Climate Change - Real or imagined?

South Florida Commercial Property Owners concerned but not worried.

 A recent survey of South Florida’s Commercial Property owners revealed that there is some concern over the effects of climate change on the Property Insurance market but not too much.

See the full report: 2012 Property Insurance Survey

Climate Change – Real or imagined?

The theory suggests that increased warming of the atmosphere leads to warmer oceans and sea level rise.  If true, this would seriously increase property damage from wind and/or flood.  We wanted to better understand howSouth Floridaproperty owners perceived this risk.

 Over 50% of owners believe that climate change is naturally occurring but was exacerbated by human action with only 7% believing that climate change is a figment of the imagination.  With respect to recent studies by Climate Central (www.climatecentral.org) predicting that the sea level will rise by more than 4ft within the next 20 years most felt that it was possible but not probable.  About a third believe that it will take at least 50 years before their properties would be affected by Global Warming while another third did not think their properties would ever be affected.  Most owners (84.2%) trusted scientists for their information with environmental organizations a distant second (39.5%) – more than one answer was permitted. Almost half have already taken measures to reduce the carbon footprint of their properties with the remaining half looking into it.

Effects on premiums?

Given the belief by mostSouth Floridaproperty owners (68%) that climate change was a real concern and that there would be some effects on their properties, we wanted to see how that was affecting their insurance premiums.

 When asked about the likelihood that their properties would be hit by a named storm this Hurricane Season, a third believed that they had a 5-10% chance, another third believed that a less than 5% chance was more realistic, a fifth were not so optimistic – predicting a 11-20% chance, and the remainder believe that there was greater than 20% chance.

 When asked about their insurance premiums this year, almost half the owners had no increase in their premiums with another third seeing a 1-10% increase and only a handful experiencing a greater than 10% increase.  However, when asked about their next renewal, most felt than an increase of between 6-10% was coming.  Just over 60% were pleased with their insurance broker’s performance while the other 40% were looking for options.

 South Florida Commercial Insurance Property Rates

Property Type  

Average

High

Low

Office  

 $    1.07

 $   2.00

 $     0.50

Industrial  

 $    0.55

 $   1.00

 $     0.30

Retail  

 $    0.64

 $   1.00

 $     0.40

Multifamily  

 $    1.58

 $   2.75

 $     1.00

Insurance

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