Insurance companies pull out of coastal areas

About six years ago, my then boyfriend (now husband) and I moved into a lovely little house a few minutes outside of downtown Bar Harbor. It was set midway on a hill, about half a mile from the ocean, with enough space for a garden and some grape vines, and a mortgage rate that, in this market, feels like it may have been a mirage.

The house, which had been hastily constructed after the fire of 1947 (with help, unbeknownst to us at the time, from my great-grandfather), was 141 feet above sea level. It wasn’t in a flood zone. The entire town of Bar Harbor — shops, restaurants, movie theaters — lay downhill.

Yet when we called insurance companies, the big names told us they wouldn’t insure the property, because they were concerned about flood risk and rising seas. We politely explained that if the house were ever to be underwater, the entire town of Bar Harbor would have to first disappear under the waves.

They wouldn’t budge. Eventually we found coverage through a local company whose agents knew the landscape and the flood risk.

I had forgotten all of this until recently, when I read this excellent piece in The Quoddy Tides a few weeks back, about property insurance in Washington County. Big-name companies, it turns out, are now dropping entire zip codes (including Lubec) from their portfolios over concerns about wind and waves.

“Winds are a huge factor,” property owner James Pollowitz, who is in the midst of a major renovation on an historic home in downtown Eastport, told the paper. “They're getting huge numbers of claims on houses [around the country] that probably shouldn't have been built where they are.”

Like us, Pollowitz eventually found a local company that knew the area to insure the home. But finding property insurance is becoming more and more challenging, as Paul McKee, president of the Maine Association of Realtors, told the Tides, even in areas that aren’t close to flood zones.

In a piece for The Monitor last August, Marina Schauffler pointed out that insurance companies used to moderate their risks by diversifying. That’s becoming harder and harder to do, as severe storms — like the ones we saw in January and March — are on the rise, and reinsurance costs (what insurance companies pay to insure themselves) are also going up. (Will we one day have insurance for the reinsurance for the insurance? Only time will tell.)

Those costs are getting passed on to homeowners. Home insurance policy premiums rose an average of 21 percent between May 2022 and 2023, according to a report by Policygenius, which analyzes industry trends. That increase is due in large part to insurance companies paying out for disasters, many of which are related to climate change: in 2022, U.S. insurers paid out $99 billion in claims due to natural disasters, a figure that’s rising every year.

Some states, most notably Florida, have responded to company pullouts by creating their own pooled insurance programs, like Fair Access to Insurance Requirements (FAIR), which is now Florida’s largest insurer, with more than a million policies. Maine has yet to create such a program, although it could under statute.

“People can deny climate change because it’s all far away, elsewhere, in the future,” Charles Colgan, a former Maine state economist who directs research at the Center for the Blue Economy in Monterey, California, told The Monitor last year. “But when the insurance company cancels your policy and you can’t sell your house, that’s when things get real.”

PSA:
If you’re going to be in Augusta next week, stop by the Civic Center at 1 p.m. to catch a panel I’m moderating on climate migration in Maine as part of the 2024 ClimateWork Maine summit. It should be a fascinating discussion, and there’s lots going on the rest of the day as well — check out the schedule here.

 What we’re reading this week:

Hannah Ritchie’s excellent (and hopeful!) new book, Not the End of the World, which, as Ritchie puts it, takes a “data-driven look at the world’s environmental problems, and how to solve them.” And don’t miss Hannah on the most recent episode of the Ezra Klein show, talking about the environmental disaster that is cows, the pros and cons of various forms of renewable energy, and so much more. (You can also just read the transcript.)

It’s a thoughtful, optimistic and, most importantly, realistic conversation about how to solve some of our most pressing environmental problems, and I highly recommend giving it a listen. One astonishing thing I learned? Roughly half (!!) of habitable land on earth is used for agriculture — much of it to raise cows — while roughly 1 percent is “urban land,” with homes and other infrastructure.

This week’s edition was produced with the support of:

 In other Maine environmental news:

Lobster:
State backs lobstermen in urging regulators to reevaluate changes to minimum size.

Potatoes:
USDA to continue classifying potato as a vegetable, not a grain.

Eels:
Maine elver fishermen will keep baby eel quota for next 3 years.

Plovers:
Piping plovers are returning to Maine for the season.

Storm damage:
Maine’s wharf owners scramble to repair what they can before lobstering season starts.

Flood maps:
New FEMA flood maps are coming, but many homeowners say they've experienced the risks firsthand.

Hurricanes:
Maine gets low marks for hurricane preparedness.

Unions:
Maine growers likely face a hot and stormy summer.

Hot water:
‘Relatively cool’ year in Gulf of Maine still 5th hottest on record.

Smells:
Complaints of odors from Hartland Landfill linger as town works toward closure.

Electricity:
Electricity Maine could pay up to $5 million in refunds to customers in a proposed settlement.

Unions:
Mills vetoes bill requiring developers of clean energy projects to work with unions.

Offshore wind:
Eight areas in the Gulf of Maine chosen as possible lease sites for commercial offshore wind.

Dune:
Protective artificial dune could be in Scarborough Beach future.

Thanks for reading. See you next week.

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