Climate Exodus: Insurers’ Fleeing High-Risk States

Climate Exodus: Insurance Companies Seeking Refuge from High-Risk Sates

Flooding, Forest Fires, Heat Waves, Tornados, oh my! The recent stretch of weather has certainly been at the forefront of the news this year. And, if you’ve been outside the past few months, the haze and the scent of smoke serve as a constant reminder that our neighbors to the north are experiencing the worst fire season on record. But what does this have to do with real estate?  

The intertwined insurance and banking sectors are witnessing unprecedented challenges due to escalating climate risks. Insurers are retreating from areas considered high-risk due to increased weather-related disasters, a trend affecting property values and reshaping population distributions. Amid these changes, how does New Hampshire rate among other coastal states?

Climate Change: Man-Made or Cyclical

The reality is, whether climate change is primarily driven by human activities or is part of the earth’s natural climatic cycles, its impacts are being felt strongly either way. Unpredictable and increasingly severe weather patterns have caused disruptions across various sectors, with insurance being one of the most affected. However, it’s important to note that increased population growth in areas prone to climate-related risks plays a significant role in the increase in property damage.

The Exodus and Its Domino Effect:

Historically, insurance companies have relied on past data to predict future risks. But the growing unpredictability associated with climate change has thrown this traditional model off balance. As a result, many insurers find themselves confronted with a deluge of claims that puts immense pressure on their financial stability. This has led to an exodus of insurers from states like California and Florida where severe climate-induced disasters are becoming increasingly frequent.

This is also impacting the citizens in these states as even here in our office, we have sold many properties to families relocating from California and Oregon due to the increased frequency of wildfires. Others added that their motivation was high crime and homelessness. While California has been hit hardest by this exodus, states like Florida and the Carolina’s are seeing massive migration to their states as they have favorable weather a majority of the year with relatively low rates of wildfires.

But with the rate of weather-related disasters and increasing temperatures, will these states soon see an exodus as well? This year is predicted to be a particularly intense hurricane season, particularly in the Gulf where some areas are seeing water temps in the 90s.

Banks are not immune to these changing tides either. Financial institutions depend on insurance when providing loans, particularly for mortgages where the property itself serves as collateral. If insurance becomes unattainable, banks deem it too risky to lend against these properties. This reluctance from banks to finance uninsured properties could significantly deflate property values in high-risk regions. Prospective buyers may find it challenging to secure loans, reducing demand and driving down prices. This will only add to the number of people needed to relocate to find homes that are not only affordable but that can be financed and insured.

Climate change poses significant challenges to the insurance industry due to its influence on the frequency, intensity, and unpredictability of extreme weather events. Let’s explore how climate change impacts insurance companies:

  1. Increased Claims: More frequent and intense weather events like hurricanes, floods, wildfires, and heatwaves lead to increased claims for property damage. These impacts can strain the financial resources of insurance companies as they pay out more in claims.
  2. Uncertainty in Risk Assessment: Insurance companies rely heavily on historical data to predict future risks and set premium prices. However, climate change introduces a high degree of uncertainty, making it difficult to predict future weather patterns based on past data. This can make risk assessment and premium pricing more challenging and less accurate.
  3. Geographic Shift in Risk: Climate change alters the geographic distribution of risk. For example, areas previously considered safe from floods or wildfires may now face these risks due to changing weather patterns. This can change the landscape of insurable properties and make certain regions uninsurable due to the high risks.
  4. Increased Premiums: To cope with the increased risks and claims, insurance companies may need to increase their premiums. This could make insurance less affordable for many people and result in a higher number of uninsured or underinsured properties.
  5. Insurer Solvency: In extreme cases, the increased claims due to climate change could threaten the solvency of insurance companies, particularly if they have not adequately factored climate risks into their pricing and risk management strategies.
  6. Regulatory Pressure: Regulators and rating agencies are increasingly requiring insurance companies to factor climate change into their risk models and disclose their exposure to climate-related risks. This can increase the regulatory burden on insurance companies and require them to make changes to their business models.

