Building standards improvements in Florida since the 1970s have trimmed the magnitude of hurricane annual losses, however, these gains have been dwarfed by higher modelled loss expectations arising from population growth in the state, Swiss Re Nat Cat experts warn.
Swiss Re believes that by partnering with the private and public sector, re/insurers can drive mitigation of and adaptation to rising nat cat risk.
Experts used Swiss Re’s in-house model for North Atlantic tropical cyclones to reach these conclusions. The improvement in building standards in the state since the 1970s have trimmed the magnitude of annual losses expected to result from hurricanes by some 90-100%.
Despite Florida’s efforts to buttress itself against hurricane losses through its improved building codes, higher modelled loss expectations – that arise from the state’s population growth which has tripled to more than 22 million since the 1970s and the accompanying accumulation of valuable assets – have stunted these gains.
“Hurricane Ian brought this into sharp focus in particular around Fort Myers, where the storm made landfall. Based on Swiss Re’s models, annual expected losses in Fort Myers due to population growth have risen 340-350% from 1970s levels, surpassing the building standards-driven gains in Swiss Re models of 150%,” experts explain.
Adding: “Across fast-growing regions, these forces are pulling in opposite directions, with population growth winning in fast-growing metropolitan areas in the US Southeast and Gulf States. For example, Houston’s modelled expected loss from population growth has risen by a factor of 200-210%.”
Cities that have been growing more slowly during the same period, like New York in the US North East, are hardly immune to expanding loss risks due to less storm-resistant construction given generally weaker and less-frequent hurricanes, as well as lower risk awareness, Swiss Re also noted.
One OECD-sponsored study puts the cost of necessary upgrades for flooding in more than 130 coastal cities worldwide at $50 billion annually – which is just a fraction of the study’s $1 trillion per-year loss estimate, should nothing be done.
