Telephone repairman Josh Smith lives in Jasper, which is Florida’s most inland city, according to the state’s Geological Survey.
Even 75 miles (121 kilometers) from the Atlantic Ocean, Smith is bearing part of the cost of rising seas and stronger storms caused by global warming. That’s because U.S. taxpayers help insure against hurricane damage for nearly 5 million Americans, mostly in Florida (BEESFL), whose homes are less than four feet (1.2 meters) above normal high tides. The programs pit beachfront property owners against inland residents who subsidize their policies.
Sea level may rise eight inches in the next 18 years and 80 inches by 2100, Climate Central Inc., a nonprofit research and advocacy organization in Princeton, New Jersey, estimated in a report this month. Global warming doubles the odds of the most- disastrous flooding for two-thirds of 55 U.S. coastal locations studied and triples the chance in about half of those, the group said. The rise of the oceans also may produce stronger storms.
“We’ve put ourselves in this situation by choosing to live a few feet from the coast,” said Smith, a 31-year-old Hamilton County commissioner. “I certainly hope I never have ocean-front property in Jasper.”
Higher oceans raise hurricane damage, said the Consumer Federation of America’s insurance director, J. Robert Hunter. The Washington organization includes 300 advocacy groups.
Blow, Winds, Blow
“It’s not just the frequency of flooding, but the severity of storms,” Hunter said. “You might have the same number of hurricanes, but with higher sea levels they’re going to travel farther inland and cause more damage.”
Taxpayers subsidize insurance on beach real estate through programs at state and federal levels.
Louisiana, Florida and all Atlantic Coast states save Maine write wind coverage for high-risk properties, according to 2010 report from Towers Watson & Co. (TW), a consulting firm in New York. Their exposure rose almost 14-fold to $757.9 billion in 2010 from $54.7 billion in 1990, according to a report last year from the industry-backed Insurance Information Institute in New York.
Florida’s state-run Citizens Property Insurance Corp. is the largest coverage provider, with 1.43 million policies, almost a quarter of the market, according to the Insurance Regulation Office in Tallahassee.
Bad for Capitalism
“Our subsidized insurance market is an embarrassment to anyone who believes in free enterprise,” said state Senator Alan Hays, a Republican on the Banking and Insurance Committee who lives in Umatilla, an inland city about 45 miles northwest of Orlando.
In Florida, where seven of the National Hurricane Center’s 10 most expensive storms have hit, the insurance, mortgage and building industries have opposed changes to Citizens Property that would reduce the amount inland residents pay toward indemnifying their coastal neighbors.
Opponents, such as Republican state Senator Mike Fasano of New Port Richey, say the measures would increase rates for his coastal constituents and damage the real-estate market.
“It’s difficult for me to understand what the emergency here is,” Fasano said. “If they raise premiums and there is no storm, where has that money gone? Will a homeowner see a reduction? Absolutely not.”
High Water Everywhere
Climate Central’s report will intensify the debate, Hunter said. The organization, started in 2008 with a Flora Family Foundation grant, also got money from Google Inc. (GOOG), the National Aeronautics and Space Administration and other government agencies and nonprofit groups, according to its website.
The study, led by Ben Strauss, is based on 2010 census data and land-elevation estimates from the U.S. Geological Survey and NASA. The study also calculated estimates for how global warming shifts the odds of high storm surges.
The conclusion is that sea level is rising at an accelerated rate that “dramatically increases” the odds of the worst floods, according to the report.
Florida, where about 2.4 million people live within four feet of the local high-tide line, has eight of the 10 U.S. cities most at risk, according to Climate Central’s study.
About $30 billion in taxable property is endangered in just three southeast Florida counties, excluding Miami-Dade, which has the most homes at risk in the state and the nation, according to the report.
Taxpayers across America may foot the bill for that damage. With few private insurers providing coverage, the federal National Flood Insurance Program serves about 5.6 million U.S. property owners at below-market prices.
The program, almost $18 billion in debt after the 2005 hurricanes Katrina, Rita and Wilma, would have to pay for houses lost because of rising sea levels, Hunter said.
Short-term extensions have kept the program alive as the U.S. House of Representatives and Senate battle over its future. When it was suspended for 20 days in 2010, 47,000 home sales were delayed or canceled, according to a National Association of Realtors survey.
“They want to be able to build a home when the tide goes out and sell it before the tide comes back in,” said Hunter, a former Texas (BEESTX) insurance commissioner. “I don’t like high rates, but I really don’t like rates that are subsidized and invite construction in unsafe areas.”
Florida’s Miami-Dade, Broward, Palm Beach and Monroe Counties formed the Southeast Florida Regional Climate Change Compact in 2009 to coordinate defenses against ocean storms. The group of county commissioners is among the most important responses to global warming threats in the U.S., Strauss said.
“This problem has the potential to cause more economic damage than most of the things we read about every day,” Strauss said. “Actual actions are few and far between.”
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