New Hampshire's Emerging Appeal:

Against this backdrop of increasing uncertainty and retreat, New Hampshire emerges as a beacon of resilience. Known for its stable economy and breathtaking landscapes, it offers a lower climate risk profile, making it attractive to both insurance companies and banks.

New Hampshire isn’t entirely immune to the impacts of climate change, but its risks are markedly lower than those of other coastal or fire-prone states. New Hampshire’s coastline is relatively small and even when hurricanes make it this far north, the intensity has been greatly reduced making them more of a rain event.

This relative climate stability and the efforts to improve climate resilience make the state an appealing prospect for financial institutions and insurance firms. This also serves as a testament to New Hampshire’s record of responsible forest management. While we are one of the most forested states, historically we have very few out-of-control forest fires.

Reshaping Property Values and Population Distribution

The stability and appeal of New Hampshire doesn’t only attract insurers and banks, but also residents seeking more predictable living conditions. This trend could stimulate the local real estate market, potentially driving up property values. This is a stark contrast to regions experiencing insurer retreat and banking caution, where property values may be in a downturn.

However, New Hampshire faces challenges too. Changes in weather patterns may impact winter activities and local agriculture. But compared to other regions, these risks are currently less severe.

The Appeal of Property Ownership in New Hampshire

  1. Competitive Real Estate Market: The presence of multiple insurers and willing lenders makes New Hampshire’s real estate market highly competitive. This competition can result in more favorable terms for buyers, including lower insurance premiums and attractive mortgage rates.
  2. Quality of Life: New Hampshire boasts a high standard of living, with top-rated schools, quality healthcare, and a vibrant economy. The state’s low crime rate and natural beauty, including its mountains, lakes, and coastlines, make it an appealing place to live.
  3. Outdoor Recreation: New Hampshire’s outdoor activities are a significant draw for many. There’s always something to do from skiing and snowboarding in the winter to hiking, fishing, and boating in the warmer months.
  4. Tax Advantages: New Hampshire is one of the few states with no income tax and no sales tax, which can result in significant savings for residents.
  5. Community Spirit: New Hampshire’s towns and cities are known for their tight-knit communities and active civic participation. This strong sense of community can make the state a welcoming place for newcomers.

The impact of climate change on the insurance and banking sectors is driving a shift in property values and population distribution. Amid these shifts, New Hampshire’s lower climate risk profile, combined with its inherent advantages, makes it an increasingly appealing option for property ownership.

Randy Miller is a Sales Associate with Roche Realty Group in Meredith, NH

This article was written by Randy Miller. Randy is a sales associate at Roche Realty Group with offices in Meredith and Laconia, NH, and can be reached at (603) 279-7046. Please feel free to visit www.rocherealty.com to learn more about the Lakes Region and its real estate market

winter Snowmobile

Real Estate in a Winter Wonderland

As I drove around the other day with my kids, I was looking at some ...
Read More →
Roche Realty Group Host Annual Toys for Tots Drive, Invites Community Participation

Roche Realty Host Annual Toys for Tots Drive

As the holiday season approaches, Roche Realty Group is excited to announce the kickoff of ...
Read More →
Small Business Saturday New Hampshire

Small Business Saturday: Living Gratefully in New Hampshire

We have so many things to be thankful for here in New Hampshire: plenty of ...
Read More →
Annie Brown Joins Roche Realty Group

Annie Brown Joins Roche Realty Group

Meredith — Frank Roche, President of Roche Realty Group, Inc., with offices in Meredith and ...
Read More →
Gunstock Mountain in Gilford, NH

Gunstock Upgrades for Winter as Real Estate Shows Resilient Growth

As the leaves of New Hampshire’s forests transition from the vibrant hues of fall to ...
Read More →
Preserving New Hampshire's Lakes

Preserving New Hampshire’s Lakes: A Community Effort

With over 250 lakes and ponds throughout New Hampshire’s Lakes Region, there are unlimited outdoor ...
Read More →
Home Inspections — The Uninspected Abode: A Spine-chilling Tale of Regret and Terror!

