Best's Review


Coastal Property
Insurance Leaders: Time to Better Protect, Shore Up Coastal Homeowners’ Properties

States are suffering because of the lack of strong building codes and mapping, industry leaders say.
  • Anthony Bellano
  • November 2022

Insurance leaders say federal, state and local governments need to better protect coastal homeowners from severe weather by making sure their homes are built properly and safeguarded correctly—particularly against floods.

In Louisiana and Texas, the biggest long-term issue is the lack of strong building codes and the enforcement of such codes, said Michael Quigley, executive vice president and head of property underwriting & multiline risk quantification, Munich Re U.S. “Whereas Florida is the poster child for strong building codes, Texas, for example, has no statewide building codes,” he said.

Related: Severe Weather in Coastal States Present Big Challenges in Hardening Homeowners Market

Jon Schnautz, assistant vice president of state and policy affairs, National Association of Mutual Insurance Companies, said NAMIC has tried to push enhanced building codes in many states and “better thought processes into where development occurs in risky areas,” as well as tax credits. He also cited inflation as a troubling factor for protecting and rebuilding in these coastal states since it impacts the costs of building supplies and repairs.

Schnautz and Quigley both said Florida's problems with fraud don't make it a model homeowners market, but there are other things insurers can take from the Sunshine State.

“The few positives about Florida from a property insurance perspective are the strong building codes and relative quality of the built environment,” Quigley said. “All coastal states should focus on strengthening their built environment and increasing community and economic resiliency by promoting mitigation efforts and appropriate land use and by mandating and enforcing stronger building codes that can address the impacts of a changing climate.”

Insureds were given a victory at the federal level in September when the U.S. House of Representatives passed a stopgap spending bill that includes an extension of the National Flood Insurance Program.

The Biden administration's proposals for reform include ending coverage for properties that see repeated flooding.

AM Best Senior Financial Analyst Anthony Molinaro said that since 5 million Americans nationwide rely on the NFIP each year to protect their homes and businesses, an extension was necessary. “For many of the coastal properties, private insurers cannot compete with the rates offered by NFIP,” Molinaro said. “These properties are also considered the most vulnerable. So the long-term solution is still unclear at this point, which is why the U.S. government continues to kick the can down the road every 12 months. But what is clear is that we still need a market to protect these risks and the NFIP is it right now.”

Related: Best's Rankings: Florida Homeowners Multi-Peril Filings by Rate Impact Greater Than 10%

Molinaro said ending coverage for properties that are repeated flood risks would create a protection gap, as homeowners and mortgage holders alike would face an availability and affordability issue. “Perhaps one way around this could be for the NFIP to require any properties having repetitive claims to mitigate using some form of federal funding and no-interest loans or sell these properties to the government at fair market value. Unfortunately, some of these properties are in low-income communities where affordability is the issue.”

Anthony Bellano is an associate editor. He can be reached at

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