Construction of new high-rise developments on vulnerable barrier islands will continue to exacerbate Florida’s property insurance crisis, according to Robert Hartwig, Ph.D., president and chief economist of the Insurance Information Institute, a national organization devoted to improving public understanding of insurance.
“Despite the well-known vulnerability to hurricanes and rapidly escalating property values, coastal development in vulnerable areas continues at a furious pace,” said Hartwig, who testified April 11 before the U.S. Senate Banking Committee on the effect of coastal over-development on insurance rates. “Adding billions of dollars in new insured exposure will further burden Florida’s already precarious property insurance market.”
Leaders of the Florida Coalition for Preservation said these insurance arguments are applicable to a massive proposed development at Briny Breezes, projected to be valued at more than $3 billion, which would introduce population densities up to 2,000 percent higher than that found in neighboring communities.
The proposed development would put 5,000,000 square feet of multi-family housing with multiple 12-to-20-story high rises on a 43-acre beachfront site, to accommodate 900 condominium units, 300 timeshares, a 349-room hotel, restaurants, shopping and a yacht marina, bringing thousands of new residents and workers to the storm-prone barrier island.
“We should not be playing Russian roulette. Briny Breezes’ vulnerable, barrier-island home sits in the middle of hurricane alley, and it’s a question of when, not if, this area will be hit by a storm,” said former Congressman Tom Evans, Chairman of the Florida Coalition for Preservation. “In the current market environment, I am not aware of a single private insurer who would agree to take on more than $3 billion in new risk to cover a high-density, high rise development on the shifting sands of a South Florida barrier island.”
Therefore, it’s extremely likely that this development would have to be covered by Citizens, the state insurer of last resort, which would shovel greater risk onto taxpayers, further strain our insurance market and increase rates for policyholders statewide, Evans said.
That message was underscored last week when the nation’s largest hurricane modeling firm announced that if the United States were hit with a catastrophic hurricane, there is a 19.5 percent chance it would strike the West Palm Beach-to-Boca Raton metropolitan area. The study, by Risk Management Solutions, helps insurance companies determine rates by predicting where hurricanes are most likely to strike.
According to the model, Florida bears more than 80 percent of the nation’s risk from a single massive storm. The Palm Beach-to-Boca Raton region bears the second-most risk behind the Miami-Fort Lauderdale region, which has a 33.6 percent chance of being hit by such a hurricane.
The Florida Coalition for Preservation’s Web site is www.PreservationFla.org.
Source: Business Wire
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