The Uninspected Home: A Spine-chilling Tale of Regret and Terror!

One night, not many years ago, in a quaint, somber town nestled amidst the haunting ...
Read More →
Interest Rates

Interest Rates Impacted by Treasury Yields

It looks like the national picture for housing stats has not improved in recent months; ...
Read More →
Local Housing Crisis: Challenges and Solutions

Local Housing Crisis: Challenges and Solutions

Our communities are facing a shortage of both residential and commercial properties, a scenario that’s ...
Read More →
Fall Splendor In New Hampshire

Fall Splendor in New Hampshire

New Hampshire in the fall is akin to stepping into a live canvas painting — ...
Read More →
Samoset Condominiums on Lake Winnipesaukee

Condominium Sales Surge in New Hampshire’s Lakes Region!

As we start entering October’s bright fall colors, I thought I’d take a look at ...
Read More →
Empowering your offer

Empower Your Offer in a Sizzling Real Estate Market!

As a seasoned real estate professional, I often consider the market conditions to keep myself, ...
Read More →
Reviews of New Hampshire's Lakes Region

Reviews of New Hampshire’s Lakes Region

We’ve had a great summer in New Hampshire’s Lakes Region, and we’re approaching the brilliant ...
Read More →
Waterfont Sales Activity Wolfeboro, New Hampshire

Waterfront Sales Activity in the Lakes Region

As we head into September, I have compiled data and insight into what is happening ...
Read More →
Labor Day Weekend

Labor Day Weekend in The Lakes Region

Labor Day Weekend has arrived, and the weather forecast for the Lakes Region looks fantastic, ...
Read More →
Interest Rates

The Mortgage Interest Rate Dilemma

This past week, we saw an increase in mortgage rates following a rise in bond ...
Read More →
Best State To Live In — New Hampshire at #3

New Hampshire 3rd Best State To Live In!

WalletHub just released its rankings of the best state to live in for 2023. It’s ...
Read More →
City/Town Comparison can make the research process easier

City/Town Comparison For Your Move

Some studies place moving to a new location as one of the top ten most ...
Read More →
New Hampshire Real Estate Lacks Inventory

New Hampshire Real Estate Inventory Crisis

A Multifaceted Analysis of Rising Interest Rates and Beyond New Hampshire is currently facing a ...
Read More →
Peaks of New England

Exploring the Peaks of New England

In my younger years in school, I always loved geography. Living in New Hampshire, there ...
Read More →
Climate Exodus: Insurance Companies Seeking Refuge from High-Risk Sates

Climate Exodus: Insurers’ Fleeing High-Risk States

Flooding, Forest Fires, Heat Waves, Tornados, oh my! The recent stretch of weather has certainly ...
Read More →
Real Estate News Headlines - Lakes Region NH

Real Estate Tidbits to Consider

Here are a few real estate tidbits I’ve pulled to keep you up to speed ...
Read More →
Roche Realty Group Sells out Lakeside at Paugus Bay

Roche Realty Group — 6 Months in Review

Closed sales for the first 6 months of 2023 have been impressive at Roche Realty ...
Read More →
Newfound Lake

Lakes Region Waterfront Sales Activity 6 Month Comparison

Below you will find data and insight into what is happening in sales activity on ...
Read More →
Buying Land

Buying Land in New Hampshire — Comprehensive Guide

New Hampshire, also known as the Granite State, offers a diverse landscape that includes picturesque ...
Read More →
Weirs Beach: A Tale of History, Community, and Natural Beauty

Weirs Beach: A Tale of History, Community, and Natural Beauty

As we celebrate the 100th anniversary of the oldest bike week in the country, let’s ...
Read More →
First Five Months of Lakes Region Real Estate

Five Months of Lakes Region Real Estate Activity

The month of May’s real estate statistics just came out for New Hampshire, and it ...
Read More →
A bird's eye view of Long Bay on Lake Winnipesaukee

South Down Shores and Long Bay on Lake Winnipesaukee — Its History

When construction started in 1981, Laconia’s South Down Farm offered a picturesque setting for condominium ...
Read More →
Memorial Day — rows of gravestones with flags in military cemetery

Memorial Day Weekend Arrives in the Lakes Region!

