This is one of the main visible outcomes of AGW in the finance sector. We've had this presented as a future risk (loss of insurance) but now, we're having people who didn't heed the financial risk loose their business to un-insurable (re-insurance) liability: Insurance was always going to walk away from what is now pretty well understood to be un-remediable change in the risk for these properties. No amount of federal or state funded work is going to manage this risk, the expectation of an "orderly exit" probably hits the financial realities before the queue for the door starts. I mean sure, the US army corps of engineers can re-invest in levee building. Thats decades, for ongoing annual flood risk now, and we haven't begun to talk about the lawsuit opposition from ecology groups.
Banks will be asking home owners if they have insurance for the banks exposure. So this ripples out: existing homes are not only un-insurable, they are potentially un-sellable. Their value plummets. When land and property values catch up, the rates the local government can charge drop because they're usually on land value. So income in the local area to remediate loss of utilities, keep roads going, you-name-it goes away: The money to mend or even build sea walls and levees has dried up, just when you need it.
Sometimes, Government has to step in with either "go away" money to fund people to move on, or some kind of limited offset on insurance costs. I think the former is sad, but necessary. The latter is a huge mistake: it just buys future problems because the resiliency any one property can build in, is less than the exposure to risk across all utilities, roads, unrelated public burdens, hospitals, food.. you name it. Keeping people in unsustainably risky communities isn't sensible, if you can relocate. But you have to be willing to handle all the relocation costs. Mental health, loss of community, heritage, culture.
It's also happening in Australia with fire and flood risk. The industry is saying up front, it can start to help fund remediation for some things in planning, but that the wisest longterm choice is to move people away from risk, because at volume they can't afford to remediate each individual property. People are talking seriously about moving town centres (which happened in the Lockyer Valley)
Some towns do build permanent levees. Some build infrastructure for temporary levees. Some things, you just can't fix: people want to live close to water, even in a pole house there's going to be that one flood which overwhelms the 2 storey lift you gave the home
(in our recent flooding, my Unit complex in West End Brisbane was electrically offline for 10 days, and flooded it's basement. We stayed in place, and we remediated for about $300,000 of shared costs mainly in cleanup but there might be the same spend again to make our power circuit resilient, and our insurance premiums for water damage are going to be much much higher)
Warren Buffet always said Re-insurance was his mainstay. I wonder how he feels about future profits in this space?
