NU Online News Service, June 9, 2:37 p.m. EDT
A catastrophe risk modeling firm, reporting on what it called an “alarming” development, said coastal area insured property values have grown at 7 percent a year since 2004.
Despite the devastating shore property damage inflicted by the 2005 hurricane season, the increase in “the number and value of exposed properties along the U.S. Gulf and East Coasts continues apace—and remains the largest factor affecting insurers’ hurricane risk today,” AIR Worldwide Corp said.
The Boston-based firm said from Dec. 31, 2004 to Dec.31, 2007 in New York and Florida alone, the insured value of residential and commercial properties in coastal counties passed $2 trillion dollars each.
Despite the recent weakening of the real estate market in many areas, the insured value—or the cost to rebuild properties—has maintained an annual growth rate that will lead to a doubling of the total value every decade, AIR said.
Ming Lee, president and CEO of AIR, said “While the scientific debate over the effects of global warming on the frequency and severity of hurricanes remains inconclusive, there is no question that the significant increase in the number and value of exposed properties over the last decade has and will continue to contribute to increasing hurricane losses for insurers.”
The firm found that since the impact of Hurricane Katrina in 2005, the total insured value of properties in the coastal counties of Louisiana has grown at the lowest compound average annual rate of all coastal states, or just over 2 percent.
Mississippi coastal counties, also impacted by Hurricane Katrina, averaged a five percent annual increase, the second lowest of all coastal states.
Overall, 38 percent of the total exposure in Gulf and East Coast states is located in coastal counties, which accounts for nearly 17 percent of the total U.S. property values.
The complete report and rankings of states according to property value is available at:
http://www.air-worldwide.com/_public/images/pdf/AIR2008_Coastline_at_Risk.pdf