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Rising Sea Levels Could Be a $1 Trillion Problem

by Precise Leads

August 9, 2016

If global warming continues at its current pace, millions of coastal homes could be underwater by the end of the century.

A recently released report by real estate website Zillow broke some sobering news for coastal cities in the U.S.: if sea levels continue to rise at their current rate, climate scientists predict that by 2100, some 300 cities will have lost at least half their homes, and 36 U.S. cities will be completely underwater. The report relies on predictions originally published in Nature; the journal estimates that if left unchecked, climate change will cause ocean levels to rise about six feet by the end of the century, costing homeowners approximately $882 billion in damages.

Calculating Risk

To hone in on such specific values, Zillow used maps released by the National Oceanic and Atmospheric Administration (NOAA) that show which parts of the U.S. would be underwater should ocean levels rise by six feet. Using its own data on more than 100 million homes nationwide, Zillow identified the percentage of homes in each state that would be at risk of ground-floor (or more severe) flooding, along with their property values.

The results are eye-opening. Roughly 1.9 million homes (approximately 2% of all U.S. homes) worth $882 billion face the possibility of being submerged by 2100, with coastal states like Florida likely to bear the brunt of the damage. In fact, more than 1 in 8 properties in Florida are expected to be underwater should levels increase as predicted, representing more than $400 billion in property value alone (a figure that doesn’t include commercial buildings or infrastructural losses). The state could lose 13% of its current property stock, or roughly 1 million homes. In Hawaii, meanwhile, nearly 1 in 10 homes are at risk.

Cities at Risk

Breaking the numbers down by city reveals further startling insights. Not surprisingly, Miami and Honolulu have the greatest number of at-risk homes, but cities on the East Coast are not far behind. More than 1 in 6 Boston homes could be flooded, while almost 3% of New York City’s properties could be submerged.

As alarming as these numbers are, it’s important to keep in mind that they rely on a lot of estimation and educated guesswork, cautions PropertyCasualty360. Still, even if sea levels rise only 2 feet, the United States stands to lose $74 billion in home value (with Florida residences alone accounting for $17 billion) — this is no small sum.

Feeling the Effects

While 2100 may feel like a far way off (but really, what’s 84 years?), coastal cities have already been feeling the effects of increased weather events in some substantial ways. The first half of 2016 global insured losses reached their highest level in five years at $30 billion, while hurricanes continue to pose significant risks (not surprisingly, Florida stands to lose the most, with an estimated 2.7 million homes vulnerable to hurricane damage).

Indeed, precisely how the insurance industry will adapt to the growing threats of global warming remains to be seen; what we do know is that proactive engagement and environmental awareness are essential. In the meantime, as risk levels continue to rise (much like the ocean), agents need to be prepared to deal with clients in crisis. Being able to relate on a deeply empathetic level is a must — practice your listening skills and avoid thoughtless, one-sided sales pitches. The loss of a home is an incredibly trying time, both emotionally and financially; so focus on staying honest and supportive, and go out of your way to deliver the best service possible.

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