Dania Beach, Fla. (February 21, 2024)

FS Insurance Brokers featured in Forbes to highlight rethinking insurance

In 2023, more than 324,000 acres burned in California, causing four fatalities and billions of dollars in costs.

Wildfires are not the only climate risk to homes, representing just a portion of the increasingly violent climate events that are damaging properties today and propelling the housing industry into new products, design processes, and insurance programs.

The situation is dire, so even though innovative solutions are landing, it isn’t fast enough. Not only are climate hazards becoming more frequent, but they are also more life-threatening. Plus, insurance companies are leaving homeowners stranded without policies, the current housing stock is aging, and new developments cannot get started for many reasons, including being located in uninsurable locations.

Not one factor stands alone, and as the numbers keep piling up, more pressure is mounting behind better solutions to address the climate challenge, including insurance, design, products, and community operations to change how we are protected by our homes.

Rethinking Insurance

Climate risk data provider First Street has estimated that there are 12 million properties at risk of flooding that do not have flood insurance. The company also reports that if there were a power outage in Seattle during the most recent heat dome event, 13,000 more people would have died. Another report by First Street stated that wildfire currently destroys more than 17,000 structures in the current climate and will double to nearly 34,000 structures annually in 30 years due to climate change alone.

Right now, what is being calculated is translating to insurance increases that are shutting down new construction and putting many homeowners at risk. According to FS Insurance Brokers, the factors that impact these increases include characteristics such as the age of the roof, the type of frame construction, the proximity to the coastline, the wildfire score, exposure to windstorms and hail, and prior claims experience and open claims.

The age of the roof is the primary factor influencing carriers in Florida, where some buildings more than 10 or 15 years old can no longer qualify for standard programs.

Coverage is changing rapidly, with premiums increasing as much as 500%, property deductibles for wind and hail, and named storm perils now range between 2% to 10% of the total insurable value. The company sees that actual cash value coverage is becoming more commonplace, especially for roofs over ten years old.

Again, lack of education is causing issues. FS Insurance Brokers’s customers report that their borrowers cannot obtain financing due to Fannie Mae and Freddie Mac insurance requirements, which mortgage underwriters frequently misinterpret.

To read the full article, click here: https://www.forbes.com/sites/jennifercastenson/2024/02/16/climate-risk-is-real-and-calculable-but-numbers-dont-protect-homes/?sh=304ae2213d10.
Feb 21, 2024