurance industry today is climate change.
Lloyd's of London's June report is titled: 'Climate Change: Adapt or Bust.'
There is no question that the insurance industry is focused on how weather losses are getting worse.
The big problem with climate change for the insurance companies is not the risk. Their whole business is getting paid to accept risks."
"So far, climate change has shaken the market most notably in high-value coastal areas. But if weather losses get worse, upheaval will become more common."
"Bill Hogan, with Twiddy & Co. Realtors in Florida's Outer Banks, says he's now seeing ''$100,000 lots plummeting in value. I don't know what they're worth. Nothing is selling. Buyers are afraid to buy. All kinds of rumors are flying around -- insurance companies are pulling out. The net effect is you bought property and it was in a good zone, and all of a sudden you sit there and it's deemed to be bad. Right now people are scrambling. Getting letters from banks -- 'We have no record of your flood insurance.' Just the kiss of death for the owner of the lot.''"