“Builders vs. Mother Earth: Coastal construction growth promises more builders claims for natural catastrophe damage”
By: Joe Duncan and Russ Patane
Summer 2017, Volume 2, Issue 2
According to the Insurance Information Institute, 2016 insured natural disasters in the United States accounted for more than $23.8 billion in damages. Worldwide, the total estimated damages attributable to natural disasters was $175 billion. Last year marked the end of a four-year downward trend in damages from natural disasters since Hurricane Sandy in 2012.
In 2012, the storm—officially named “Superstorm” Sandy—generated losses in excess of $70 billion in the New York and New Jersey area, causing damage to more than 650,000 housing units. Insured losses amounted to $25.85 billion either through private insurance or the National Flood Insurance Program. Accordingly, less than 40% of the cost of damages sustained were covered by insurance.
Similarly, in 2005, Hurricane Katrina caused more than $108 billion in damages. Private insurance paid claims in excess of $41 billion, while the National Flood Insurance Program paid an additional $16.3 billion in claims. Overall, 53% of the damage caused had insurance coverage.
While natural disasters can strike in any part of the country at any time, according to census data and the National Oceanographic and Atmospheric Administration more than 50% of the country’s population now lives in coastal watershed counties. These counties are generally defined by NOAA as counties with at least 15% of the total land area located within the coastal watershed. NOAA estimates that this population will grow by an additional 8% by 2020.
With growth of the coastal population, it would stand to reason that much of the nation’s construction and development will continue to occur in coastal areas. Housing, infrastructure and business will inevitably expand to accommodate the influx in residents and visitors.
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