AIR analysis also found insured value of US coastal property grew by 7% pa
A report by catastrophe risk modelling firm AIR Worldwide Corporation estimates that over the past three years the insured value of properties in coastal areas of the United States continued to grow at a compound annual growth rate of just over 7%. 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.
“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,” said S. Ming Lee, president and CEO of AIR Worldwide.
As a result of the devastating impact of Hurricane Katrina, 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 two percent. Mississippi coastal counties, also impacted by Hurricane Katrina, averaged a five percent annual increase, the second lowest of all coastal states. The insured value of residential and commercial properties in coastal counties of Florida and New York passed two trillion dollars each.
Overall, 38% of the total exposure in Gulf and East Coast states is located in coastal counties, which accounts for nearly 17% of the total value of properties in the US.