The long-anticipated Memorial Day weekend has arrived after a long winter, and the Lakes Region ...
Read More →
Unlike the dandelions new listings aren't popping up in the Lakes Region

Will Listings Start Bloom Like Dandelions?

Will Real Estate Listings Bloom Like Dandelions? During my rides around the Lakes Region, I’ve ...
Read More →
boat launch

Public Boat Launches in the Lakes Region

New Hampshire’s Lakes Region is a paradise for boating enthusiasts and we are now entering ...
Read More →
Real Estate Scams

Real Estate Scams to Be Aware of

One of my Realtors® received a call today from a gentleman purporting to be the ...
Read More →
Brant Point Lighthouse, Nantucket overlooking the ocean

From the Lakes Region to Nantucket

I spent a few days on Nantucket Island this past week for a quick getaway. ...
Read More →
Lakes Region Real Estate Is Still Hot

Lakes Region Real Estate Market is Sizzling

The real estate market in the Lakes Region and the state of New Hampshire is ...
Read More →
Lake Winnipesaukee Kayak

Buying a Lake House — Where to Start?

Owning a waterfront home in New Hampshire’s Lakes Region is a treasured experience. For many ...
Read More →
Home improvements

Home Improvements Before You Sell

One question I commonly get asked is, “What type of projects or improvements should I ...
Read More →
Single-Family units are down

How’s the Lakes Region Market Looking?

We’ve already passed the first quarter of 2023 for real estate sales in New Hampshire’s ...
Read More →
Moving into new home young happy couple celebrating toast Champagne

Buying a Home? Follow These Tips & Tricks

Spring has officially arrived and launches the beginning of our spring selling season for real ...
Read More →
Marketing

How Marketing Real Estate Has Evolved

Back in the year 2000, the world was at the beginning stages of a major ...
Read More →
Mount Washington, New Hampshire

New Hampshire — 30 Reasons to Move Here!

With lakes, beaches, mountains, forests, rivers, and the ocean for people who enjoy the outdoors, ...
Read More →
New Hampshire Ski Resort

Ski Resorts in New Hampshire Are Ready for Spring Skiing!

It’s been a good week, and mother nature hit our region with a blanket of ...
Read More →
Market Trends

Real Estate Market Trends to Follow

I’ve been pulling up some current research on the real estate market on a national, ...
Read More →
Carol Mattice

Roche Realty Group Welcomes Carol Mattice

Meredith — Frank Roche, President of Roche Realty Group, Inc, with offices in Meredith and ...
Read More →
Kevin Shaw - Roche Realty Group

Kevin Shaw of Roche Realty Group is Top Producer for 2022

Laconia— Frank Roche, president of Roche Realty Group with offices in Meredith and Laconia, recently announced ...
Read More →
Lisa Lewis

Lisa Lewis Joins Roche Realty Group

Meredith — Frank Roche, President of Roche Realty Group, Inc, with offices in Meredith and ...
Read More →
Wanda Keenan

Wanda Keenan Joins Roche Realty Group

Meredith— Frank Roche, President of Roche Realty Group, Inc. with offices in Meredith and Laconia, ...
Read More →
Land for sale

Buy Land in New Hampshire — They’re Not Making it Anymore

The science is in and the more trees a state has, the happier and less ...
Read More →
The Price of Real Estate

Did The Price of Real Estate Increase in Your Town?

Everyone’s always interested to see how their real estate values have performed over the past ...
Read More →
Laid off employee in recession

Are We Headed into a Recession?

It’s pretty big news lately; Microsoft, Amazon, and other tech companies have laid off more ...
Read More →
Price Reduced

2022 vs. 2021 — Is The Lakes Region’s Frenzied Market Over?

It’s that time of year to provide all of you with an update on real ...
Read More →

Leave a Comment