Our Looming Property Insurance Crisis

Over the past few years, I’ve worked on a number of projects in coastal areas, including extensive work in Louisiana. If you talk to Louisianans or Californians affected by fires, or anyone living in coastal areas, you quickly hear about the skyrocketing costs of property insurance.  A new Wharton School study looks at the scale of these increases.  Between 2020 and 2023, the researchers estimate that household property insurance costs rose around 37%, adding about $500 to the average annual bill. These costs increased even faster in climate change affected areas like Florida (up 90%) and Texas (up 50%).

These big increases are largely attributed to higher reinsurance costs, but this is surely not a one-time price jump. While the article is not focused on economic development impacts, rising insurance costs do need to become a part of each community’s development debates.  If costs continue to rise, many now-booming areas may see an outflow of residents or face challenges in attracting and retaining new talent.  At the same time, rising insurance costs create major state budget pressures as many states manage insurers of last resort, such as the Florida Insurance Guaranty Association.  At present, the problems seem manageable.   However, the long-term implications could be threatening.  Keep this one on your radar!!