A ‘Sea Change’ in Florida’s View on Climate Risk?

Jeff Dunsavage, Senior Research Analyst, Triple-I, 05/25/21

Florida Governor Ron DeSantis last week signed two bills that lawmakers say will leave Florida better prepared for future flooding and sea level rise.

The legislature’s approval of these measures and the governor putting his signature on them is one of those moments that seem to mark a real change in awareness of and attitude toward this often-minimized risk. As the Tampa Bay Times points out, “Florida’s legislature for most of the last decade has taken little action and entertained hardly any public discussion about sea level rise.”

The bills, SB 1954 and SB 2514, will — among other things — set aside hundreds of millions of state dollars for flooding infrastructure projects. It requires the Department of Environmental Protection to prepare a flooding and resiliency plan and provides up to $100 million a year to communities that identify areas along the coast and other waterways that are at risk from sea level rise.

“This is a really significant amount of resources,” DeSantis said at a bill signing ceremony in Tarpon Springs. “We’re really putting our money where our mouth is when it comes to protecting the state of Florida, particularly our coastal communities, from the risks of flooding.”

On the leading edge of sea level rise

Florida’s 1,350 miles of coastline is the lifeblood of its tourism industry. Given the fact that much of the state sits at or near sea level on a foundation largely composed of porous limestone, it is particularly vulnerable to the threat of rising seas. Some areas of the state are already seeing flooding on clear days during particularly high tides, according to the Associated Press.

The magnitude of the threat is illustrated by the fact that three Florida-based insurers recently announced that they will not be renewing more than 53,000 property policies as of June – just as the 2021 Atlantic hurricane season begins. The first named storm of the season — Subtropical Storm Ana — formed early on May 22, northeast of Bermuda.

Florida statute Chapter 224 Part III allows insurers to cancel policies when the company would be placed in a hazardous financial situation due to an uptick in claims after hurricane damage or attorney’s fees to defend itself over fraudulent adjuster claims.

Dulce Suarez-Resnick, past president of the Latin American Association of Insurance Agencies, said this kind of widespread cancellation is common after subsequent years of heightened hurricane activity.

“It’s not the end of the world or that they’re bad companies,” Suarez-Resnick said. “It’s that these companies were weakened by prior storms and the bill for the reinsurance got heftier. That’s where we are today.”

As we’ve previously written, many experts consider the current system for managing and mitigating flood risk to be generally unsustainable. Insurers increasingly recognize that risk transfer is not enough and that a resilience mindset is required that demands more than new insurance products. Innovation and technology, along with public-private partnerships, are key components of any resilience strategy that is going to be effective.

Thanks to the insurance industry’s longtime focus on assessing and quantifying catastrophe risk and the rise of sophisticated modeling capabilities, insurers are ideal partners for addressing these evolving risks.

Learn More on the Triple-I Blog:

ESG Is in Insurers’ DNA

Man-Made and Natural Hazards Both Demand a Resilience Mindset

White House, FEMA Resilience Officials Speak at Triple-I Event

Flood: Beyond Risk Transfer

Partnering to Improve Flood Resilience

Climate Risk Is Not a New Priority for Insurers

Above-Average 2021 Atlantic Hurricane Season Predicted

FEMA’s New Approach to Flood Risk Will Make Insurance Program Fairer

Floods, Freezing, Other Extreme Weather Highlight Need for Planning And Insurance

Study Quantifies Future Climate Change Impact on Flood Losses

Why Do Disasters Keep “Surprising” Us? A Resilience Culture Would Aid Preparation

Community Catastrophe Insurance: Four Models to Boost Resilience

Insurers Are Addressing Climate Risks

Study Supports Case for Flood Mitigation as World Warms