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Florida sea rise puts housing — and insurance — at risk

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Catastrophe modeling paints a bleak future for South Florida — a future risk managers and the broader insurance industry must contend with, experts say.

The National Oceanic and Atmospheric Administration forecasts a 2-foot sea rise by the 2048-2066 time frame, which would deplete freshwater resources and local sewage plants in Miami-Dade and Broward counties, Harold Wanless, chair of the geological sciences department at the University of Miami in Coral Gables, Florida, told attendees of the National Association of Insurance Commissioners in Miami last month.

The 4-foot rise projected by 2074-2099 would take out Miami International Airport, while a 6-foot rise projected for the 2093-2121 time frame could force much of the population out of the state. But these are conservative projections because they do not factor in accelerating elements speeding up the melting of polar ice in Greenland and Antarctica, meaning the “disastrous consequences of climate change” could materialize sooner than the models project, he said.

But the word clearly hasn’t gotten out yet, as more condominiums are being built in South Florida for a population that will have to flee the state and will not be able to sell their properties because of the inability to purchase insurance or long-term mortgages, Mr. Wanless said.

“I think the role of insurance and banking is to provide a transparent future,” he said. “If we aren’t careful, we’re going to blindside all the people of South Florida, and we’re going to send them out with nothing.”

Public-entity risk managers in South Florida are showing a growing awareness about climate risk, not just in relation to property damage, but also to tax revenue and other contingent losses, and are exploring risk mitigation and reinsurance solutions, said Deepak Badoni, co-founder and president of Ann Arbor, Michiganbased EigenRisk Inc.

“There’s a segment of the risk manager population that is obviously very directly impacted by climate change,” he said.