Insured Value of Property in Coastal Hazard Areas

Explanation of Indicator
Whereas the size of the population in coastal high hazard areas indicates the risk to human health, insured value of property in coastal hazard areas indicates the risk to property. Homeowners insure their property for many reasons including the threat of damage from hurricanes and coastal storms. Recent hurricane events demonstrate that insured losses can be significant and create a tremendous burden for homeowners, local governments, insurers and state government. As insured value of property in coastal hazard areas rises, the state is faced with increasing magnitudes of fiscal impacts.

Although there have been two studies estimating the insured value of property in coastal hazard areas, the dissimilarity of methodologies does not allow comparison. The first study was conducted in 1989 by the All-Industry Research and Advisory Council; the second study was conducted in 1994 by the Florida Department of Insurance and is noteworthy in that it includes damage associated with high winds in addition to storm surge.

Historically, definitions of what constitutes the coastal high hazard area have varied. The Florida Administrative Code (see 9J-5.003(19)) currently defines the coastal high hazard area as the evacuation zone for a category 1 hurricane as established in the regional hurricane evacuation study applicable to the local government.

Data Characteristics
SOURCE
At the Florida Department of Insurance, contact Steve Liner at 904-922-3141. For the All-Industry Research and Advisory Council report contact Mike McDonald, Division of Emergency Management, Florida Department of Community Affairs, 2740 Centerview Drive, Tallahassee, FL 32399, or at 904-413-9953.

ACQUISITION
Hard copies of the reports are available at photocopying expense.

COLLECTION
The reports represent data for 1980, 1988 and 1994 for all coastal counties; however, the dissimilarity of methodologies does not allow meaningful comparison.

Data Limitations
Documentation of the methodologies is limited; however, it appears that different assumptions were made as to what constituted property at risk.

Recommendations
The Department of Insurance should establish a procedure for preparing annual reports on the value of insured property in coastal hazard areas. Experience with the 1994 report shows that this can be a major project, therefore simpler methodologies may need to be developed to provide estimates of insured value. This might be accomplished by determining the value of insured property within the different inundation zones of the SLOSH (Sea, Lake, and Overland Surge from Hurricanes) maps prepared by the National Oceanographic and Atmospheric Administration. Complete coverage of coastal counties by Geographic Information Systems (GIS) would be needed to accomplish this task.